Friday, March 16, 2012

Bonds Off The Cliff (It's Embarrassing)

Yes, it is embarassing. I wrote in my "Accual Portfolio Review", that I'm planning to reduce fixed income part and increase stocks. Well, I increased stocks positions, but failed to reduce bonds. More to the point, I added to BlackRock Long-Term Municipal Advantage Trust (BTA) position. The idea was to move money from Nuveen Municipal Market Opportuninty Fund (NMO) to BTA, taking advantage of higher yield and better fund management.
Well, I was wrong. Very wrong. The idea in portfolio review was right, I just failed to implement it. Besides, I missed the fact that muni CEFs had parabolic charts lately. All of them. You don't buy parabolic chart, you sell it.
It looks like all bonds (starting with Treasuries) are down because of increased inflation expectations. I still don't see where inflation might come from (China?). And I think 10 year Treasuries will be back to 2% this year. I don't want to sell any muni CEFs now, price is too low and yield is good.
The lesson: I need to act on my plan, and act fast. Markets are faster nowadays, and if you are too late to act, you missed opportunity, or even worse, you lost money.
Disclosure: I am long BTA, CEV, MZF, NMO.
Additional disclosure: Positions can change any time.

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