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 [ … ]
Category: Understanding Bonds
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 [ … ]
Why I Prefer to Think of Stocks as Bonds
Bonds have always struck me as fairly simple instruments. In general, you know what a (high quality) bond’s return will be and you know what its time horizon is. That [ … ]