Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
bonds at the bottom
Old 12-30-2011, 02:48 PM   #1
Full time employment: Posting here.
tightasadrum's Avatar
 
Join Date: Aug 2006
Location: athens
Posts: 802
bonds at the bottom

With bonds most likely at the end of their winning streak, I mean, how much lower could interest rates go, I've given some thought about changing a couple of bond funds to dividend paying equity funds next week. I think even the immortal Wellesley Fund may be in NAV peril in the next year or two. Anyone else contemplating a similar move?
__________________

__________________
Can't you see yourself in the nursing home saying, " Darn! Wish I'd spent more time at the office instead of wasting time with family and friends."
tightasadrum 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!

Old 12-30-2011, 03:12 PM   #2
Thinks s/he gets paid by the post
RockyMtn's Avatar
 
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,234
been lightening up on my bond AA over the last couple of months. Interest rates have nowhere to go but up which will whack the NAV and the yields are just miserable. Been sliding some $$$ into VIG, VYM and SCHD. Loving my KMP too!
__________________

__________________
FIRE'D in July 2009 at 51...Never look back!
RockyMtn is offline   Reply With Quote
Old 12-30-2011, 03:18 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Mar 2009
Posts: 1,437
Looks like quite few people have gone this route already. The Vanguard High Dividend Yield Fund is up about 11% for the year.
__________________
Retired in 2016. Living off dividends / interest and a mini pension. Freedom.
foxfirev5 is offline   Reply With Quote
Old 12-30-2011, 03:34 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
Never say never. Look at Japanese 10 year rates...

That said, I would not be wildly eager to own treasuries or high grade corporates of any significant duration right now. Sliding over to junk, I bonds, bank loans, etc., but still feel compelled to keep a little.
__________________
"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
Old 12-30-2011, 04:27 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,485
Weren't many saying the exact same things a year ago?

But hasn't the Fed said that they intend to try to hold interest rates at current levels for 2012 (and maybe even 2013 IIRC)?
__________________
pb4uski is offline   Reply With Quote
Old 12-30-2011, 04:39 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Posts: 1,649
pb4uski...I was getting ready to post the same thing but you beat me to it. There was much discussion about rates remaining where they are thru 2012.....into 2013 and some were saying they would not rule out going into 2014. I'm not getting out of bond funds yet. But I may not put anymore to work in them either. Don't know.
__________________
sheehs1 is offline   Reply With Quote
Old 12-30-2011, 04:56 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,696
Is anyone saying anything here that the bond market doesn't already take into account?

I'm not saying I disagree with anyone either. You want my personal opinion? Nah, it's already been discounted I'm afraid.
__________________
Lsbcal is offline   Reply With Quote
Old 12-30-2011, 05:14 PM   #8
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,949
Quote:
Originally Posted by pb4uski View Post
Weren't many saying the exact same things a year ago?
Yes, and it seems to me they were saying the exact same things 2-3 years ago. Timing this market has been pretty difficult.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Old 12-30-2011, 05:25 PM   #9
Recycles dryer sheets
Packman's Avatar
 
Join Date: Jan 2011
Location: Phoenix
Posts: 303
I'm selling some muni's and moving to high yield bonds. I still need to maintain some allocation to bonds, even if interest rates eventually go up. Otherwise where else would you place funds other than stocks and cash?
__________________
Retired on 5/31/2011 at 54
Packman is offline   Reply With Quote
Old 12-30-2011, 05:31 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by Packman View Post
I'm selling some muni's and moving to high yield bonds. I still need to maintain some allocation to bonds, even if interest rates eventually go up. Otherwise where else would you place funds other than stocks and cash?
There are alternatives. As an example, I use merger arbitrage funds as a low volatility investment that has limited correlation with equity markets as a stand in vs. more bonds. I know of two such mutual funds: MERFX and ARBFX.
__________________
"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
Old 12-30-2011, 05:39 PM   #11
Recycles dryer sheets
 
Join Date: Apr 2005
Posts: 463
Quote:
Originally Posted by tightasadrum View Post
With bonds most likely at the end of their winning streak, I mean, how much lower could interest rates go
YTD return on 20+ year Treasuries (TLT) = 29.33%. Even short term bonds (e.g. 1-3 year Treasuries) trounced the S & P, and this has been a regular occurrence these past few years while the bond "experts" say rates have nowhere to go but up.

Predicting interest rate moves is clearly even more of a fool's errand than equity market predictions. Regarding Wellesley the only issue I see is it is actively managed which introduces unnecessary expenses and risk vs. an index fund or ETF no fat tails equivalent such as 70% total stock market 30% 5 year Treasuries.
__________________
kevink is offline   Reply With Quote
Old 12-30-2011, 06:08 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,435
Everytime a bell rings, a dirty market timer gets his wings...
__________________
soupcxan is offline   Reply With Quote
Old 12-30-2011, 06:17 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by soupcxan View Post
Everytime a bell rings, a dirty market timer gets his wings...
Could be. Personally, I just do not like the odds when an asset class moves to valuation extremes. I would not go to the point of shorting such a market, but my instinct is to back away cautiously.
__________________
"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
Old 12-30-2011, 06:53 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,449
Yes, market timing is difficult. However, market corrections usually take longer to happen than most people think. When even the bearish pundits have to shut up while the bulls make victory dances, that is usually the respective market top.

Here's an example about the recent housing bust. I remember seeing in 2005 an interview with the CEO of a large national house builder. The reporter asked him if his business was having any sign of slowing down. His confident reply was the following.

"People keep asking me this same question. It is the same as being asked if you beat your wife! Never have, never will."

And they proceeded to produce another stellar quarter earning. Well, we all know what happened next.

I am staying with my course: more equities and short-term cash than bonds.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 12-30-2011, 07:18 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
2012 will be the year the government bond market starts to correct.

I have been making this prediction for 3 years now, I am sure the 3rd time is the charm.

Of course I am seldom in doubt, but often wrong on such matters
__________________
clifp is offline   Reply With Quote
Old 12-30-2011, 11:06 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,696
Quote:
Originally Posted by clifp View Post
2012 will be the year the government bond market starts to correct.

I have been making this prediction for 3 years now, I am sure the 3rd time is the charm.

Of course I am seldom in doubt, but often wrong on such matters
Join the club (of which I'm an officer)!
__________________
Lsbcal is offline   Reply With Quote
Old 12-30-2011, 11:15 PM   #17
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Quote:
Originally Posted by W2R View Post
Yes, and it seems to me they were saying the exact same things 2-3 years ago. Timing this market has been pretty difficult.
Quote:
Originally Posted by clifp View Post
2012 will be the year the government bond market starts to correct.
I have been making this prediction for 3 years now, I am sure the 3rd time is the charm.
Of course I am seldom in doubt, but often wrong on such matters
Mortgage rates can't possibly get any lower and I'm not going to refinance any of our properties ever again.

And this time I really, really, really mean it.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 12-30-2011, 11:52 PM   #18
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Quote:
Originally Posted by clifp View Post
2012 will be the year the government bond market starts to correct.

I have been making this prediction for 3 years now, I am sure the 3rd time is the charm.

Of course I am seldom in doubt, but often wrong on such matters
Eventually you will be correct.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is online now   Reply With Quote
Old 12-31-2011, 11:56 AM   #19
Thinks s/he gets paid by the post
DFW_M5's Avatar
 
Join Date: Sep 2003
Posts: 4,982
I just don't see how interest rates are going to rise much at all given the unemployment rate. I can understand some tweaking of bond allocations, shortening durations, and diversifying but abandoning bonds in a major way doesn't make sense to me. Especially considering the uncertainty in Europe, Iran, Gov't gridlock, and who knows what other 2012 black swan will come along.
__________________
DFW_M5 is offline   Reply With Quote
Old 12-31-2011, 03:36 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
Quote:
Originally Posted by DFW_M5 View Post
I just don't see how interest rates are going to rise much at all given the unemployment rate. I can understand some tweaking of bond allocations, shortening durations, and diversifying but abandoning bonds in a major way doesn't make sense to me. Especially considering the uncertainty in Europe, Iran, Gov't gridlock, and who knows what other 2012 black swan will come along.

Well that is what makes markets. At least one of us will be right next year.
__________________

__________________
clifp 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
Treasury trying to kill off program to buy EE and I Bonds Mulligan FIRE and Money 25 11-28-2011 11:32 PM
I BONDS......again vttlarry FIRE and Money 7 10-31-2011 08:49 AM
Municipal Bonds mountaintosea FIRE and Money 4 10-18-2011 06:17 PM
If there is deflation, how does that affect bonds? 67walkon FIRE and Money 8 08-10-2011 09:42 PM
1/1/12 No more sales of paper savings bonds at financial institutions powerplay FIRE and Money 9 07-20-2011 03:16 AM

 

 
All times are GMT -6. The time now is 11:33 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.