About once a week, someone will say, “I don’t understand bonds.” Sometimes they’ll state it in stronger terms: “I don’t like bonds.” So it’s worth taking a closer look. Fundamentally, bonds are just IOUs. If you buy a $1,000 U.S. Treasury bond, you’re simply lending the government $1,000. The [...]
Navigating the Bond Market
In the world of investments, bonds certainly aren’t the most interesting—but they generate their fair share of debate. Especially after the rout suffered a few years ago—when total-bond market funds dropped 13%—many investors are wondering how best to proceed. One open question in particular is [...]
Sea change?
A key conundrum for investors is as follows: On the one hand, the data on tactical trading is clear. It tells us that making frequent changes to a portfolio is a bad idea and can damage returns. But on the other hand, we shouldn’t be so wedded to the status quo that we’re unwilling to ever make a [...]
The long and the short of it
Back in the 1980s, Michael Milken earned celebrity as “the junk bond king.” With his swagger—and his toupee—Milken was an outsized personality in a normally staid industry. But that was 40 years ago, and that may have been the last time that bonds were truly interesting. On most days, bonds are [...]
Suddenly more interesting
In a typical year, the bond market doesn’t attract much interest. That is by design. The role of bonds in a portfolio is to serve as a bulwark against the unpredictability of stocks. They’re supposed to be boring. All that changed this year. Owing to rising interest rates, the most common total [...]
