lawman
Thinks s/he gets paid by the post
Some here have suggested the certainty of rising interest rates is a good reason to avoid bond funds..I'll continue to show my ignorance but my logic for hoping for higher rates is best explained by example..If 10 year Treasuries are now set to return 2.6% interest as Hussman claims, I can certainly see how the value of that bond will decrease if rates rise rapidly but if that bond is held until maturity the value of that bond will steadily increase as the maturity date approaches. As long as one is willing to remain in the fund until that bond matures I don't see how there could be much risk. I also understand that as bonds in that fund mature the capital will be invested in other bonds at higher rates and the whole thing starts over again.. I suppose if one sold his positions during a time of rapidly rising rates he could lose principal but I don't see myself having to do that..Sitting on the sidelines with cash waiting for rates to go up seems like a losing proposition to me...If my logic is flawed I'm sure some here will be happy to tell me why and I appreciate your help...