what would you do

T

tradekilla

i am just curious what people think.. our little group had total different opinions on those 2 questions.

so if anybody could answer those to questions and why would be great

1)
A prospect wishs to invest some money overseas. The reference currency is EUR. He would like to achieve 4-5% p.a. Which Invest proposal (allocation of the assets) would you recommend him? What is it your reasoning?

2)
An existing client having an USD bond portfolio complained about the current low yields he can achieve, as the current interest rates are very low. What would you recommend him? and Why?
 
I started selling the bonds I wasn't using for income at 126, obviously too early.

Reallocated 10% of liquid net worth to VWIGX
and another 10% to VFWIX
so that takes care of my international exposure

The rest is sitting in cash or my trading account. I was DCAing into the S&P up until 1306. I'll resume that on a decent pullback. (I already have enough in the stock market)

Too much cash (USD) forced me to hedge in a little GLD.

Only thing that is making money now is the trading account which is exclusively in forex, Probably both would do best just trading EUR/USD. But long or short? That is the question. I was short, now I'm long, and I'm looking for a place to take the other side. Not a good time to be sitting in anything too long.
 
Quote from tradekilla:

try to answer both questions.. and why.. really curious
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I did, the guy in bonds should do what I did, the guy who wants international exposure should do what I did, and both should do what I do
 
Quote from tradekilla:

hehe nice oldtime

well if anybody has good answers for 2 questions keep going
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what the heck do you want? How more explicit can I make it? Is this some kind of game? Are you just looking for the right answer?

How plain can I make it? Guy 2, has money in USD bonds. Same here and same with almost everybody. What to do now? No yield, no cap gains (although this year has been good). Sold all I was not using for income and added to stock portfolio until 1306, now sitting in cash. Hedging some of that cash with GLD. Trading forex with the rest. What is it about that you don't understand?

guy 2, not clear if he is US or EUR. wants international exposure, either way so did I, so took 20% and put it in two international mutual funds. Is there something about that that makes it not a good answer?

I can make it simpler if this is still over your head.
 
Quote from tradekilla:

no no just looking for different answers.. didnt say there is a right answer
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well, this day and age, it's hard to be responsible without having some kind of currency component in a portfolio. When I sold the bonds and started trading forex, I realized that money in cash (USD) was not just sitting there. It moves everyday. It's like having a scoreboard that constantly changes no matter who scores the point. So if 1. is based in EUR and 2. is based in USD, before they actully know who made 6% they will also need to know what EUR/USD did. Making 6% a year is better than nothing, but it doesn't really mean much if the base currency is also going down 6% a year.

ok, I'll let it go, hope you get some better replies.
 
An existing client having an USD bond portfolio complained about the current low yields he can achieve, as the current interest rates are very low. What would you recommend him? and Why?
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i would ask him about his risk tolerance first. no risk, decent return times are over long time ago..gotta have balls or stick with 0.5% at bank

second question would be time frame. he probably can get some decent yields with long term corporates,but can he hold them till maturity and not looking at the prices,if rates spikes up?
 
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