July was good to the market
Although like most people we are down after the losses in 2008 and 1Q09, July has been 'off to the races' with good yields on high-quality corporate bonds and corporate stocks battling back from the March lows.
We were very pleased to see a solid double-digit gain in our portfolio for 2Q09. Every little bit helps, for sure! I do agree with some of the experts that the market has gotten a little ahead of itself, with quite a few days' upswings due mostly to traders having to cover their shorts, rather than any real stampede back into equities.
One thing that really surprised me was that the sole fixed income bond fund offered by DH's pension fund (where all our portfolio is; we have no taxable accts) had a 7.8% gain in 2Q09. That very bright fund manager picked up attractive yields on intermediate-term Ford and AT&T bonds. I'm so thankful he didn't load up on GM bonds instead!
Just to be on the 'better safe than sorry' side (yeah, I'm a slow learner, LOL - should've moved our money back in Oct 2008), I took advantage of Friday 7/24's sideways move to take some profits and throw 30% of the portfolio into cash. I will probably hold it there for three months or so and look for a good dip in the market to buy back in. This is unusual behavior for me; I am normally a buy-and-hold type.
Still, I felt this was a good time to nudge our portfolio in a slightly more conservative direction. I only check our allocation balances once or twice a year, and noticed in early July that our preferred allocation had gone pretty far out of whack in a couple of sectors. So it was time to make a few changes based on what I thought the market might do in the next 2-6 quarters. Time will tell if we guessed right - the crystal ball is pretty fuzzy these days for everybody.
DH is still working/contributing, but he's counting the days now till retirement. We're aggressive investors so the portfolio is still 50% domestic and international equity funds. This isn't money we need to live on, so we are able to take more risk with it than if we needed to preserve capital for taking distributions.
What have you changed in your portfolio in the last six months due to the increased volatility of the markets?