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Author: Taxedout Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75634  
Subject: Timing Diversification Date: 10/9/1997 12:41 PM
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If one owns a considerable amount of muni bonds, but instead wants to replace them with solid high-growth company stocks (to be held long-term) sometime before 12/31/97, what is the best alternative:

(a) Sell all the bonds at one time and re-invest in stocks immediately thereafter; or

(b) Diversify the timing of sale and reinvestment by selling and reinvesting, say, about 1/3 portion each over the next 3 months?

Does the answer depend on if one's outlook is bullish for stocks in the near-term?

Also, if option "a" is recommended, and one's outlook is bullish for the near-term, would it be better to sell and reinvest now rather than closer to the end of the year when stock prices might be even higher?

Possibly one reason why it might be better to hedge the timing risk under option "b" is based on the principle of dollar cost averaging. Option "b" might hedge against the risk of a sudden market movement like what occurred 10 years ago in just one day. However, I believe rayvt said in one of his messages that one might as well invest when the funds become available rather than spreading out the timing risk.

Thanks for your thoughts!

Taxedout
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Author: nbkciw1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 495 of 75634
Subject: Re: Timing Diversification Date: 10/22/1997 5:30 PM
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