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no one is referring to his funds performance. we are talking about bill gross's fortune telling ability. he has been awful .
his advice he was giving the public the last 2 years was flee stocks. he said this near the lows too as returns over the next few years will be single digits at best.
i guess over 100% gains in the markets had his call off a little wouldnt you say? his followers lost quite a bit of dough if they followed his advice.
hmmmmm ,ya think he has a vested interested in telling everyone to flee stocks? he only runs the worlds biggest bond fund.
i bet his fund didnt beat a simple un-managed long term treasury bond fund like TLT in 2008.. up 33.4%
Last edited by mathjak107; 03-15-2011 at 04:03 AM..
So guys did you sell your bonds? I got some Vanguard Total Bond Market, I wonder if I should sell it.
If I sell it I think I don't have to sell it for cash I can exchange it for other funds? if I exchange for other funds I wont' get taxed right? what's the pro/con of exchanging it to another fund? thanks
exactly what are those big investors worry about and dumped all their bonds? Will bonds be 50% less or won't worth anything at all? I thought bonds are the safest investment, since it's low return low risk
bonds can be low return high risk. if your in a bond fund the price per share drops with every up tick in rates. you can loose money if rates keep rising. the longer the bond funds average weighting the steeper the losses. TLT a long term treasury bond fund can fall 18% or so with every point rise. getting 4.5% interest and having your principal drop sucks!
if your holding individual bonds and you want to sell them before maturity then you wont get face value. if you keep them then getting 3.5% in a world where eventually cd's are paying 6% is a loss as well. its like working for less then the going rate.
if inflation kicks up and your living off that bond interest then the interest may no longer cover your expenses and you will be forced to sell bonds at a loss to cover the short fall. selling off bonds will generate even less interest next year causing you to sell even more bonds.
bonds are only nice when rates are falling but with record low interest rates and the fed artificicially trying to hold down longer term rates as investors try to bid them up the hand writting is on the wall. unless there is another flight to safety into treasuries from world events odds are you may find conventional bonds and bond funds an up hill battle .
we just had a 30 year bull market in bonds and like every asset class there comes a time the party is over .
risk is a relative term. holding stocks at the beginning of a bull market or after a huge drop is less risky. holding gold in a rising inflation scenerio is less risky ,holding long term bonds in rising inflation is very risky. holding bonds when we are slowing down is less risky .risk is determined by the part of the markey cycle we are in.
bonds have more downside risk right now and way less upside potential.
Last edited by mathjak107; 03-16-2011 at 04:09 AM..
So guys did you sell your bonds? I got some Vanguard Total Bond Market, I wonder if I should sell it.
If I sell it I think I don't have to sell it for cash I can exchange it for other funds? if I exchange for other funds I wont' get taxed right? what's the pro/con of exchanging it to another fund? thanks
sold bonds today at their low, decided to take the cap gains, pay the taxes, play it safe and get more into cash.
sold some 30's with 6 years left at 7 1/8% and some 10's at 5 3/4%
Realize every bond has a coupon rate or interest payment . if you bought a 30 year bond 24 years ago you still have 6 years to maturity.
because that bond pays almost double todays rate on a new 30 year the price of the bond is sold not at 1,000 dollars but for a whole lot more to a buyer .in fact its adjusted upward in price enough so the new buyer gets a total return of 4.5% or so which is todays rate even though the bond pays him 7% interest. the seller gets a whopper of a gain becauase he basically is collecting all the interest over and above todays rate upfront
what a huge run up in gov't bonds this past week. to bad ole bill missed it. like i say its always the unexpected that make the obvious not play out as planned. you never know whats a blip and whats the next trend.
Last edited by mathjak107; 03-17-2011 at 03:28 AM..
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