I am pretty much a buy and hold guy and haven't made any major adjustments to my portfolio other than some informal balancing for a few years. I noticed my Fidelity intermediate bond fund's asset value YTD has already declined more than any hopes of interest income for the year and am think on bailing out of anything longer than short term. I am looking for opinions?
I am aware of the two basic arguments for buying and holding bond funds. First, that if you hold long enough the increasing returns will eventually outweigh losses in NAV. And that it is futile to try to predict interest rates and time the market. Well...on another day I would tend to agree. But with interest rates at rock bottom and nowhere to go but up, and with what appears to be a boom in housing sales, improved consumer confidence, and a general economic recovery, is not the interest rate writing on the wall? Even the talking heads are warning about the risks of getting into bond funds right now. Why stand idly by?
Then I guess the question then becomes where to go? I was thinking just shifting into short term funds, but there is always CDs or money markets, where returns are dismal but the principal is protected.
I am aware of the two basic arguments for buying and holding bond funds. First, that if you hold long enough the increasing returns will eventually outweigh losses in NAV. And that it is futile to try to predict interest rates and time the market. Well...on another day I would tend to agree. But with interest rates at rock bottom and nowhere to go but up, and with what appears to be a boom in housing sales, improved consumer confidence, and a general economic recovery, is not the interest rate writing on the wall? Even the talking heads are warning about the risks of getting into bond funds right now. Why stand idly by?
Then I guess the question then becomes where to go? I was thinking just shifting into short term funds, but there is always CDs or money markets, where returns are dismal but the principal is protected.
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