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One thing JohnChisum is that he has always been a market timer. His monthly subscription newsletter is called market timer. So I think bailing out of Vanguard GNMA's, Vanguard TIPS, and other high quality fixed income investments goes along with a Marketimer, even though market timing is usually associated with stocks. Actually, he's timing the bond market in a sense.For all the years I listened to Brinker, and that amounts to around 15 years, he was very much the "stay the course" advisor. Perhaps his change of stance is reflective of a new investing environment we now face. Since 2008 it has been fast changing.
@Jim0445, yes, in posts to JohnChisum I went over this. He sold his Vanguard GNMA holding quite some time ago, because he is convinced interest rates will rise and any bond fund with a significant duration will do very poorly. Currently the Vanguard GNMA fund has a duration of 5.8 years. Brinker has an average duration of 1.1 years on his Income portfolio.I'll have to listen to him again. I'm sure I can listen on the internet somewhere.
You can listen to the archives on ksfo.com
Choose Sunday from 1-4 pm. There is a 7 day archive of all the ksfo.com radio programs. He did talk about bonds today. Actually, you can skip 3-4 pm if you are mainly looking for his info on bonds, because 3-4 pm is an interview with a guest author
Bob Brinker is now recommending bond funds with shorter durations than the GNMA fund. The average duration is just a little over 1. His logic is that, in an improving economy, he would rather have credit risk than interest rate risk. He's actually going against the advice generally given by Vanguard (to stay the course in total bond market index) and Jason Zweig and I'm sure others. I like Brinker as well and would welcome the opportunity to dialogue his advice.
@expatsp: EDV has a duration of 24.9 years! So if you are in that fund and interest rates go up 2%, the net asset value of that fund goes down by 50%. That's some serious stuff.......for that reason, I would never invest in anything like that.......well, unless we had a repeat of September 8, 1981, when the 10-year Treasury had a yield of 15.59%......remind me then, and I'll buy an extended duration Treasury!
You can buy short term Treasuries, Intermediate term Treasuries, Long term Treasuries, etc. Or you can buy individual Treasuries at any place from less than one year all the way out to 30 years.
I wouldn't count on people getting interest rate calls right, or any other predictions right, at least not on a consistent basis. They can certainly get a lucky one or two.
Another option for fixed income money is to go with an online FDIC insured bank and accept anywhere from 0.87% at Ally Bank to 0.95%, and have instant access to your money, and total safety. Of course, that's all you are going to make. But it does diversify a portfolio that is 85% stocks.
He only went into funds like OSTIX due to his conviction that interest rates will rise and traditional bond funds will do very badly. That's why he went into Fidelity's bank loan fund too. And Gundlach's Low Duration Bond, and Metro West Low Duration Bond. He's focused on only one thing with bonds right now: he says rates will rise and bond funds will do badly, except short duration. Now, if you go short duration Treasuries, those will do fine, but they have almost no yield.....therefore, he went into the bank loan fund, OSTIX, and Gundlach's Low Duration Bond. And his average duration of 1.1 is about as low as you can get. Fidelity Floating Rate High income has a duration of something like 0.24 years, so a hefty weighting to that keeps his duration very low.Well that's interesting. He was against junk bonds back when but of course stocks were the sure bet too. OSTIX sounds like ASDVX which I own. He is the king of the $cost avg.
@JohnChisum: you bet I remember his QQQ buy signal! I made the mistake of buying on that signal! And I still hold a chunk of those QQQs in my account to this day!"do you still listen to Bob Brinker. I listen to him every Sunday for the full 3 hours. Maybe we can share some Brinker stories....."
@rjb112
I don't listen to him any longer and haven't done so for several years now. Do you remember his QQQ buy signal? That was before the tech crash. I was a subscriber and got the bulletin in the mail. It seemed to go against everything he had preached on his show and besides that, the bulletin was on a plain sheet of paper, not even his letterhead. At first I thought it was fake.
I listened to him for a few years after that but he would never talk about that QQQ debacle. During the 90's he had a great show and some excellent advice.
Yeah, micro and growth. I used to own this fund very long time back and sold long time back, after concluding my WHEN vs WHAT mantra. Not sure if you own this fund, but we take diversification to extreme when we think about such funds. On one end I do own BRLIX. Next correction I plan to buy BRSIX - the other end.BUFOX hammered ytd...negative 13.62%! Ouch!
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