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Subject:  Bond/Tech Stock Hedge Portfolio Date:  3/3/2000  2:18 PM
Author:  pauleckler Number:  19767 of 78166

I would like to claim I came up with this by astute planning, but actually in my case it is happenstance. I have an IRA account thats about 70% bonds and 30% technology sector funds. Interesting things are happening in this account. Bonds were clobbered last year with rising interest rates (many bond funds had negative returns last year), but still my account balance keeps rising because the tech funds are doing so well.

If stocks crash, it is likely the Fed will quickly drop interest rates to stimulate the economy. This should mean that much of the loss in stocks could be made up in increased bond value. Ie, this is a hedging strategy. Moreover, if the tech funds do well enough this combination has potential to meet or exceed S&P Index fund returns.