When your 30-Year Bonds are Ten Years Old...

[dualstow]

you are supposed to sell them and replace them with fresh 30-year bonds. Is there any special action that should be taken whether the price is up or down? I guess you should ignore the price, other than when it exceeds rebalancing bands?
Well, I don't have to worry about this for ten years, but I don't recall seeing this in the Fail-Safe Investing book* and I'd like to find out before I put too much into the pp.

*In fact, if you're thinking of buying Fail-Safe Investing for more info on how to implement the permanent portfolio, don't. Don't get me wrong - it's a gem of a book, but you can find similar wisdom and caveats in other investment books that may already be on your shelf. As for implementation, I didn't find much. I found much more here at crawlingroad and in Harry Browne's radio archives, although the latter is a lot to wade through when you want answers to a specific question.

[craigr]

When they are 20 years or less you just sell them and buy new ones. Price isn't an issue. It is what it is. I have rebalanced them when they have gone up too much in price (such as 2008) though. So the three times to tinker with them:

1) When they go up too much and exceed the upper band - Sell down to 25%
2) When they go down too much and are beneath the lower band - Buy up to 25%
3) When they are 20 years or less maturity - Sell (and buy new ones between 25-30 years) to 25%

[dualstow]

Thanks Craig. I also heard a radio show that touched on it. It was Harry's 24 April '05 show, I believe. He basically said the same: sell the bonds when they're down to just 20 years away from maturation, because you want the "most powerful" bond possible. In other words, an instrument that will react the most strongly to interest rate movements. Sometimes the bonds will be up and sometimes they'll be down.

It's interesting to note that at the time of that show, new 30-year treasuries were not being offered. However, Harry added, "when the time comes to buy new bonds, just buy the longest ones possible. Maybe they'll be offering 30-year bonds again, by that time. It depends on who is in office." etc. So, I'm grateful that they are currently available.