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07-25-2017, 09:23 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Location: Texas
Posts: 1,065
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Sell bonds now?
Investment club speaker (retired CFP, RIA) mentioned that she thinks bonds are currently a loser's game and that her portfolio has more cash in it than ever before. Her statement had some caveats, but in general she is not a current fan of the bond climate or outlook. She simply viewed cash as a better hedge for current times where interest rates will surely begin rising at some point.
I'm not encouraging a discussion of FA's or any other advisor's worth or credibility, I'm just interested in this line of thinking about holding a large percentage of bonds at this time?
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07-25-2017, 09:35 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,865
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Bonds are a game of musical chairs now, but no one has been able to accurately predict when the music will stop. Search PIMCO and Bill Gross.
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07-25-2017, 09:49 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
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the myth of increasing interest rates?
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You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
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07-25-2017, 09:57 AM
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#4
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Recycles dryer sheets
Join Date: Aug 2013
Posts: 275
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First off I do not claim to know anything about bonds, but I did make a couple of resent changes to my bond allocation which is currently only 15%. I moved from a intermediate bond index fund (FSITX) to a manage total bond fund (FTBFX). I guess my thinking here was given the potential increase in rates it may do better under a active manage fund vs a index fund... I also bought some GNMA bonds (SWGSX). I'm now way heavy in cash (~35%) and waiting for buying opportunities. Not willing to buy equity funds at these levels...
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07-25-2017, 09:58 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Are we talking about bonds or bond funds? Also how long do you intend to hold these bonds/bond funds.
My bonds are all in Wellesley and I have no plans to sell for many years so I'll just sit tight.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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07-25-2017, 10:10 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 16,972
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I cannot bear to buy bonds at this point, so I'll buy CD's paying 1.5 to 2 percent.
Even though the bond fund pays out more, it will drop a few percent IF interest rates rise again and again.
That said I have a small allocation in bond funds, and Wellsley and am keeping it.
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07-25-2017, 10:15 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Location: Texas
Posts: 1,065
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Quote:
Originally Posted by nun
Are we talking about bonds or bond funds? Also how long do you intend to hold these bonds/bond funds.
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My interest is in bond funds/indexes. Planning to hold long term and I'm not talking about getting out totally, just adjusting AA to more like 50/25/25 vs current 50/50.
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07-25-2017, 10:23 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Jul 2002
Posts: 1,581
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Except in an active managed fund, Wellington, the only other bonds I hold are short term investment grade corporates. Unless you count Series EE and I savings bonds purchased between 1990 and 2004.
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07-25-2017, 10:34 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,865
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If you don't want to sell bonds but wish to hedge against a loss you can buy an inverse bond fund such as DTYS or TBT.
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07-25-2017, 10:38 AM
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#10
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Full time employment: Posting here.
Join Date: May 2015
Location: Charleston, SC
Posts: 524
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If you didn't sell your Bonds in Sept 2016, I wouldn't sell 'em now. Your guest speaker is not looking in a Crystal Ball......she's looking in her rear view mirror.
The non-Equity portion of my AA consists of a little FTBFX, a CD ladder, CapOne MM and some of the Bureau of Engraving Collection of American Heroes like Andrew Jackson & Benjamin Franklin.
I used the EE Bonds to pay for Daughter's College, with a Tax Advantage.....the Bond Market doesn't owe me a thing.
__________________
Semiquincentennial -- A Republic, if we can keep it.
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07-25-2017, 11:36 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Jun 2013
Posts: 1,019
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Quote:
Originally Posted by Tailgate
interest rates will surely begin rising at some point.
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I can't predict the future, but we have had similar discussions on this forum for the past several years, and "at some point" still hasn't arrived.
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07-25-2017, 12:29 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Mar 2017
Location: New York City
Posts: 2,838
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I guess this would be market timing? I am on an AA 80/20 , rising rates, falling rates market crash/ market charging ahead, its all noise now.. Until I found this forum, i only discussed investing / money management 1 time a year, the week between Christmas and New Years. Im done with tweaking & maneuvering trying to squeeze out the last % from investments. I do enjoy getting a bargain at the stores once in a while by saving a few cents. But the big ticket investments that by tweaking, and would maybe get me thousands I now avoid. Weird right?
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Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
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07-25-2017, 01:54 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
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I think it is fooish to get out of bonds entirely due to interest rate risk.... OTOH, I think it is prudent to try to mitigate interest rate risk. I have moved my bonds to target maturity bond funds from Guggenheim... they are like an individual bond portfolio maturing in a stated year.... in my case 2020.
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If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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07-25-2017, 02:48 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Jun 2014
Posts: 1,069
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Governments paying interest for loans is sooooo 20th century.
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07-25-2017, 02:54 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Posts: 1,659
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I think 18.4% bonds is perfect lol (because this is my current allocation and I'm too lazy to think about it further).
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07-25-2017, 03:01 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Bonds are really on a multidimensional continuum with cash. Bonds have interest rate risk that is a function of their duration, credit risk if other than US govts, trading risk if you do not intend to keep until maturity, and a liquidity risk that may vary from time to time. If you anticipate needing the money quickly, a savings account that you can get to or money market fund likely ideal. But if this is a fairly steady part of an investment allocation, no problem, just minimize credit risk and stay short. You then miss any speculative profits from interest rate declines, but we can't have everything, right?
Ha
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"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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07-25-2017, 03:17 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: The Beautiful Blue Ridge Mountains
Posts: 2,778
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This thread could have been started in any given year since about 2010.
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07-25-2017, 03:20 PM
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#18
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,518
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Quote:
Originally Posted by GalaxyBoy
This thread could have been started in any given year since about 2010.
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There have been many over that period. The easiest way to see them, and the views expressed at the time, is do do a forum search with "Bond" and specify "Search Titles Only". Just browsing the titles will quickly lead to the same topic from years past.
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07-25-2017, 08:22 PM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2016
Location: Northern Virginia
Posts: 7,515
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Personally I have a cash and a bond allocation. As Haha said there is a continuum and you need to watch duration. I think you want active management in bonds as there are not truly representative indices. I keep durations short to midterm.
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07-25-2017, 09:28 PM
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#20
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Dryer sheet wannabe
Join Date: Jul 2017
Location: Nashville
Posts: 11
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Decreasing your exposure to duration is a reasonable thing to do when investing in a bond fund in a potentially rising interest rate environment.
I would personally stay away from any mid to high duration bond funds even if just due to a percieved increase in interest rate risk. O
Plenty of alternatives, or just hedge your duration exposure with an inverse or even a negative duration bond fund.
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