“Same reason why you would sell a stock that has dropped a bit and seems undervalued. Look at GE….sales and earnings have gone up and the stock has essentially flat lined. You could have made better money somewhere else for the past 5 years.
Why settle for the 2% bond that you bought in 2003 that continues to drop in value? Now, it’s 5.25%, but you might sell if you think it will hit 7. Cash out, wait for yields to hit 7%, and buy back in.”
i think at this point, it would be useful to see a graph of some sort charting the value of your existing bond vs change in yield. maybe if showed some inflection point at which your loss in value will be made up with higher yield…
without that it just seems like a shell game, taking money out of one pocket to fill the other.
maybe i just dont understand asset trading in general…
