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Subject:  Trading Bond ETFs Date:  1/5/2013  4:02 PM
Author:  globalist2013 Number:  34602 of 35924

The premise of this post is simple. You buy bonds to make an investment. You buy ETFs to do a trade.

As I have been whining for over three years now, the low-hanging fruit is gone if you’re trying to buy fixed-income assets at a sufficient discount to intrinsic-value to create a margin of safety. This isn’t to say that new money can’t still be put to work in individual bonds. But the game has changed, and now it’s become time to act like a trader --instead of an investor -- meaning, if you put on a position (on either market side), be ready to exit fast. That means you need tight spreads, good liquidity, and hard stops, all based on a technical game plan. Yes, fundamentals will always trump technicals. But that’s not the kind of market we’re in, nor the time-frame we’re now dealing with. Now, the game is “Shoot first, and ask questions later.” Prices (stocks, bonds, whatever) are being driven by the market’s knee-jerk reactions to the policy du jour. In short, now is the time to use ETFs, rather than individual bonds, to make your bets. (And ‘investing’ is nothing but a betting game in which you’re trying to put in your favor the odds of gaining more money than your risk.) In no special order, and without prejudice or recommendation, I’m going to grind through the hundred or so some fixed-income ETFs there are and try to set myself to go long or short at Monday’s opening in whatever seems promising. I’m going to do this post as if I’m making recommend