Bonds - What to do?

[clifp]

Quote:

Originally Posted by nun I don't think you'll see rates go up by 1% overnight, much more likely that they'll creep up in 0.25% steps and you can rebalance. Still I'll stick to my AA as I expect to get most of the return from my bonds in interest and not NAV appreciation.

You are generally right but 1% hikes overnight aren't unknown, Volcker did it. More importantly the Fed often act pretty swiftly. For instance between June of 2004 and June of 2006 the Fed raised the Fed Rate from 1% to 5.25% in .25% increase roughly every two months. It was cut 5% 5.25%-.25% from Aug 2007 to Dec 2008.

But back in 2004 most bond funds were paying 6% a lot different than the 2.5% of today.

[eytonxav]

This bond bubble chatter seems over done to me. Just watch the unemployment rate, as there will not be any upward spikes in interest rates until we see real unemployment come down dramatically. Calm down and stop listening to CNBC!

[MikeD]

Quote:

Originally Posted by DFW_M5 This bond bubble chatter seems over done to me. Just watch the unemployment rate, as there will not be any upward spikes in interest rates until we see real unemployment come down dramatically. Calm down and stop listening to CNBC!

Didn't the Fed just say that they won't raise rates until unemployment comes down a few days ago? I am just starting to follow this as I recently moved most of our money from stocks to bonds. I really don't know what I am talking about yet so take my words with a grain of salt.

Mike D.

[bUU]

It was longer than a few days ago (though perhaps they have restated it recently), but yes, that's the case.

[allanlevy]

alternatives would be annuities and real estate