Today's Market
by Dr Invest

Investment time again. See the WEEKEND REPORT. I purchase 5 shares of  TIP at $114.42 and 6 shares of BND at $84.23. This means that 1/3 of our theoretical portfolio of $10,000 has been invested in BONDS. ($3,333.33 is our BOND position.) As of today, the total BOND portfolio has gained .80%.

To learn the details of the IVY PORTFOLIO METHOD, start reading all of May's blog. A brief summary can be found just before this article in the WEEKEND REPORT.

As with stocks, you need to set a STOP-SELL on your purchase. I set my STOP-SELL at 3% below the purchase price. (Multiply the purchase price by .03%. Then subtract the SUM from the purchase price.) I purchased TIP for $114.42. 114.42 X .03= 3.4326   Now subtract the SUM of 3.43 from the PURCHASE PRICE of $114.42. Your STOP-SELL will be set at $110.99 for all 15 shares of the TIP ETF.

You will follow this same method is calculating the STOP-SELL for BND. Don't forget this step. You want to have a plan to enter the investment purchase as well as a plan to leave the investment purchase. Friday, employment figures will come out. Everyone believes that the report will be BAD! The only hope is that the figures are not too bad. This will be a short week, so investors will be sensitive about how they have positioned theirselves for the upcoming bad news.

BOND investments could remain choppy through July, with some rises and some falls in price. August and September will likely bring the best climate for BONDS to increase in value. Don't be impatient, wait for the performance that comes from BONDS. Bonds will NOT quickly rise or fall. A 6% return by the end of the year would be commendable and beat the interest from a Certificate of Deposit at a bank.

BOND BUBBLE

You must always be ALERT that even BONDS can reverse their gains. This is why a STOP-SELL is of great importance to your investment strategy. Once you see a 5% return on your BONDS, we will move the STOP-SELL closer to the daily closing price. This will help you maximize your return from your BOND investment. Bonds may stablize and the STOP-SELL may never be used, but always have the STOP-SELL IN PLACE.

With smaller downward moves in the market, BONDS will continue to grow in price. HOWEVER, when a serious recession/depression arises, both STOCKS and BONDS decrease until the OVERVALUED  condition is erased from the market. So BONDS are not always SAFE and can be equally as volatile as STOCKS. There have been suggestions of a BOND BUBBLE. This means that too many people have purchased bonds at very low yeilds, when inflation begins to push up the yeild on BONDS, people will want to sell their worthless bonds to buy the bonds that bring a higher yeild. If you are holding a BOND POSITION when people begin selling their bonds, the price of bonds will begin to decline dramatically. Your STOP-SELL should limit your losses if this occurs.

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