Equity and ETF Models
A few weeks ago, we took a tax loss in longer-duration bonds (EDV – Vanguard Extended Duration) and swapped it into the iShares 20+ Year Treasury Bond ETF (TLT). Since that swap, the position is up more than 5.5% and is approaching more extreme overbought conditions.
Today, we are taking profits in TLT, reducing the position from 5% to 4% of the portfolio in anticipation of a reflexive sell-off in bonds, particularly if the Fed is more hawkish this week or the next inflation report prints “hotter” than expected.
If a sell-off occurs, we will add back to TLT and take it back to our target weight of 5% in the future.
Equity Model Trades
- Reduce TLT to 4% of the portfolio.
ETF Model Trades
- Reduce TLT to 4% of the portfolio.
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Lance Roberts is a Chief Portfolio Strategist/Economist for RIA Advisors. He is also the host of “The Lance Roberts Podcast” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter, Linked-In and YouTube
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