/biz/ - Business & Finance

Interest rate risk.

>>674616
But the interest rate is still 0%

>>674618
Markets price in future expectations.

>>674614
>I thought bonds were supposed to be safe
Who told you this? Why did you believe them?

ALL investments have risks. Bonds are an investment. Therefore bonds have risk.

This is 4th grade material.

>>674614
interest rates are going up soon why do you have bonds

>>674627

So what's the best investment now knowing that interest rates will be raised?

>>674627
cuz i want free money

>>674639
impossible to know what interest rates will be.

>>674643

We know they will be higher.

So would this bode well for equities and depress bond yields?

I bought some goldman sachs bonds when the 10 year was at 3%. That' worked well for me. I'm deep in the green, and ahead of the interest rate increases. At least I think.

>>674641
if you're standing still you're falling behind, bonds are the equivalent of standing still in the market right now, you could be making more so you might as well be losing money in a sense

>>674646
>We know they will be higher.
People have been saying that for 15 years, and they've been wrong the entire time. Don't be so arrogant when in actuality you don't understand anything.

>>674653
you should've/still should sell while they're still low
they're worth more in this market

>>674682
kek, ok maybe you should just hold to maturity then m8

>>674680
>bonds are the equivalent of standing still in the market right now
Do people actually believe this? No wonder you're all so poor.

>>674710
>paying someone to manage bonds for you
no wonder you can't understand the basics of the bond market, compare that index to the NASDAQ or S&P and you just proved my point you fucking retard

>>674743
>paying someone to manage bonds for you
kek

0.12% fee.
69 separate bond holdings.
no commissions.
no account fees.

How many bonds you holding, sport?

>compare that index to the NASDAQ or S&P
OK, will do.
2014: S&P returned 11.39%
2014: NASDAQ returned 13.40%
2014: Vanguard's long-term government bond fund returned 20.88%

Go to bed kid. Adults are talking here.

>bonds

>>674752
go to school retard

>>674754
>comparing a bond fund and tech index over three years and expecting parity
>not understanding risk-adjusted performance
It's fucking amateur hour on /biz/, apparently.

>>674710

>20%
>Bonds

What in the name of sweet fuck.. That's not even possible.

NO ONE issues bonds with yields like that. Except maybe Greece with a triple nigger credit rating.

>>674758
>mfw VLGSX and VUSTX returned ~20% in the past year

>>674754
Uh, I checked what the nasdaq composite did on february 12th through the 15th, and I can tell you that your chart is a lie.

>>674758
>>674764
That's why I posted. So many people dismissed bonds, and continue dismiss them. Like this faggot >>674680. Then it become of circle-jerk of conventional wisdom.

When in fact, there is yield out there. You have to take more risk to get it (obviously), but yeah ... over 20% in a bond fund. Pull that fact out next time some moron says bonds are a bad investment in the current markets.

>>674776
>february 12th through the 15th
Early contender for /biz/ best post of March 2015. Or should I say March 15. Thanks for the chuckle.

>>674754
Ok you know more than I expected you to, but you're completely misleading OP. A few bond indices had unreal years because the Fed is jerking everyone off with interest rates. These indices still barely outperformed the stock market and the bond market as a whole still didn't beat the stock market.
But by all means hold on to your bonds cause they're about to blow up bigger than bitcoin over the next few years

>>674776
kek

>>674822
directed at
>>674756

>>674639
Banks and floating rate securities (preferably with a rate floor). mREITs being the worst thing you can own if rates are rising since they're ultra-leveraged towards lower rates.

>>674758
You can think of bonds similarly to a stock with a dividend only in that the bond itself can increase or decrease in price. Say a bond is issued at a par value of $100 and over time the bond trades up to at market price of $110, if you bought the bond at par you'd have $10/bond in profit in addition to whatever you get in yield. That's where the 20% return is coming from.

>>674639
buy dollars

>>674614
>buying bonds
>ever
shaggy doggy

>>674826
Actually, you're the one who made a misleading statement. Need I remind you of what you proclaimed just three short hours ago?

>bonds are the equivalent of standing still in the market right now, you could be making more so you might as well be losing money in a sense

Its cute that you're acting contrite now that you've been shown to be a fool, but you still haven't recanted your statement or even shown the slightest understanding of why you were so wrong.

The reality is that bonds are a huge and diverse asset class, with a variety of risk and yield variables (much like equities). Some bonds types do indeed struggle to keep pace with inflation under current market conditions, but other bond types have been generating meaningful returns even in a low interest rate environment.

Furthermore, bonds, like all assets, are subject to the forces of supply and demand. Short-term treasuries are an unattractive store of money these days, which pushes demand towards both fixed income with (a) higher duration, and (b) higher credit risk. The performance of funds like VLGSX and VUSTX shows what happens when lots of dollars chase that elusive combination of yield and safety.

As to your comment that that some bond funds had unreal years, I never argued that 2014 yields were indicative of long-term expected performance. I merely responded to your asinine -- and false -- statements with dispositive facts. If you stop saying dumb things, then I'll stop pointing out what a dummy you are.

>>674618

best time to get into the bonds? when the fed reserve is

worst time? when the fed reserve isn't

Fuck all you faggots, my bonds are going to be worth like 150% 10 years from now

>>674835
I will sell you $5 US dollar for every $50 US dollars you give me.
It is the best investment you can make in these uncertain times.
Its got an exchange rate of ten times what you put into it!

>this whole thread

>>674684
then I wouldn't collect the interest... I'm going to hold until a few years before maturity, then sell. maybe 2020.