Weekend Report
by Dr Invest

Stay Alert!  The market is constantly changing and in ways that are totally unpredictable. If I said that I wasn't NERVOUS, I would be lying. The FED has been purchasing 10 year treasurys, driving down the yield. The yield on 10 year treasurys sits at 1.6% but many analysts believe that they will be eroded from 1.6% to 1% by the end of the year by the FED's quantitive easing.

For us, that means that purchasing treasurys will NOT BE A SAFE HAVEN from market downturns. This is the very thing that the FED wants, that is to drive investors back into stocks. Peter Schiff said on Tuesday, U.S. Treasurys are JUNK! This means that if you have purchased BND and TIP exchange traded funds, you need to be prepared to minimize your losses. USE A STOP-SELL to limit your losses.

In May, I purchased BND and TIP. These bond funds rose 1.26%. I added another equal purchase of TIP and BND on the 1st of June. Look if you buy $100 of a stock that grows 1.26%, and then a month later buy another $100 the stock, your total gain on that $200 is .63%.  Since, in this case, you have already a .63% total gain in your portfolio, you would deduct .63% from 3%, leaving you to set your STOP-SELL at 2.37% below the purchase price of TIP and BND in June.

Odd behavior in the market is the sole reponsibility of the FED. The FED has already messed up stocks and now they are intent on messing up bonds. As of this weekend, my TIP and BND bond portfolio has declined to -.27% in June.  This is not reason for alarm, but does put an investor into the ALERT MODE.

My View

My best guess is that bond funds could remain weak until the end of July and rebound in August and September as the market falls further, but these are guesses based on 30 year seasonal charts. Weakness in Europe could push the market into an early decline but I expect the seasonal trends to prevail.

The trading rules of the Ivy Portfolio is to wait until the 1st of the month and then see if the price of the ETF falls below the 10 month simple moving average. We will remain alert this coming week to see if there is improvement in the TIP and BND exchange traded funds.

Meanwhile, we will remain on ALERT, setting our STOP-SELL on TIP and BND and hoping that the continued FED TWIST doesn't ruin even the minimal returns that come from a Bond Portfolio.  Welcome to the real world of investing. When the market is climbing, everyone is a wise sage; but when the market is diving, wisdom is getting out before real losses set in.

Note: the above article is for entertainment purposes only and not to be used as investment advice.