Why are Bond Funds and Treasury Funds dropping right now?

Discussion in 'Trading' started by sneakoner, Aug 16, 2012.

  1. 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?
  2. can you think of any reason why they should not get out of bonds at current rates?
  3. 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.
  4. 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.
  5. So if bond yields are low, stick to stocks like index funds?

    If bond yields are high, move the money to bond funds?
  6. +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.
  7. that's true but don't bond funds have a typical history of rising? if we're in it for a 3-5 year time horizon, shouldn't we be safe? pardon my ignorance if i say anything stupid but if anybody with more knowledge than me (probably most out there) please chime in
  8. emg


    Because big investors don't want to lose.

    More than 90% of small traders lose. They just lose!
  9. Look at the yield you get over that 3-5 year time horizon. It's next to nothing. If you are talking about "historically"; that's an entirely different discussion because you are talking about pre-ZIRP. 10 years ago, if you stuck around for 3-5 years, you'd be talking about 5+% yields even if there was a bit of volatility in the interim. Nowadays, it makes no sense to tie up that cash for next to zero yields.

    It's a disaster.
  10. Is this the right table to look at for the yields?

    #10     Aug 17, 2012