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First off, everyone wants an Apple ITouch and a pair of $125 Nikes for holiday gifts. These are both companies that we own shares in so that makes us happy BUT the point is that sometimes the drab, boring gifts are the ones that are the most thoughtful.
Give your kid a FirstAId kit for his car and you get that invincible smirk that only an 18-year old can give their parent. Savings bonds for college and you get the “where’s my Abercrombie gift certificate expression”. These are gifts that require maturity to appreciate much like certain investments of late.
We have received inquiries lately as to the performance of bonds and bond funds. They have seen some principal leakage and we expect that to continue - no full fledged bleeding just some downside to these positions. In short, we hold these investments as ballast to our equity position and while we would like every investment to be an “apple” that would be far too risky and volatile for most portfolios. We are taking heart in the fact that at this time bonds and stocks are moving in opposite directions hence stock gains are more than offsetting those minor bond losses.
We have also added junk bond and inflation protected securities to many portfolios. Ourt advice to bond investors is to “be short- be greedy”. Look for lower grade bonds and keep your maturities shorter.
Like that first aid kit, bonds take an emergency to be most appreciated (think spring 2008).
Happy Holidays