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Old 01-23-2014, 11:56 PM   #41
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....SV does have risk dependent on the insurance co's providing the guarantees. Maybe I read to much into that risk....
I think that you have read way to much into that risk (and others do as well).

While there is theoretically a risk that the wrapper will be unable to perform, IMO the risk is so low it can be ignored for all practical purposes. I have never heard of an insurer providing the wrap defaulting ever, so the risk is truly minimal and certainly much lower than the credit risk associated with the typical corporate bond fund.
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Old 01-24-2014, 02:17 AM   #42
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lsbcal and brewer12345, thanks for your replies.

I understand the duration/rate rise calculation to project the change in bond price. Interested to know if there's any consensus regarding an estimate for how much rates will rise?


NT2

To be flip the consensus prediction is reflected in the bond market pricing.

Now my personal prediction is that the 10 year T bond rate will rise 3-4% over the next two to four year (i.e. pretty steep.) This last year we saw a ~1% rise in the 10 year from 2% to 3%. So my new prediction is 2-3% increase over the next one to three year. This would put the 10 year at slightly above the historical average, which I believe is justified due to the challenges of reversing 5+ years of unprecedented expansion of monetary supply.

I should quickly add that I've be confidently making this prediction since the end of 2009 and 2013 is the first year I've been close to being right. The other years I was dead wrong. But like a broken clock I should be right once a decade (I hope).

My fixed income is Pen Fed CD, and 3 small legacy bond positions, and decent chunk of now short-term corporate inflation protected bond and 75-80% equities.

I remain often wrong but seldom in doubt..
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Old 01-24-2014, 07:34 AM   #43
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my personal prediction is that the 10 year T bond rate will rise 3-4% over the next two to four year (i.e. pretty steep.)....

I should quickly add that I've be confidently making this prediction since the end of 2009 and 2013 is the first year I've been close to being right. The other years I was dead wrong. But like a broken clock I should be right once a decade (I hope).

I remain often wrong but seldom in doubt..
clifp, thanks for your reply-
I remain often in doubt!
At least the 50:50 allocation with SV should make me half-right however this plays out.

NT2
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Old 01-24-2014, 07:46 AM   #44
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My fixed income is Pen Fed CD, and 3 small legacy bond positions, and decent chunk of now short-term corporate inflation protected bond and 75-80% equities.
Is it short-term inflation protection bond? That's a big allocation to equity!
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