Recently PIMCO disclosed their holdings, which indicated they increased their Treasury bond holdings. This seems to be in direct conflict from months earlier when they reduced their Treasury bond holdings. In fact, PIMCO chief Bill Gross’ public media statements resulted in a few clients calling wanting to blow out of Treasuries because PIMCO was.
A Portfolio Manager manages according to the requirements of their offering documents or prospectus. They are able to buy and sell what they want when they feel it is best for the portfolio in accordance with those governing documents.
What’s the point? Just because an investment manager is screaming at the top of his or her lungs to enter or exit a position doesn’t mean you have to. Many of these managers turn over their portfolio 2 or 3 times a year. Thus, what they hate one month may be their biggest trade the next. They are trading to profit from a spread. If you chase them, you risk being behind the curve, and may only wind up chasing your tail.
The key takeaway is this: if you are investing for the long haul you shouldn’t necessarily worry when a trader is getting in or getting out. Just because a trader is exiting a position now doesn’t mean that position is a bad investment, it just means that trader thinks somewhere down the road there might be a better entry point. Those investors who try to mimic traders seldom have the information necessary to make a good decision.
