"Game Over" (for bonds) - Jonathan Clements

[Out-to-Lunch]

Quote:

Originally Posted by dixter for example... if you buy a bond with 10% coupon and its valued at $1500 then it would be best to monitor the bond over time and attempt to recover the over par premium by simply reselling the bond before the maturity date... you may not get back the $500 cost in full but you could get close or if luck is on your side, even get back more than the $500...

Forgive me if I am putting words in your mouth: Perhaps I could interpret these sentiments as asserting that the coupon rate (and concomitant inflated value over par) has an effect on the bond's convexity.... That is, that this bond would respond differently to changes in interest rates compared to other bonds of the same duration but different coupon (i.e., value vs. par).

Hmmm, I would have to think very hard about this, but I could perhaps believe it.

[dixter]

Quote:

Originally Posted by Out-to-Lunch Forgive me if I am putting words in your mouth: Perhaps I could interpret these sentiments as asserting that the coupon rate (and concomitant inflated value over par) has an effect on the bond's convexity.... That is, that this bond would respond differently to changes in interest rates compared to other bonds of the same duration but different coupon (i.e., value vs. par). Hmmm, I would have to think very hard about this, but I could perhaps believe it.

There are many different parameters that can affect a bonds value (either below par or above par).. coupon rates and durations are just two parameters... a bonds rating would be another parameter.. and many many more

I have no connection with Fidelity but here is a presentation that you might like...

https://www.fidelity.com/learning-ce...ting-recording

[NW-Bound]

Quote:

Originally Posted by NW-Bound ... A big portion of my fixed income AA is in a Black Rock T-Fund. Its yield varies, and used to pay 2% which would offset inflation, but is now only 0.01%/yr!

I just looked at my wife's 401K Stable Value fund. YTD, it has paid 4.03% cumulative!

Wow, how do they do that? Loan sharking?

[Dtail]

Quote:

Originally Posted by NW-Bound I just looked at my wife's 401K Stable Value fund. YTD, it has paid 4.03% cumulative! Wow, how do they do that? Loan sharking?

Could be heavy investing in riskier bonds such as mortgage backed bonds. This is true for my SV fund which has a current gross of 4.01%.

[NW-Bound]

Quote:

Originally Posted by Dtail Could be heavy investing in riskier bonds such as mortgage backed bonds. This is true for my SV fund which has a current gross of 4.01%.

Does not look too "stable" to me.

I don't know what my wife's fund does, but we have only 4.3% of investable assets in that fund.