Eureka Correspondence

Cutting back bank exposure and asking for more about bonds.

Cutting back bank exposure

Just a big thank you to Alan and Eureka for banging about being too exposed to bank shares (see Beyond banks: Other yield ideas and Has the hunt for yield peaked?.

At one stage I wrote a letter defending them, however, your words of caution were always in the back of my mind and six months ago I started  reducing my exposure. You saved me a lot of money this week. Thank you again, very much.

Mark Umbers

More about bonds

Hello Alan & staff! I will love to read about your new reports from July this year, especially regarding listed investment companies and model portfolio. You’ve heard all accolades but I add mine:  admire your QUALITY reporting … mature, knowledge, experience, serious, light side, and the right amount of depth.  We’re all exposed to too much other stuff.

May I make a request please: Can you please give us another BURST ON BONDS. Most of us with $1m in super need to preserve capital, but also need to earn 5 per cent-plus for maybe 20 years … So allocation to bonds and cash is say 50 per cent.

As you’ve pointed out, recent large bond movements are very significant. But this significance is hard to understand. Can you give me/us a few (much valued) comments and opinions please?

Peter Busch

Editor’s response: Thanks for your letter. Our fixed income expert Philip Bayley has written recently about bonds (see Our annual bond portfolio review and Measuring risk in the fixed income market). Alan Kohler has also written about the bonds market recently.

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