Re: Bond duration compensation
Posted: Wed Jan 16, 2019 2:49 pm
Thanks for your post Kevin K.
Because of concern about long term bonds, I adjusted my portfolio by lowering duration. Currently you gain very little by holding on to long-term bonds while the potential downside risk is incredible. It's probably even worse for a Eurozone PP, like mine.
Maybe rates will stay this low for 20+ years, that’s possible of course. But if they don’t it’s possible to suffer very severe losses. Especially if stocks and gold decide to go down as well.
I couldn't feel comfortable anymore by holding on to my eurozone bonds so I've traded them for short-term CD's. Because the duration of my fixed income is much lower now, I've lowered my gold exposure as well, and increased the equity part a bit.
I've basically transitioned into a low duration Desert Portfolio now. Not perfect, but it definitely feels safer than my previous allocation.
Because of concern about long term bonds, I adjusted my portfolio by lowering duration. Currently you gain very little by holding on to long-term bonds while the potential downside risk is incredible. It's probably even worse for a Eurozone PP, like mine.
Maybe rates will stay this low for 20+ years, that’s possible of course. But if they don’t it’s possible to suffer very severe losses. Especially if stocks and gold decide to go down as well.
I couldn't feel comfortable anymore by holding on to my eurozone bonds so I've traded them for short-term CD's. Because the duration of my fixed income is much lower now, I've lowered my gold exposure as well, and increased the equity part a bit.
I've basically transitioned into a low duration Desert Portfolio now. Not perfect, but it definitely feels safer than my previous allocation.