Performance is posted.  Nothing to write home about.  I've lagged with my exposure to long bonds as well as closed end funds that have been hammered to sizeable discounts.

I still like the funds, ut clearly they are being punished by a market that has flipped a hidden switch if you will.  TLT and other bonds are responding only to news about the economy and the eventual end of QE.  Even though I believe the market is not realizing that growth is still anemic and that bonds offer good value, I have been wrong and my portfolio has suffered for it.

In hindsight, I probably should have stayed with the "spread trade" (long credit exposure like muni's and preferreds and loans) and been hedged for the interest rate exposure (selling the 10 year government  bonds).  This would have mitigated some of my losses in the outright bonds that I hold (TLT, MHN, the loans and PFF).

But, I consistently under-appreciate the fickle nature of the market.  The current world is much more news sensitive (everyone sees everything, immediately!) and turns occur much more rapidly.  I have to adjust for that.

Stocks still look good to me and intererstingly enough, I think the rotation has been out of bonds and into cash more than stocks.  I still believe the market to be under-exposed to stocks and that will provide a base for stocks.  If I am right, pullbacks will be shallow and infrequent.  I would not be surprised to see another 10% rally through year end.  Perhaps there will be some pullbacks to buy but I am not going to be too cute about timing.

Today, I am selling off positions that have gotten a bit rich in price or low in dividend yield.  I have sold KO and PG and am considering selling JNJ and GE.  I will replace these with IWM (small stocks) as I think they will benefit from further gains.  Be aware though, that this adds a lot of risk.  Valuations in small stocks are a bit more stretched than SPY.