Liquidate Bond VBILX now or wait?

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stocknoob4111
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Liquidate Bond VBILX now or wait?

Post by stocknoob4111 » Tue Mar 24, 2020 7:41 pm

I have been toying with the idea of liquidating this holding due to the risks. VBILX (Vanguard Intermediate Bond) has 40% corporates (BBB - essentially junk in my opinion) in it which risks implosion. However now that the Fed has pledged to buy corporate bonds I am wondering if the risks are no longer present. The fund is still very sharply down from it's peak but it's gone up a bit in the last 2 days. I am wondering if I should just sell it.

Absolutely kicking myself for not selling this junk at the highs (8% higher than current!) just 2 weeks ago (I dislike selling anything in my portfolio so I procrastinated)! I absolutely wasn't aware of the risks and thought the price movement was just based on the Intermediate Term Treasury, lesson learned :oops:

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alpenglow
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Re: Liquidate Bond VBILX now or wait?

Post by alpenglow » Tue Mar 24, 2020 7:45 pm

stocknoob4111 wrote:
Tue Mar 24, 2020 7:41 pm
I have been toying with the idea of liquidating this holding due to the risks. VBILX (Vanguard Intermediate Bond) has 40% corporates in it which risks implosion. However now that the Fed has pledged to buy corporate bonds I am wondering if the risks are no longer present. The fund is still very sharply down from it's peak but it's gone up a bit in the last 2 days. I am wondering if I should just sell it.

Absolutely kicking myself for not selling this junk at the highs (8% higher than current!) just 2 weeks ago (I dislike selling anything in my portfolio so I procrastinated)! I absolutely wasn't aware of the risks and thought the price movement was just based on the Intermediate Term Treasury, lesson learned :oops:
It's not junk - it's investment grade.

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stocknoob4111
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Re: Liquidate Bond VBILX now or wait?

Post by stocknoob4111 » Tue Mar 24, 2020 7:47 pm

alpenglow wrote:
Tue Mar 24, 2020 7:45 pm
It's not junk - it's investment grade.
investment grade is a level above junk, most of it will downgrade to junk with just a whiff of a slowdown per many economists. I was watching Robert Kessler on Consuelo Mack and he warned people to stay away... however wondering if the Fed will backstop.

https://wealthtrack.com/treasury-bond-m ... e-shelter/

Triple digit golfer
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Re: Liquidate Bond VBILX now or wait?

Post by Triple digit golfer » Tue Mar 24, 2020 7:50 pm

The fund is flat for the year. It is doing its job.

It had a VERY short run up of 6% and came down shortly after. Just market noise. Stop looking. Or just sell it. You clearly are not comfortable with it. You've posted essentially the same thing several times in the last couple weeks.

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watchnerd
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Re: Liquidate Bond VBILX now or wait?

Post by watchnerd » Tue Mar 24, 2020 7:53 pm

Which of these companies are you trying to avoid?

https://investor.vanguard.com/mutual-fu ... o-holdings
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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alpenglow
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Re: Liquidate Bond VBILX now or wait?

Post by alpenglow » Tue Mar 24, 2020 8:02 pm

stocknoob4111 wrote:
Tue Mar 24, 2020 7:47 pm
alpenglow wrote:
Tue Mar 24, 2020 7:45 pm
It's not junk - it's investment grade.
investment grade is a level above junk, most of it will downgrade to junk with just a whiff of a slowdown per many economists. I was watching Robert Kessler on Consuelo Mack and he warned people to stay away... however wondering if the Fed will backstop.

https://wealthtrack.com/treasury-bond-m ... e-shelter/
IG is a range of quality, just like junk. 25% of VBILX is Baa. The rest is rated higher.

m@ver1ck
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Re: Liquidate Bond VBILX now or wait?

Post by m@ver1ck » Tue Mar 24, 2020 8:07 pm

I've got the same question about VBTLX.

If some of these bonds within the bond fund get downgraded to junk (temporarily), will VBILX be forced to liquidate them?

I'm not so much concerned with eventual default, which I cosider a possibility, but lower risk, that temporary moving to junk, the fund forcing to liquidate at distress prices.

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watchnerd
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Re: Liquidate Bond VBILX now or wait?

Post by watchnerd » Tue Mar 24, 2020 8:10 pm

m@ver1ck wrote:
Tue Mar 24, 2020 8:07 pm
I've got the same question about VBTLX.

If some of these bonds within the bond fund get downgraded to junk (temporarily), will VBILX be forced to liquidate them?

I'm not so much concerned with eventual default, which I cosider a possibility, but lower risk, that temporary moving to junk, the fund forcing to liquidate at distress prices.
Yes, unless the shareholders vote to change the bylaws, they will have to be liquidate if they're no longer investment grade.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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stocknoob4111
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Re: Liquidate Bond VBILX now or wait?

Post by stocknoob4111 » Wed Mar 25, 2020 8:30 pm

And so it starts... S&P cuts Delta Airlines credit rating to Junk

https://www.fool.com/investing/2020/03/ ... by-sp.aspx

DAL is one of the corporate holdings of VBILX... thinking of bailing out soon, anyone holding VBILX or VBTLX or any such "Total Bond" should be very cautious. I have been told my people who know much more about bonds than I do to hold only Treasuries or Cash at this time.

Triple digit golfer
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Re: Liquidate Bond VBILX now or wait?

Post by Triple digit golfer » Fri Mar 27, 2020 7:11 pm

stocknoob4111 wrote:
Wed Mar 25, 2020 8:30 pm
And so it starts... S&P cuts Delta Airlines credit rating to Junk

https://www.fool.com/investing/2020/03/ ... by-sp.aspx

DAL is one of the corporate holdings of VBILX... thinking of bailing out soon, anyone holding VBILX or VBTLX or any such "Total Bond" should be very cautious. I have been told my people who know much more about bonds than I do to hold only Treasuries or Cash at this time.
Those funds are doing just fine. Positive for the year. These experts who are saying to sell a diversified bond fund for a non-diversified one should have instead told you to sell equities for ANY bond fund on February 19. Bond for bond doesn't move the needle. If they are experts why didn't they foresee the equity crash?

Ignore them completely.

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