I recently took a fairly significant TIPS position thinking I would leave it in place for a long time and collect the dividends. I bought at $99.50/sh. I did a fair amount of research on this prior to making this purchase, my first in TIPS. On this message board, it seems some people are using TIPS as a trade, in and out. I'm curious as to some opinions about that strategy versus leaving it as a long term hold. For certain inflation is ahead; just a matter of when it hits.
Not sure I agree with your rebalancing. On the face of it it sounds plausible. However, the stock market is not beholden to conservation laws like gravity. A stock can go up and keep on going up for a long time - like years. Likewise a stock that has tanked can stay tanked for a very long time. So rebalancing can cut your winners short and shift money into losers.
PS - The "Buy and Hold" strategy I advocate includes periodic re-balancing. That is, having set various allocation percentages for portfolio investment, an annual adjustment is required to keep the allocations in balance. Thus one would have been a net seller of emerging markets for the past years as the gains there outpaced other investments.
Taking money from winners to put it into losers sounds illogical but over time, it is the path to good portfolio growth because it effects a basic investment principle: buy low, sell high.
1) I am not telling him what to do
2)you sound like you work for a fund. the kind who gets you to buy in and never sells. I have had enough of that
3)even if you are a buy and hold investor, entering a trade at a time that is more likley to get a return after the intial trade is a good policy
4)any information someone can give regarding a trading method only helps me in the long run.
you applcy research,
5)the markets can act irrational for longer that you can stay solvent,
The average investor should follow a buy-and-hold strategy. No one has a crystal ball, but we do know the general trend of the market is up ovet long periods of time (10 years plus). You get close to 10% in stocks and 7% in bonds.
A portfolio of ETF index funds in bonds, (US and foreign, corporate, high-yield anbd TIPs) re-balanced once a year, will make you comfortable. Add some equities (US total market and foreign total market) and you'll be a little more comfortable. Much better returns than having your money in a savings account or CDs and much less risk and agita from chasing the end of the rainbow.
Perform some research and study index funds and ETFs, the only sensible investment products for folks who can't spend hours each day analyzing their portfolios and the trend of the hour.
Yes. It means that it is possible that the 200sma may turn upwards sometime in next 50 days. The more of these moving averages are turning upwards the more likely it is that TIP attracts institutional investors. Crossovers are significant too because some people trade the crossover of one moving average over another. The 50 crossed above the 200 in early May and has continued rising to put some space between them.
I go with the out of the money calls. I think it could be a long slog back to 103.5. If you look at the June CALL/PUT ratio is 2:1 on the 102 strike and 1:2 on the 103 strike. So option traders seem to be betting on move above 102 and discounting a move above 103 before the June expiration. The front-month volatility is nose-diving from May to June (28% vs. 8%) so look for a lot of doji-like days.
Look for macd and stochastics signals on a daily chart to reach a swing high/low. These have been fairly reliable trade signals. My preference is to sell option premium. For instance I sold cash-covered May 100 PUTs last week and then the Jun 100's today and plan to hold to expiration. On the upside I will be evaluating the macd/stochastics signals as the price returns to 103-4 area and sell covered-calls there. If the timing is right I look to close the covered-calls on the ex-dividend day.
this is a link to a CPI-TIP treasury report today.
Do you own the bond or an ETF or mutual fund? How did you decide on the bond if that's what you bought? coupon, maturiy, inflation index etc?
I think most of the people who inhabit message boards are traders; the buy and holders just aren't that interested in what their peers are thinking day-to-day. I have 20-25% of my investment money in TIPs. They are the only "buy and hold" part of my portfolio. When they went down to 90 I was perplexed, but I held on, assuming they would recover when people realized that inflation wouldn't disappear for the next 5-10 years.