Resetting Bond Holdings to 30%

Since I began this blog I have made eight trades. Two of these trades, in the postmortem, look like bad calls.

On 13th June I increased my bond holdings from 30% to 40% because I saw a decline in stocks. Stocks rallied 3% in the following month.

Then on 25th July, after missing a stock market rally, I reduced my bond holding to 19%. Stock markets retreated 12% in the following month.

In hindsight it is easy to see my mistake: I was buying something because it had increased in price, rather than the reverse. This is precisely what Benjamin Graham advised us not to do. Worse still, I had deviated from my own Investment Policy.


It is interesting that the only good call I have made when trading the bond fund was back on 13th May, when I initially set my bond holdings to 30%. I did this not because of prices or market sentiment, but because of my Investment Policy: to hold between 25% and 75% bonds at any time. I will return to this policy and keep 30% of my portfolio in bonds.

  • BUY Bond Fund @ $210.39
  • SELL S&P Fund @ $93.84


One month after these trades, on 25th September 2011, this looks like a good call. Both funds have advanced around 0.5% but, more importantly, my bond fund is at an appropriate level within my portfolio and in-line with my Investment Policy.



One comment

  1. Pingback: Reducing Bond Exposure | Dataclutter

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