A few years ago I wrote a post about how I was having trouble constructing portfolios that could meet a conservative 4% rate of return. With bond yields near 0% [ … ]
Category: Understanding Bonds
3 Reasons to Hold Long Bonds as Short Rates Rise
As short rates rise the tendency for novice bond investors is to believe that the short end of the curve suddenly makes it irrational to hold any long-term bonds. While [ … ]
Do Bonds Still Diversify When Rates Rise?
Rates have inched up enough now that if you squint your eyes you can see the change on a 40 year chart. I say that partly in jest, but the [ … ]
How to Overcome Your Fear of Bonds
I specialize in building relatively conservative “all weather” style indexing portfolios. They are designed for people who have a reasonably long time horizon (at least 5-10 years), don’t want to [ … ]
What Will Happen to Bonds if Interest Rates “Normalize”?
There’s a lot of chatter out there about rising interest rates and “normalizing” rates. As I’ve written about before, I think most of these fears are a case of short-termism [ … ]
Do Bond Prices Have Momentum?
Here’s a strange thought from Jeff Gundlach, one of the world’s largest bond managers: “If you get above 3%, then it’s truly, truly game over for the ancient bond rally.” [ … ]
Are Individual Bonds Safer than Bond Funds?
The WSJ was out with a piece discussing outflows from DoubleLine’s Total Return Bond fund this week. One of the reasons for the outflows was cited as the lack of [ … ]
The Biggest Myths in Investing, Part 5 – Bonds Lose Value if Rates Rise
This is the fifth instalment of a ten part series similar to what I did with “The Biggest Myths in Economics”. Many of these will be familiar to regular readers, but [ … ]
Repeat After me: “Bonds Don’t Necessarily Lose Value When Rates Rise”
If you take a basic finance course the first thing you learn about bonds is that bond prices are inversely correlated to interest rates. So, when rates rise bonds prices [ … ]