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Who sold bonds to buy cheap stocks
Old 10-14-2008, 09:34 AM   #1
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Who sold bonds to buy cheap stocks

How many sold bonds to buy stocks.

I was all in, 100% stocks by last week. I averaged all the way down and it paid off like a bandit in Fort Knox.

I couldn't resist as stocks were paying more than bonds on a return basis and the upside looked better.

Anyone else do the same?
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Old 10-14-2008, 09:48 AM   #2
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I did some. But my bonds were getting killed too - just less killed than stocks.

Audrey
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Old 10-14-2008, 09:57 AM   #3
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I sold some bonds to rebalance my AA...glad I did. At least one good thing from last week's drumming.
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Old 10-14-2008, 09:59 AM   #4
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On Friday, I did some rebalancing by moving 15% of my 401(k) assets from a bond fund to an S&P500 index fund. That's not quite what you did. I think many folks reported on this forum that they rebalanced recently.

I haven't looked, but I don't think yesterday's 10-20% increase (depending on asset class) made up for the loss of the week before.
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Old 10-14-2008, 10:13 AM   #5
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I've recently changed my asset allocation from 50/45/5 to 60/35/5 with blessings of my guru, Jack Bogle.

In his book, Common Sense on Mutual Funds on page 66 he states:

"There is a third option, but only for bold and self-confident investors. It does not abandon the "stay the course" principal, but it allows for a mid-course correction if stormy weather threatens on the horizon. If rational forecasts indicate that one asset class offers a considerably better investment opportunity than another, you might shift a modest percentage of your assets from the class judged less attractive to the class judged more attractive. This policy is referred to as tactical asset allocation. It is an opportunistic, transitory, aggressive policy--if skill, insight, and luck are with you--may result in marginally better long-term returns than either a fixed-ratio approach or benign neglect."

"...That is if your optimal strategic allocation is 65 percent stocks, limit any change to no more than 15 percentage points (50 to 80 percent stocks), and implement the change gradually."
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Old 10-14-2008, 10:25 AM   #6
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I did some rebalancing on the way down (as discussed here: Did anyone buy this week?) and will continue to buy more equities on dips. The core of my portfolio is made up of Vanguard Wellington and Vanguard Wellesley so I am sure that they have been busy doing a lot of the rebalancing for me...
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Old 10-14-2008, 10:25 AM   #7
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I'm shifting from bonds to equity to rebalance, but am doing so using a dollar-cost-averaging method. My hope is to be in balance over the next 12 months - less if the market rebounds.
I'll sleep better this way.
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Old 10-14-2008, 10:30 AM   #8
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Yesterday I sold some bond funds to buy stock. Not a lot - only 1% of my portfolio. I was going to stick to my set schedule of rebalancing but this seemed a good opportunity for some market timing!
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Old 10-14-2008, 11:32 AM   #9
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I also rebalance on friday.

I had moved some stocks into bonds early in 2008 to get in balance.
Friday i put the bonds back into stocks. (to get back in balance)
(picked up some real bargains, compared to what i had been paying per share) But only time will tell.
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Old 10-14-2008, 11:44 AM   #10
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To hell with that

I sold cash to buy cheap bonds
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Old 10-14-2008, 08:27 PM   #11
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I rebalanced last Wednesday.

I'll let you know in a couple of years how "cheap" the stocks I bought were.
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Old 10-14-2008, 09:21 PM   #12
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Didn't sell bonds, but did some blatant day-trading Friday and Monday, and damn proud of it.

In one of Bernstein's books, he said that once a generation, the market goes off its rocker and I figured Friday was the day. From here, who knows, but it was fun.
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Old 10-15-2008, 11:03 AM   #13
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I wanted to, but held firm. Had about $20K in G fund in TSP (pretty much 1-3 day special gov't bonds = cash) I was going to transfer into the S&P 500 fund.
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Old 10-15-2008, 12:58 PM   #14
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Moved some cash to both index ETFs (last Friday) and TIP at $91 and change (Monday)...
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Old 10-15-2008, 01:02 PM   #15
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Anyone that missed the chance to sell bonds and buy stocks, or use their "dry powder" during the steep sell-off, will probably get another chance.
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Old 10-15-2008, 02:24 PM   #16
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Moved some bond fund money to stocks (SPY ETF) last Friday. Moved some 'safe' bonds to Junk bonds yesterday, so that my average div pay out is ~ same.

That junk bond fund (SPHIX) seems to be about 1/2 the volatility of SPY. Ylds ~ 9.5% based on current NAV. Geez, even SPY is paying 2.5% yld.

Also tried to raise a little cash by selling OCT 101 Calls and OCT 103 Calls on SPY. Got $1.15 and $0.75 for 'em when SPY ~ 95. Seemed smart until I saw the futures at 106 (!), but SPY now back to 94 with just two more days to expiry. But anything can happen in this market.

I probably shouldn't give all this detail, so that I can lie about it later

-ERD50
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Old 10-23-2008, 01:36 PM   #17
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Quote:
Originally Posted by ikubak View Post
Anyone that missed the chance to sell bonds and buy stocks, or use their "dry powder" during the steep sell-off, will probably get another chance.
Looks like today might be the day for me. Still keeping a close eye on things, and as you said, there will probably be plenty more chances beyond today, but it's damn hard to resist the temptation to adjust the allocation to be a little more aggressive (esp. into small caps that are just getting killed right now)
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Old 10-23-2008, 02:03 PM   #18
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Quote:
Originally Posted by ERD50 View Post
Also tried to raise a little cash by selling OCT 101 Calls and OCT 103 Calls on SPY. Got $1.15 and $0.75 for 'em when SPY ~ 95. Seemed smart until I saw the futures at 106 (!), but SPY now back to 94 with just two more days to expiry. But anything can happen in this market.

I probably shouldn't give all this detail, so that I can lie about it later

-ERD50
Yes, responding to my own post here...

Well, all those calls expired worthless, so I collected the full premium. All this volatility has me playing a bit more, trying to squeak out some small gains. I sold a variety of calls against my SPY holdings Monday ( 105s, 108s, 110s, mostly 114s), when the market was up for the day. I just bought them all back for about 1/4 of what I sold for. My thinking is, if SPY has another jump up (let's hope so!) I can see if selling them again, at higher levels makes sense. If not I still locked in 3/4 of my (small, 3/4%) profit. And I may be able to repeat before the month is out, but the premiums will decay with time.

OK, we need a market rally now that I am no longer capped. I said so.

-ERD50
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Old 10-23-2008, 05:02 PM   #19
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I've made a couple of small cautious buys when the DOW was below 9000. Today I moved 2.6% of my bond money into stock.
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