Why are Bond Funds and Treasury Funds dropping right now?

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

  1. #22     Mar 8, 2013
  2. ammo

    ammo

    #23     Mar 8, 2013
  3. #24     Mar 8, 2013
  4. ammo

    ammo

    don't know squat about bonds sneak,so not advising
     
    #25     Mar 8, 2013
  5. So according to this:

    http://online.wsj.com/mdc/public/page/mdc_bonds.html?refresh=on

    30-year Treasury Bonds have a yield of 3.26%
    10-year Treasury Bonds have a yield of 2.06%

    VUSTX:

    https://personal.vanguard.com/us/funds/snapshot?FundId=0083&FundIntExt=INT#tab=2

    holds bonds that have an average maturity of 24.2 years.

    Since the 30-year and the 10-year have yields that are pretty low and they'll most likely go up in the long term, that means that the fund is destined to drop? I bought this fund a few months ago and I'm down almost 10%.

    Should I even bother holding or should I sell?
     
    #26     Mar 8, 2013
  6. what was the purpose for buying? How long are you planning to hold?

    yes, as rates rise your nav will go down

    but if you are needing to preserve capital rather than accumulate it, there is nothing wrong with those funds. They do the same thing you would be doing if you bought individual bonds yourself. They hold until maturity and then rollover. So eventually if rates ever stabalize somewhere you eventually get even and start making money from the yield.

    If you really believe rates are going to rise, then the money market is the best place.

    But most who are over the age of 50 keep some money in bonds and some money in stocks. Asset allocation is usually more certain than guessing.

    but like I said, most feel rates have only one way to go, up, but nobody knows when. If the unemployment number keeps dropping like it did today you could lose a lot of money very quickly in bonds.

    you're kind of between a rock and a hard place. You just bought bonds at an all time high, but if you sell them, you will now be buying stocks at an all time high.

    If you are under the age of 50 I would sell the bonds and go 100% in stocks, even at an all time high.

    I own bonds, but I am old an I use them for monthly income. I rode them all the way up, and I'll ride tham all the way down. The principal is just to provide income, I don't ever need to sell.
     
    #27     Mar 8, 2013
  7. I bought them to diversify. I had Vanguard Short-Term Bond Funds and Intermediate Term Bond Funds and both were doing okay (Intermediate Term actually was and still is doing pretty good).

    I have money spread over the domestic and international stock market indices as well as various mutual funds so I'm pretty well diversified.

    I'm under 30 years old and I don't "need" to take this money out anytime soon. I'm just debating whether or not it would be a smart move to leave it there and wait for a bounce back. But like you said there is no way to know what the market will do.

    The money market was just not returning much of anything and I thought bond funds would be somewhat low risk with low reward. I'm slowly finding out that the long term treasuries are actually very volatile and are not as low risk as I initially thought.
     
    #28     Mar 8, 2013
  8. you haven't seen anything yet. Rates have gone nowhere. I know if it was me at your age I wouldn't own a single bond. You don't have to go wholehog in stocks. Go to the money mkt and move it out a little at a time, especially if we get any kind of a pull back. You've got a good 20 years to ride out any bear market. And maybe by that time you will have so much money you won't even need bonds then. Bonds are not for the young or the rich.
     
    #29     Mar 8, 2013
  9. Holy jeez I just did a search for a historical yield of 30-year bonds and it peaked at 15% in the early 80's.
     
    #30     Mar 8, 2013