Indeed, AOK tends to be less volatile than IEF, as the equities in AOK can act a bit like a hedge. While IEF has outperformed on total return by roughly 3.5% to 3% year-to-date for AOK, entering a 75% fixed income/25% equity fund may have a bit less risk than Treasuries alone.
There is a third alternative, of course. You can recognize that there are always other fish in the sea, so to speak. Great opportunities always emerge; one doesn't have to be married to any asset or asset type.
In other words, do you really have to tell yourself, "I will buy Apple (AAPL) when it falls to XXX." Instead, you can think in terms of something entirely different for achieving your goals.The reason that it's critical to keep the third possibility in mind is because it's possible that U.S. Treasuries have already seen their best days. Even if I think there's a little more juice left in the tank for the long end of the bond curve, that doesn't make it so. Similarly, I might believe Apple is destined for 850, but there's nothing to say that it couldn't drop to 300. Don't marry your investments. Have an exit plan for any individual acquisition, regardless of successes you may have had with that investment in the past. You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can follow me on Twitter @ETFexpert. Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.
Gary Gordon reads: Real Clear Markets
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