Tag Archives: Bonds

Going Long in Two Fields: Why TLT Could Be Your MVP During Recessions

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Dear Mr. Market:

First off, if you want to know how amazing Artificial Intelligence is, the following list of article titles were generated for this article in the matter of four seconds! (we picked the first one and the rest of this article is typed with regular human toiling!)

FYI: If you’ve never used ChatGPT, before try it! Much of its delivery is on what and how you ask things and in this case here is the prompt/reply that we asked of it:

Certainly! Here are a couple of article title ideas that play on the “going long” football reference while discussing extending bond allocations, especially in a recessionary context and using the TLT ticker symbol:

  1. “Going Long in Two Fields: Why TLT Could Be Your MVP During Recessions”
  2. “Huddling Up for Stability: TLT’s Game Plan for Going Long in a Recession”
  3. “Scoring Big in Bonds: Going Long with TLT Amidst Recession Signals”
  4. “Touchdown for Investors: TLT’s Playbook for Going Long in Uncertain Markets”
  5. “Bonds and Touchdowns: TLT’s Strategy for Going Long in Recessions”
  6. “From Gridiron to Portfolio: Going Long with TLT’s Defensive Play”
  7. “Executing the Long Game: TLT’s Endurance in a Recessional Season”
  8. “Tackling Recession Risk: Going Long with TLT’s Defensive Line”
  9. “The Bond Field Advantage: Going Long with TLT Amid Market Turbulence”
  10. “Scouting for Opportunities: Going Long with TLT’s Recessional Defense”

Now…on to business and what we’re talking about today, which is not related to football but rather recession worries, market strategy, and in our opinion how one should consider adjusting the bond piece of their allocation to hedge what we see coming. If you’re in the growing and increasingly popular camp of preparing for a stock market crash or just a general recession, here’s one adjustment and hedge that you may want to consider.

Continue reading →

Permanent Portfolio Review

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Dear Mr. Market:

Simple allocation ?

In a year where the stock market has provided zero safe places to hide…you may have changed, the markets certainly have, but one thing has not; the Permanent Portfolio.

We’ve reviewed the Permanent Portfolio before but believe it’s time to check in and provide an update on how it’s doing relative to the broad markets now as well as chime in on whether the strategy still has merit going forward. For some quick background, our first original review was written in June of 2013 (click here to see that). Most recently we revisited the topic with an update in November of 2020 (click here) as we climbed out of one of the wildest years in world history amidst a global pandemic.

If you didn’t hit the embedded article links above, the Permanent Portfolio is pretty simple at face value. The Permanent Portfolio is a seemingly basic portfolio allocation strategy created by investment advisor Harry Browne in the 1980’s and outlined in his book Fail-Safe Investing back in 2001. Here’s the secret (simple) sauce and how each asset class should do during repeatable economic cycles:

Continue reading →

Westcore Fixed Income & Bond Market Interview

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Dear Mr. Market:

th-3We certainly spend a lot of time writing to you about the stock market and all the twists and turns it brings investors. Today, we have the pleasure of mixing things up a bit as we dive into something far larger and more intricate than the stock market; we’re going to talk about the bond market!

On a recent trip out to Denver, CO My Portfolio Guide had the opportunity to meet with Troy Johnson, CFA and Director of Fixed Income Research at Denver Investments. We were able to ask him and his team several questions about the bond market and how they’re navigating it in these interesting times.

My Portfolio Guide: First and foremost, thank you very much for making yourself and your team available. As you know, we own positions in the Westcore Plus Bond Fund as well as the Westcore Municipal Opportunities Fund. We understand your team was awarded a Lipper Award. Without necessarily giving us a pitch on your firm, could you briefly expand on the recent accolades?

th-5

Westcore: The Westcore Fixed Income funds won the Lipper Fund Award for best fixed income small fund group for the three-year period ending November 30, 2016, placing first out of 74 eligible fund families. The award was granted based on Lipper’s measurement of risk- adjusted returns across our multiple fixed income fund offerings. We believe that winning the award affirms the soundness of our approach across multiple strategies as well as the hard work and talent within our fixed income team.

My Portfolio Guide: Excellent, and congratulations on the awards and success. Related to this, could you share your opinion on what makes your firm or approach different than some of the larger bond shops?

Westcore: We utilize an investment approach that emphasizes income and security selection rather than a focus on trading. This generally results in a heavier weighting towards credit oriented issues that offer enhanced income. We recognize rigorous fundamental research is a necessary component of such an emphasis and differentiate ourselves within that process in the following manner: Continue reading →

MPG Core Tactical 60/40: August 2015 Performance Update

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MW-BB798_sm6040_20130422180557_MDDear Mr. Market:

If you’ve never experienced a stock market correction until now (technically defined as -10% or more), you have either never invested or have only been investing since 2012. For the vast majority of others, you should know that markets “correct” on average at least once every 12-18 months. One reason why this feels worse than other corrections is because we just went 47 months without a correction of -10% or more! (third longest streak on record)

For a refresher, stock market corrections are short and sharp declines of -10% to -20%. They’re typically accompanied by sensationalized stories such as the European sovereign debt crisis, Greece’s exit from the Euro, or the “fiscal cliff”. For all those investors that ducked for cover and went to cash during the last correction you saw the Dow Jones move up over 6,000 points. Were you able to correctly “time” your reentry into the market? No…and you’re not alone. No matter what you read or hear there is not a single person or professional advisor that owns a crystal ball and can consistently time the market.

If you’re new to this monthly series…remember what we’re doing. This exercise, as we like to call it, is not an attempt to pick the best stock or “time the market”. We leave that futile task to those who own time machines and accurate crystal balls. For a refresher, see our first article on the MPG Core Tactical 60/40 Portfolio.

Here’s the current summary of the MPG Core Tactical 60/40 portfolio mix, which is updated as of this writing (September 1, 2015).

Click here to compare our portfolio against the benchmark.

From the last week in July to this writing the MPG Core Tactical 60/40 portfolio went down -4.49%. How did the rest of the markets do? Continue reading →

Don’t Neglect Bond Basics

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Seesaw1Dear Mr. Market:

The equity markets typically dominate the headlines but recently there has been more and more talk about the Fed and where interest rates are going. Stocks are definitely a more intriguing topic as they can move very quickly in either direction and make a dramatic impact on investor’s portfolios. Future Fed activity will have an impact on what is often the most neglected portion of a portfolio – Fixed Income or Bonds.

Most investors spend a minimal amount of time with this portion of their asset allocation. It is often the textbook definition of a ‘buy and hold’ approach and why shouldn’t it be? For the last several years investors have accepted the fact that interest rates are essentially zero and this portion of their portfolio warrants little to no attention. While this approach has been adequate investors that subscribe to this approach could find themselves with losses in what they consider their ‘sleep at night’ portion of the portfolio. When and if the Fed makes any changes to their policy investors need to be prepared to make changes to this portion of their investment portfolio.

When rates do change the behavior of bonds can be explained using something that everyone has seen on a children’s playground…a seesaw or teeter-totter. It is based on a very basic concept – when one side goes up the other will go down. When using this analogy with Fixed Income, one side would have interest rates and the other would have the principal value of the bond or fund. As rates go down the principal would go up and if rates go up the principal would decline. Fairly straightforward…isn’t it? Additionally, the further away you are from the middle of the seesaw (fulcrum point) the harder your landing will be. This playground explanation paints a simplistic explanation of how the price of bonds is affected by interest rate changes but what should you focus on when it comes to your fixed income positions? Continue reading →

MPG Core Tactical 60/40: February 2015 Performance Update

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MW-BB798_sm6040_20130422180557_MDDear Mr. Market:

For a guy who is usually full of surprises you’re scripting 2015 like a boring rerun of last year. As you’ll recall we had a rough start to the year with the S&P 500 dipping -3.1% in January but then February came around and erased all the negative returns for the year with a very strong month. As a matter of fact the S&P 500 had its best month in almost five years with a gain of +5.5%. The Nasdaq bubbled up (pun intended) even higher at +7%.

Everything is fine and dandy, right? The media is as giddy as they’ve been in ages. They’re showing us charts and comparisons of Nasdaq 5,000. Nothing could go wrong from here, could it? Is this another perfect backdrop for the four most dangerous words in investing?

“It’s different this time”. Continue reading →

MPG Core Tactical 60/40: September 2014 Performance Update

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MW-BB798_sm6040_20130422180557_MD

Dear Mr. Market:

October is historically one of your stormier months and it looks like you began to rumble a month or so early this year. We’re headed into the last quarter of the year but in case you’ve missed why we’re running a series of articles around the topic of a “60/40 benchmark”, here’s a refresher:

Click here to revisit the first edition of the MPG Core Tactical 60/40 Portfolio.

Here’s the current summary of the MPG Core Tactical 60/40 portfolio mix, which is updated as of this writing (October 6, 2014).

Click here to compare our portfolio against the benchmark.

It’s finally happening. Yes…it appears the stock market is correcting. As a matter of fact for the second time this year alone the Small Cap asset class has endured a correction of -10% or more. What’s puzzling (and actually quite worrisome) is the divergence between what Large Caps and what Small Caps are doing. In a healthy and rising stock market, “as the tide rises so do all the boats”. We’ve had warnings before but the alarm bells are ringing louder since not all asset classes are moving in tandem as they once were. What we’re seeing now are perhaps the final signs of the rally peaking out.

What adjustments did we make?

The following moves were made during the month of September: Continue reading →

Bill Gross leaves PIMCO…Should you sell your funds?

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Pimco1Dear Mr. Market:

They say all news gets priced into the stock market. Proponents of the Efficient Market Theory believe that there is “perfect information” in the stock market. Any information or insight that is available is there for all to see therefore negating any possible edge in beating the market. All that being said, no matter how clear your crystal ball is, nobody expected the shocking news we received on Friday.

Bill Gross, the co-founder of Pacific Investment Management (PIMCO) in Newport Beach, quit and packed his bags to join Janus Capital this past Friday. Gross has long been known as the “King of Bonds” and considered to be the nation’s most prominent bond investor. Until last year he was responsible for managing the largest mutual fund in the world – the PIMCO Total Return Bond Fund (PTTRX). That title now goes to the Vanguard Total Stock Market Index but PTTRX is still the world’s largest bond mutual fund. So…what happened here and was the writing on the wall?

As alluded to above PTTRX, and PIMCO in general, has been suffering for quite some time. PIMCO isn’t the only bond fund manager who has struggled with outflows but the sheer volume has opened some eyes. From May to August of 2014 PIMCO has had over $70 billion in assets liquidated and withdrawn. Over the past 72 hours (only 1 trading day including the weekend) the firm has already seen $10 billion bolt for the door! Continue reading →

Target Date Funds – is it time to refocus?

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Off TargetDear Mr. Market :

You certainly have a unique sense of humor! Your unpredictable personality often leaves investors scratching their heads as they attempt to figure out your next move and how they should be positioned.  You’ve reintroduced us to market volatility the last few weeks and left investors scrambling.  During the first quarter of this year, investors moved billions of dollars into the equity markets as they began to gain a sense of comfort based on recent performance.  As investors muddle through the overwhelming amount of investment options available to them, more and more continue to look for the ‘quick fix’ or the ‘one stop shop’ and invest in Target Date Funds.  By simply picking the fund that has a date corresponding to a time frame they have in mind for their investment goals, they can put their portfolio on cruise control and focus on more important things. Simple, right?

If only it were truly that easy…“If it seems to good to be true, it probably is”

Investors need to take a step back and not allow ‘Mr. Market’ to play with their hard earned dollars and take a look if these funds are in fact too good to be true.  While the underlying premise of the fund appears sound, investors definitely need to kick the tires on these funds before buying them.  The typical Target Fund intends to be much more aggressive in the early years and as the years pass and the ‘target date’ approaches, they will become more conservative.  They do this through the asset allocation within the fund. Simply put, in the earlier years the portfolio has a higher percentage in stocks which then get trimmed with a reallocation and more exposure to fixed income or bonds.

Sounds perfect doesn’t it?! Continue reading →