I didn't want to hijack another thread that touched on this subject, but I would be interested in getting a better understanding of the reasons why one might want to hold a fund like TLT. Any takers?
Any reason for a long bond fund?
NO
Audrey
Forgive me for such a basic question (bonds kind of elude me), but are we not seeing a trend toward higher long-term interest rates with the recent cuts in the discount and fed funds rates? My limited understanding of what's occcurring right now is that the bond market is being driven primarily by the expectation of increasing inflation. Am I missing something here?
last week saw a big drop in longer rates actually hitting 4% even on thursday before bouncing up. these longer term bond funds are considered a flight to quality on most of those big drops we had that were slow down or recession based. . the bonds are their to cusion the drops and dont forget these will be like gold if the perception of recession surfaces even stronger.
for income stay short but for some recession protection you need longer term. dont forget the markets are driven by perception. we dont actually have to have a recession, just the perception of one
2% on TLT is a normal reactionary move and can move almost as much as stocks in a day. ytd is about 9%
Forgive me for such a basic question (bonds kind of elude me), but are we not seeing a trend toward higher long-term interest rates with the recent cuts in the discount and fed funds rates? My limited understanding of what's occcurring right now is that the bond market is being driven primarily by the expectation of increasing inflation. Am I missing something here?
at higher rates they may be a buy and hold but for now they are just a trading vehicle to match to the inflation/ recession cycle we keep going thru every week.
.... at least until theres a clear direction to some economic scenerio when a more traditional mix of 60/40 or 50/50 would be better. just my best guess although its not something i may actually do at this point. just hope im not sorry i didnt do it ....
I don't think the future is ever any clearer. I have an AA and every other day think that "maybe we're headed for a recession, hmm ... maybe I should sell something" or "maybe we're going to have a surprisingly nice year next year, maybe I should buy something". For me these mood swings happen all the time. Everytime I have to convince myself that unless I made a major percentage move, a big bet, there'd be no sense in it.
If you haven't done an Investor Policy Statement now ... right now ... might be a good time to do it.
That said ... maybe we're going to have a great year next year ...