Bond Allocation

[wabmester]

Brewer, congrats on the little girl. *Ours just turned 16 months, and she's an absolute blast.

TH, try a low-carb diet to take care of that positive convexity problem.

Cut-Throat, try a book called simply "The Bond Book." *I haven't read it myself, but I've heard nothing but praise.

UncleMick, I've only heard of convexity as it applies to mortgage-backed bonds. * IIRC, negative convexity means duration will extend as interest rates rise due to the dearth of refinancing activity. * So, mortgage-backed securities get hit harder than you'd expect when rates rise.

And, yeah, mortgages are like shorting long-term bonds, but they come with a free put option.

[cute fuzzy bunny]

F--- low carbs diets!

I'm low fat, mostly vegetarian. I like the variety of veggies and grain products. Especially around here...there are still a few dozen types of vegetable products I havent even tried yet. Had Chayote squash as a side dish tonight. Nice...kinda like a cross between summer squash and zuch.

The preponderance of posterior isnt so bad. I'm just trying to regain my 21 year old proportions and finally coming to terms with the fact that it aint gonna happen.

I liked being in the 190-200 range. At 240 I feel positively porky. Maybe I should just look into ways to increase my height a few inches rather than reducing my diameter.

I actually lost 20lbs when I went back off the mostly meat diet, but I put it back on when the wife began demanding huge quantities of meat products at the beginning of the pregnancy. I believe I characterized it as jabba the hutt yelling "bring me steak and eggs for breakfast!". Except she's WAY prettier than jabba the hutt.

I just hate it when I rub the expectant mother to be's tummy and cheerfully burble "baby!" and she pokes mine and says "food baby!". Its worse when she stands there holding her hand on it and says "I think I felt it kick!" :P

Mortgages also have a call option. I've got a 140k in HELOC I can employ anytime I want to. In the meanwhile, I've got a quarter mil in the frickin short term corp fund scraping out a match to inflation. I wish I had another mortgage to pay off with that money for double the return.

[wabmester]

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F--- low carbs diets!

I'm not an expert on nutrition, but I play one on TV (err, I mean, I studied biochem at one point in the last millennium).

Here's a pretty non-controversial hypothesis: if you have high triglycerides in your blood stream, your carb intake is probably responsible for much of your rotundity. A simple blood test will tell you whether it's worth checking into. Mine were outrageously high for years. I cut out sugar and starch (including pasta, starchy veggies, etc) for a few weeks, and my triglycerides fell to a normal level, and I dropped about 10 lbs.

It's all about liver function and insulin. Your body cranks out insulin in response to high blood sugar. This works fine when you're a youngster, but if you have continuously high blood sugar (i.e., consume lots of carbs), eventually your cells are awash in insulin, and they become resistent (you start losing insulin receptor sites).

Eventually, this can lead to diabetes, but before you get there, you just start converting the carbs to triglycerides all day, which eventually get stored as fat after they're done blocking your arteries.

Aren't you glad the concept of "off-topic" doesn't exist here?

[gayl]

Went to an investment 'seminar' yesterday re: bonds. Schwab is advising that we stick to shorter terms, ie: 2-3 yrs, to somewhat guard against interest rate increases. Then they proceeded to tout their short-term fund paying 2.2% per annum. Then they went on to talk about barbells vs laddering. Guess I need a book, as all I came away with is that I do better in the 457 General Acct (paying 5.5% this year) then I'd do in bonds. I know the 'experts' advise bonds in the portfolio, but when I can get such returns with the general acct, can you give me a reason why I should switch?

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as all I came away with is that I do better in the 457 General Acct (paying 5.5% this year) then I'd do in bonds. I know the 'experts' advise bonds in the portfolio, but when I can get such returns with the general acct, can you give me a reason why I should switch?

Do you know what kind of investments are in your Acct that are paying the 5.5% return?

[wabmester]

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I know the 'experts' advise bonds in the portfolio, but when I can get such returns with the general acct, can you give me a reason why I should switch?

Gayl, there are three reasons to buy bonds:

1) preservation of capital (if you hold to maturity)

2) income

3) low covariance with equities

Your fund probably satisfies (1) and (2). MPT stresses (3).

[azanon]

Quote:

Went to an investment 'seminar' yesterday re: bonds. Schwab is advising that we stick to shorter terms, ie: 2-3 yrs, to somewhat guard against interest rate increases.

In a nutshell, that's all i was saying earlier. *I'm a biologist by profession, so its nice to know i wasnt in left field with my assessment. *Schwab is pretty good company. As i was corrected, the shorter-term bonds are in fact less interest rate sensitive, as are other types such as munis and High-yield corporate.