Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
A Bear Market In Bonds
Old 03-10-2006, 10:37 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,694
A Bear Market In Bonds

http://tinyurl.com/fyn6r

In the USA Today they actually had an interesting article about bonds in a bear market.

I particularly liked the image:
"A bear market in stocks is like being stepped on by an elephant. A bear market in bonds, though, is like being bitten by a poodle for a decade."

__________________

__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: A Bear Market In Bonds
Old 03-10-2006, 11:20 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: A Bear Market In Bonds

Thats a good one.
__________________

__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: A Bear Market In Bonds
Old 03-10-2006, 07:36 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Re: A Bear Market In Bonds

I think the article erroneously focuses on the market price of the bond. If you're reinvesting coupons and holding to maturity, your total return from fixed income investments over the life of the bond will actually be higher in a "bear" market scenario and lower in a "bull" market.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Re: A Bear Market In Bonds
Old 03-10-2006, 08:44 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: A Bear Market In Bonds

Good point, 3 Yrs. Plus, if one invests in bonds that offer a potential capital gain as well as yield, the direction of interest rates makes a lot less of a difference.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: A Bear Market In Bonds
Old 03-10-2006, 08:47 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,446
Re: A Bear Market In Bonds

Hey, I'm looking forward to BUYING bonds again. They're finally getting cheaper.

4.75% - is it a bear market in bonds? Well I don't know, but I'd swear 3% to 4.75% WAS.

Audrey
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Re: A Bear Market In Bonds
Old 03-10-2006, 08:51 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: A Bear Market In Bonds

audrey, I am tip-toeing into some junk issues at the moment. Once we see the 10 year treasury over 5%, I will be watching very carefully because there will likely be an opprtunity for capital gains at some point.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: A Bear Market In Bonds
Old 03-11-2006, 05:06 AM   #7
Recycles dryer sheets
 
Join Date: May 2005
Posts: 228
Re: A Bear Market In Bonds

The article did not discuss bonds per se, but bond funds and clearly indicated that the discussion did not apply to those holding (individual) bonds to maturity. I found the paper rather clear though not offering solutions to the problem addressed (i.e. generating income) and curiously enough did not mention TIPS as a class of relevant assets.

If one manages to make money holding bond funds (LONG) in an environment where rates are rising, let me know, I'll be interested !!!. One way I think of (for individuals with low fees access to the product and good liquidity) is going SHORT an ETF which replicates the performance of an index of bond funds, for example the EuroMTS 10-15YTM (Ex CNO-Etrix) which is one such index (with associated ETF) for the Euro zone. There must exists the equivalent in the US which I do not know.

Any other idea ?
__________________

__________________
gnoti seauton
poyet is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
talking myself into the benefits of a bear market runchman FIRE and Money 8 03-22-2007 09:42 AM
Retiring In Secular Cycles Tadpole FIRE and Money 138 02-21-2007 11:38 PM
Just Say No to Bonds? Rich_by_the_Bay FIRE and Money 48 06-10-2006 11:07 AM
Annuities versus money market and ST bonds Rich_by_the_Bay FIRE and Money 5 02-23-2006 12:41 PM
Corporate Bonds on the Secondary Market Roger_R FIRE and Money 35 02-13-2006 02:48 PM

 

 
All times are GMT -6. The time now is 06:10 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.