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sneakoner

Registered: Jan 2011
Posts: 230

08-16-12 01:40 PM

I bought VBLTX (Vanguard Long-Term Bond Index Fund) and VUSTX (Vanguard Long-Term Treasury Fund Investor Shares) a few days ago and they've been dropping...are investors moving their money into stocks now and away from bonds and treasuries?

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Free Thinker

Registered: Nov 1999
Posts: 14316

08-16-12 01:42 PM

Quote from sneakoner:

I bought VBLTX (Vanguard Long-Term Bond Index Fund) and VUSTX (Vanguard Long-Term Treasury Fund Investor Shares) a few days ago and they've been dropping...are investors moving their money into stocks now and away from bonds and treasuries?

can you think of any reason why they should not get out of bonds at current rates?

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sneakoner

Registered: Jan 2011
Posts: 230

08-16-12 01:46 PM

Quote from Free Thinker:

can you think of any reason why they should not get out of bonds at current rates?

I guess current rates are pretty low...where is smart money going right now? Slowly back into stocks? I was going to put it into a money market account but the yields are horrible there.

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Free Thinker

Registered: Nov 1999
Posts: 14316

08-16-12 01:49 PM

Quote from sneakoner:

I guess current rates are pretty low...where is smart money going right now? Slowly back into stocks? I was going to put it into a money market account but the yields are horrible there.

you can lose a lot of money in bond funds if rates back up. not a good place to be at alltime lows in yields.

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sneakoner

Registered: Jan 2011
Posts: 230

08-16-12 01:51 PM

Quote from Free Thinker:

you can lose a lot of money in bond funds if rates back up. not a good place to be at alltime lows in yields.

So if bond yields are low, stick to stocks like index funds?

If bond yields are high, move the money to bond funds?

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FrankSlaughtery

Registered: Aug 2010
Posts: 810

08-17-12 12:16 PM

Quote from sneakoner:

I guess current rates are pretty low...where is smart money going right now? Slowly back into stocks? I was going to put it into a money market account but the yields are horrible there.

+1 to free thinker's thought re this.

i've seen/heard about financial advisors putting clients in bond funds for more yield b/c mm, cd, checking/savings are at zero. they are in for a rude awakening when all of their yield is wiped out by a capital loss. for those who haven't had their morning cup of coffee, an investment that yields 2% and loses 3% is not good.

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