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URL:  http://boards.fool.com/hedging-a-bond-portfolio-30678170.aspx

Subject:  Hedging a Bond Portfolio Date:  5/10/2013  5:41 PM
Author:  globalist2013 Number:  34923 of 35662

I screwed up majorly today by not paying the least bit of attention to the price for gold. http://stockcharts.com/h-sc/ui?s=IAU&p=15&yr=0&m... That's inexcusable. I should have been in there buying. I could have closed the day with at least a dime a share. But I'll offer excuses nonetheless. Wednesday, I made 389% (ann.) on a Penney's bonds. And this morning, as I marked myself to market, I hit another equity high for the year, which has been happening two to three times a week for a couple months now. When the financial weather is the equivalent of perpetually blue skies, it's hard to turn one's thoughts toward the yet unseen storm clouds coming. But only a fool doesn’t fix roofs and windows while the weather is good, and I have to admit to being one.

I take my bond stuff seriously and treat it like the business it is. Every day, I’m in the market scanning for opportunities. Every day, I’m doing the back-office work I need to do. Every day, I’m trying to push what I know of investment theory a bit further. But I’m treating this trading stuff like a hobby, not a business, and that’s going to bite me in the butt when I need those skills to implement the hedges required to protect capital. I need to be able to put on and take of hedges as intuitively and reflexively as I can do bond longs. Scan, vet, execute. Scan, vet, execute, and then get up the next morning and do it again. I don’t give a crap how many pennies I lose learning how to do it. I need trading skills to be in place so I don’t lose dollars. When markets crash, and they will soon enough, I need to be ready to act fast, accurately, and without fear.

I learned to invest in junk bonds by investing in junk bonds. At first,