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PIMCO Total Return Instl Message Board

  • ca_resident_alias ca_resident_alias May 28, 2013 7:49 PM Flag

    I can't believe folks are panicking

    The very purpose of bonds is to ensure current income and smooth out portfolio volatility. Whereas we all know that the 30 years bond bull market probably has ended, there is no reason to think that a bond bear market is anywhere in the horizon. If yields rise too soon, US govt. can't pay the interest on the 17Trillion dollar debt. So that means, the deflation fear & QE bond buying is not ending anytime soon. If rates rise too soon, stocks will crash more than bonds. I intend to stay the course, PTTRX is a global actively managed fund being managed by Bill Gross (one of the brightest person in financial world), so they will structure in such a way, that we will still have some positive returns. It may not be double digit though in the years to come. Maintain diversification, and rebalance when volatility upsets your apple cart.

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    • Call it panic if you like.I think its just reality. The 10 yr wants to go up whether the stock market is up or down.
      Pimco has been a safe haven for many years in my 401k but I sold 110K of it yesterday and I am glad I did.
      I dont think the fund has anywhere to go but down at this time. As other posters have stated there is no other game in town right now. I certainly am not buying equities at the current market high so its put my tail between my legs into a MMF for now.

      Sentiment: Strong Sell

    • I have to disagree with your comments, it depends on the maturity time frame of the bonds themselves, really. Don't tie money up in long-term bonds and the funds that focus on them now. Shorter-term bonds and bond funds with expected maturities under five years will let you squeeze out some additional income without getting slammed when rates rise by a lot. For example, if interest rates rise 1 percent, a 10-year note can be expected to lose 10 percent of its value, while a 2-year note would lose 2 percent of its value.

      • 1 Reply to sblowmeh
      • Sir, my original post is in the context of owning PTTRX which is an actively managed fund, is intermediate in duration 4-5, is globally diversified, uses proprietary leverage, contains broad mix of types of bonds, treasuries, junk, local currency etc. I am not saying people should go out and buy 30 year T-Bonds.

        In fact Goldman Sachs analyst thinks Japan will find the 2% US 10 years very tempting and will flock to it to gain a higher yield & preserve their wealth against a plummetting YEN. So, if one wants to have bond exposure / allocation in their portfolio, there is no better fund than PTTRX. Keep in mind, you have to sacrifice some returns to sleep peacefully at night. Even the best managed company Apple can drop 50% within a matter of months. GL.

    • Very good point about the interest on the debt.. puts the FED between a rock and a hard place of their own making. If they cut back... sell off in stock will cause a flight to bonds and rates go down.. at least until the dust settles and folks rotate back to stocks. Sort of puts the bond market in a catch 22.I think the .08 correction puts this fund more in line with reality for now.

      • 1 Reply to medimg
      • "...In fact Goldman Sachs analyst thinks Japan will find ..." Goldman's recommendations to those it refers to as "muppets" has not been that profitable of late, I understand. I respect Mr. Gross and his team for their past accomplishments, but the history of investing is littered with the legacies of managers who had their success's and then couldn't invest their way out of a shoe box.

    • Stay if you like. The dollar balance of my PTTRX is now below what it was on January 1, meaning a loss for the year so far, and I reduced my exposure by 40% today. Too late, of course, to avoid today's route. PTTRX has had some good times, but it has also had some bad. I am out of equities totally, by the way. The central banks have managed to keep all of the balls in the air for quite a while- certainly longer than I thought they could, but it cannot last forever. I don't know what, and i don't know when, but something sometime somewhere will trigger the real "panic." And I think we are getting close. In the meantime, @ 54 I am where i think I need to be in regards to retirement savings so I see little need at this point to take much risk at all. So I am not going to. And as this MIGHT now be the long-awaiting rise in interest rates, staying heavy in PTTRX is proving to be a bit risky, so it would seem.

 
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