Should I Sell Bonds Now? How to Reposition Fixed Income in a High-Oil, High-Rate World

SPEAKER_1 (0:01)

This is InvestTalk from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host, Justin Klein.

Justin Klein (0:16)

Good afternoon, fellow investors, and welcome back to InvestTalk. This is our Friday, September 18th, 2026 edition of InvestTalk. Excited for this hour to close out a very interesting week in markets with you. Unpack as much data and perspective as we possibly can as we move through the hour and answer as many questions from the audience, from you, our listeners, as we possibly can. So we're here ready for you. Whatever's on your mind, give us a call. 888-99-CHART is how you get through and ask your question. 24 hours a day, seven days a week. There's a quick heads up. Make sure to mark your calendars. October 24th, Saturday, it's our in-person retirement summit. It's a special event.

It is free of charge, but seating is very limited, so you must pre-register over at investtalk.com. Now, in just a bit, we'll talk about today's Mark Performance and run down the show topics for the hour. But as usual, we'll tackle this first caller question now.

SPEAKER_3 (1:24)

Hi, guys.

SPEAKER_4 (1:24)

Great show.

SPEAKER_3 (1:25)

I was calling about NTRA. I own a little bit.

SPEAKER_4 (1:30)

Just wanted to know if it's worth getting into more or just wait for a pullback. Thank you.

SPEAKER_3 (1:36)

I'll be listening on the show.

SPEAKER_4 (1:37)

Okay.

Justin Klein (1:38)

This is Natera, engaged in development and commercialization of molecular testing and technology services in the field of women, oncology, and organ health. So it's a biotech name. The biggest issue is that it doesn't make any money. Now, the free cash flow is positive. That's good. So it does have revenue, does have revenue, about 3.5 billion expected next year, up 20% revenue, 26% increase in revenue this year. Earnings are negative, but let's get into cash flow is positive. So I like that. But cash flow has actually started to decline. It peaked out at 93 million in the third quarter of last year, and it now is at 51 million. So on a $50 billion market cap, I'd really have to have a lot of confidence in the drug pipeline. Look at the chart here.

So, if you don't have any debt, that's good. Let me see, are they issuing shares aggressively still, even though cash flow is positive? Yeah, they're still issuing shares at a rapid pace. So that worries me a bit. It's just very expensive. Priced if your cash flow is 1,000. I mean, it's just ridiculous. So, what I would do here is it's very overbought. It's stretched from its 100-day moving average. It's probably going to at least take a breather in the near term. I would take an opportunity to resize my position, maybe trim a little bit, and then have a trailing stop, probably at the 100-day moving average. As long as it can hold that over the coming weeks and months, I would be okay with it, but it is pretty expensive. These biotech names, there's always a lot of hype around them. I just don't think that, yeah, it's a diagnostic company. It's all about genetic testing, which is great. I'm actually doing a genetic test right now. But the valuation just doesn't really add up here, even though it's a growing solid business, it's just not worth the multiples that it's currently trading at. So trim a little here and have a trailing stock.

You know, we had a great show yesterday. We looked into the story about energy stocks and what $100 oil really means for your portfolio. We also answered a listener question on Astera Labs, ALAB, and if you happen to miss it, go check it out. Best way to get every show, every InvestTalk show, is to follow InvestTalk wherever you get your podcasts. Now, we have a lot of ground to cover over the next 45 minutes or so, and our main focus point is about bonds. Bonds are down, rates are up. What is that, how do you think about that when it comes to your portfolio allocation to bonds?

Yeah, they're down.

A lot of people might be freaked out about it, but this kind of jives what I've been saying for a long time, which is it's all about the type of exposure you have in the bond market. What kind of duration do you have? How much risk are you taking when it comes to credit risk?

These are all questions you have to answer, and we're going to answer the question, how do you think about it in your portfolio? We're going to look at that. Also, a lot of people are indexing, and we're going to look at three indices. We're going to look at the total stock market index, which is a proxy for the S&P or maybe the VTI, whatever you want to look at, but they're all kind of very similar when it comes to its current risk. And then we're going to look at the core bond index. So if you have a bond fund, what type of risks are you taking there? And then emerging market indices as well.