/biz/ - Business & Finance

>>55357111

>>54137760
anon capital appreciation is a thing

>>53866201
The way it works is that if you hold the bond fund for its average duration it performs identically to if you had just bought the individual bond itself. Its weird but true.
>>53866224
Because I'm a boglehead that refuses to time the market. A ton of people were claiming interest rates were done climbing because inflation was tamed for a bunch of cope reasons. If that's true obviously you'd go long in bonds now. But it wasn't true. So technically I could go cash gain until it's ready. But I don't do this full time and could easily miss the timing. I could be wrong next time and miss out on when interest rates plateau. So I just go long. It works out nicely because the extended long term bonds inversely correlate with my stocks

Also literally no one seems to understand the idea of capital appreciate when it comes to low bond rates. Bond convexity means that when rates are most of the profit is from selling your LTT when rates fall. Pic related, EDV with an average maturity of 25 years will have profit that increases the lower rates go
>4% to 3% - 12.5%
>3% to 2% - 17.5%
>2% to 1% - 22.5%
>1% to 0% - 24.5%
It's the reason you still see people buying bonds at negative rates. At -1% interest rates if they fall down to 2% you see a 30% increase

And mind you I'm saving long term. Even with fluctuations, LTT always perform the best.

>>53842484
better pick up some LTT
even at low rates like this capital appreciation returns greatly

Reminder that 99% of investors are ignorant of the impact bond convexity has on capital appreciate of securities.