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Strategies & Market Trends : Trader J's Inner Circle -- Ignore unavailable to you. Want to Upgrade?

To: Trader J who wrote (56162)	5/8/2024 4:48:28 PM
From: Trader J	Respond to of 56532

Fixed Income (Bonds): For those that have followed me for any length of time, you may remember that I rolled out of my bond components some time ago due to rates, etc. Obviously, you still need to have a fixed income component in your portfolio to guarantee some income while reducing the beta of your performance, especially if you're retired or later in years. The % of fixed income is debatable and I'll never be "excited" about it, but as I've aged, I've come to grips with its/their usage, need and function. In the past year, I've rolled more to CDs and money market (SWVXX) because of the increased yield (5.2%). The CDs make up a portion of my fixed income via a 5 year ladder. Again, not sexy or exciting, but it guarantees me 5 years of income while reserving 5 years of expected+ drawdowns. The long end of the CD ladder is uninspiring but necessary, especially considering where we are in the rate cycle. All cash has been rolled to SWVXX for ease, rate and liquidity. I'm about to roll OUT of SWVXX and back into a short term corporate bond fund (VCSH), yielding about 5.5% as the 30-day yield. This is an ETF with average maturity around 2 years. Yielding more than the SWVXX but that yield will come under pressure as rates decline in 2025 and beyond. But, at the same time, while the yield declines, bond action should be on the rise. I still have work to do on the correlation of our current environment, the rate ease expectations and timeline but I'm expecting to see a 5%-7% increase in bond price, even as the yields slowly decline. It's starting to look like a favorable swap out of money market into the short end of the fixed income bond plays. VCSH is the one I've become most comfortable with. Not a move that needs to be done right away but once the Fed starts moving, the clock will be ticking. Again, this is primarily for the cash portion of my portfolio and perhaps the short end of the ladder.