I can still kick myself for not jumping in at 100 and later at 105. Now that BOND has backed off 110 any feeling for if its too late to jump in? Is 115 or 120 in the cards for 2013? It makes me nervous how old Bill Gross is starting to look every time I see him in an online video.
So as I understand as long as interest rates are low then any volatility in the market results in investor leaving equities and BOND is good shelter so goes the demand share price goes up. Thats what's been drivng share price from its initial offering around $96/share. A market dip (fiscal cliff ) should drive this share price up. When the Fed begins to increase interest rates (2014, 15?) or some time just before that other bonds are going to be more attractive than the ones BOND holds so demand for BOND is going drop and so goes share price. I'm planning to move from BOND into equities gradually in the next market pull back 15%.
axsjpinaz, I don't think you are correctly understanding how the ETF works. Current NAV is 109.00 and that is the actual value of the assets held in the fund. Market price is 109.09, a .09 premium over NAV. Market price can be higher or lower than NAV, dependent on current perception of trend. Over time, the NAV has risen from 96 to present 109 because the managers are buying and selling bonds in the fund, and making money at it! A new SEC ruling may be good for BOND because the managers will also be able to use derivatives (options, swaps, etc.) in the ETF, like they can in sister mutual fund PTTRX.
I'm with you on moving more into equities this year, but BOND will still be OK because of excellent management. When interest rates start rising they will always be exchanging assets to ensure some yield. Total return will not be as high, but will still be positive.
With age comes wisdom.
People are pulling their money out of bonds now and investing in overseas equities. But the majority is usually wrong. It all depends upon how long and effective the Fed will be in the future to hold down interest rates. They can do it for awhile but I don't see a good ending. However, our stock market is selling at a forward PE of 13; there's a good chance that the stock market will advance by at least 10% in 2013.
Here's my strategy . I'm about 60% bonds 15% cash since the run up after 2008. I'm waiting for the next big market pullback, in 2008 I bought stocks that I would have had to hold for 20 years to see that kind of return. Fiscal cliff, Euro, investors continue to leave equities and are running this bond fund up, I know its going to sink when interest rates rise and I'm not going to try and time the market I'm looking for a 15% pullback to start moving out of PTTRX and into equities. Rule of thumb your % of bond investments = age, at 54 I'm not going to leave BOND all together just taking some of the gains. On the down side if there isn't a pullback in the stock market I get to keep my money the downside risk is better than equities. My $.002 worth.
New York CNN Money:
U.S. stocks are expected to grind higher in 2013, but don't expect another year of double-digit gains.
According to more than 30 investment strategists and money managers surveyed by CNNMoney, the S&P 500 should finish 2013 at 1,490, up 4.5% for the year. While that's not anything to scoff at, it's a far cry from last year's 13% increase.
4.5% I think BOND can beat that without the downside risk. JMHO
I'm close to 60% bonds but until now I've done almost all corporates BBB+ to AA that I've chosen myself. I have a few GSE bonds as well but no bond funds. But now, I have to literally go out 30 years to get 3.5% on a Shell or Pepsi or something of equivalent quality. I feel like a classic schizophrenic trying to chase yield without being pushed to far up the risk curve at the same time. What I'm hoping for from a Bill Gross is that kind of magic that can sidestep the downward pressure in price if in fact I held the fund into 2014 or 2015 and interest rates move up a percent. My alternative is foreign equities with decent dividends, reasonably stable currencies and no foreign withholding.