Bond funds are used to minimize losses when the equity
markets go down. Unfortunately we have been sitting on a bond bubble and bond
funds appear to be collapsing as we speak. Bond owners beware. No one can
really predict the extent of any down move and it is best to stand aside when
these things happen. If there has been any help for the typical 401K fund
owner, it is that they were also been in equities and US equities have done
very well this year.
Back to bonds – earlier in one of my posts I stated I was
exiting bonds. I also had exited GLD. Both have fallen precipitously. Friday
bond funds all gapped down. Yes gapped down. Can’t remember the last time bond
funds made that kind of move. Why did that happen? Employment numbers came in
at 195,000 or thereabouts beating all the pundits’ pessimistic predictions
(including mine). Yes, we really do have a recovery and have been adding jobs
ever since President Bush left office. I am not taking political sides, just
marking when we started adding jobs. A stronger economy in the US must mean that the Feds will get us off that QE drug we have been on and bond buying. It
looks like the patient just might make it on his/her own. I sure hope so. Add
to that the coming shale oil and natural gas boom, and I would say we have a
reason to be positive about the economy here over the next few years….
Attached is a chart on the bond fund TLT.
I missed a beautiful move on the inverse bond fund TBF.
Unfortunately I was tied up in Canada
on a work assignment and I missed it… excuses don’t make money…
My SPY chart still shows some more strength required in the move up before we are convinced that the direction is changing.
Next blog I will write about my “hyper” trading experience… using 1” charts on NQ Nasdaq e-mini futures.
...using paper money not real stuff. Got a lot of off-hours work to do to perfect it; but does it have some potential... >100% returns!!
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