william the wie
Gold Member
- Nov 18, 2009
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The shake out just past is a result of wealth management accounts. Such accounts are supposed to be boring. Therefore there are a lot of matched pairs:
Stocks and industrial bonds
CDs and Sovereign bonds
and so on with anywhere from two to almost 20 different sub-accounts with stocks and bonds being the most common type. So when stocks go up there are too many shares and not enough bonds. If possible interest and dividends are used to rebalance stocks v. bonds. Normally there is a 50-50 split and a 5% imbalance will usually trigger selling as happened earlier this month. At current growth rates we should have multiple corrections this coming year. Can these crashes working in our favor?
Stocks and industrial bonds
CDs and Sovereign bonds
and so on with anywhere from two to almost 20 different sub-accounts with stocks and bonds being the most common type. So when stocks go up there are too many shares and not enough bonds. If possible interest and dividends are used to rebalance stocks v. bonds. Normally there is a 50-50 split and a 5% imbalance will usually trigger selling as happened earlier this month. At current growth rates we should have multiple corrections this coming year. Can these crashes working in our favor?