ok I feel stupid asking this,but here goes

[moneymaker]

If I bought 10 year treasury notes @ 3.50% and then they went up to 4% and I divested from them would I be ahead or behind, monetarily. I know with stocks the idea is to buy low sell high, is it the opposite with notes/bonds?

[XBoxBoy]

If you bought 10yr’s at 3.5% and new issues were going for 4%, you would have to lower the price of your bonds to make them attractive to a potential buyer. (After all your notes are paying below going rate, thus less attractive)

The thing to keep in mind here is that the price of an existing bond goes down as interest rates go up, but if interest rates go down, the price of an existing bond goes up. Thus, interest rates and the price of the bond go in opposite directions.

The consequence of this, is that although the bond is insured by the govt, and the interest is guaranteed, the price you can sell the bond can fluctuate. And that fluctuation is inverse to the current interest rates.

Hope that helps,

XBoxBoy

[XBoxBoy]

If you bought 10yr’s at 3.5% and new issues were going for 4%, you would have to lower the price of your bonds to make them attractive to a potential buyer. (After all your notes are paying below going rate, thus less attractive)

The thing to keep in mind here is that the price of an existing bond goes down as interest rates go up, but if interest rates go down, the price of an existing bond goes up. Thus, interest rates and the price of the bond go in opposite directions.

The consequence of this, is that although the bond is insured by the govt, and the interest is guaranteed, the price you can sell the bond can fluctuate. And that fluctuation is inverse to the current interest rates.

Hope that helps,

XBoxBoy

[XBoxBoy]

If you bought 10yr’s at 3.5% and new issues were going for 4%, you would have to lower the price of your bonds to make them attractive to a potential buyer. (After all your notes are paying below going rate, thus less attractive)

The thing to keep in mind here is that the price of an existing bond goes down as interest rates go up, but if interest rates go down, the price of an existing bond goes up. Thus, interest rates and the price of the bond go in opposite directions.

The consequence of this, is that although the bond is insured by the govt, and the interest is guaranteed, the price you can sell the bond can fluctuate. And that fluctuation is inverse to the current interest rates.

Hope that helps,

XBoxBoy

[XBoxBoy]

If you bought 10yr’s at 3.5% and new issues were going for 4%, you would have to lower the price of your bonds to make them attractive to a potential buyer. (After all your notes are paying below going rate, thus less attractive)

The thing to keep in mind here is that the price of an existing bond goes down as interest rates go up, but if interest rates go down, the price of an existing bond goes up. Thus, interest rates and the price of the bond go in opposite directions.

The consequence of this, is that although the bond is insured by the govt, and the interest is guaranteed, the price you can sell the bond can fluctuate. And that fluctuation is inverse to the current interest rates.

Hope that helps,

XBoxBoy

[XBoxBoy]

If you bought 10yr’s at 3.5% and new issues were going for 4%, you would have to lower the price of your bonds to make them attractive to a potential buyer. (After all your notes are paying below going rate, thus less attractive)

The thing to keep in mind here is that the price of an existing bond goes down as interest rates go up, but if interest rates go down, the price of an existing bond goes up. Thus, interest rates and the price of the bond go in opposite directions.

The consequence of this, is that although the bond is insured by the govt, and the interest is guaranteed, the price you can sell the bond can fluctuate. And that fluctuation is inverse to the current interest rates.

Hope that helps,

XBoxBoy

[AK]

I put some of money in bond funds back in ’08.

My investment has done well but I know interest rates can’t stay this low forever. But I can’t find anything else out there worth buying, and at least I’m earning interest while my money is parked in bonds.

As soon as I find something else worth buying, my money is out of bonds and into equities, precious metals, solar radiation futures, horse manure, whatever.

And so will everyone else’s money. And there goes the great fixed-income bubble of 2008-2010 🙂

[AK]

I put some of money in bond funds back in ’08.

My investment has done well but I know interest rates can’t stay this low forever. But I can’t find anything else out there worth buying, and at least I’m earning interest while my money is parked in bonds.

As soon as I find something else worth buying, my money is out of bonds and into equities, precious metals, solar radiation futures, horse manure, whatever.

And so will everyone else’s money. And there goes the great fixed-income bubble of 2008-2010 🙂

[AK]

I put some of money in bond funds back in ’08.

My investment has done well but I know interest rates can’t stay this low forever. But I can’t find anything else out there worth buying, and at least I’m earning interest while my money is parked in bonds.

As soon as I find something else worth buying, my money is out of bonds and into equities, precious metals, solar radiation futures, horse manure, whatever.

And so will everyone else’s money. And there goes the great fixed-income bubble of 2008-2010 🙂

[AK]

I put some of money in bond funds back in ’08.

My investment has done well but I know interest rates can’t stay this low forever. But I can’t find anything else out there worth buying, and at least I’m earning interest while my money is parked in bonds.

As soon as I find something else worth buying, my money is out of bonds and into equities, precious metals, solar radiation futures, horse manure, whatever.

And so will everyone else’s money. And there goes the great fixed-income bubble of 2008-2010 🙂

[AK]

I put some of money in bond funds back in ’08.

My investment has done well but I know interest rates can’t stay this low forever. But I can’t find anything else out there worth buying, and at least I’m earning interest while my money is parked in bonds.

As soon as I find something else worth buying, my money is out of bonds and into equities, precious metals, solar radiation futures, horse manure, whatever.

And so will everyone else’s money. And there goes the great fixed-income bubble of 2008-2010 🙂

[moneymaker]

Yep that’s kinda what I was afraid of if the stock market tanks and interest rates go up most of us are screwed. Louise Yamada is covering this right now on Bloomberg. Many people may be investing in long term bonds to get the better rates, when in fact they should probably be looking at shorter term bonds.

[moneymaker]

Yep that’s kinda what I was afraid of if the stock market tanks and interest rates go up most of us are screwed. Louise Yamada is covering this right now on Bloomberg. Many people may be investing in long term bonds to get the better rates, when in fact they should probably be looking at shorter term bonds.

[moneymaker]

Yep that’s kinda what I was afraid of if the stock market tanks and interest rates go up most of us are screwed. Louise Yamada is covering this right now on Bloomberg. Many people may be investing in long term bonds to get the better rates, when in fact they should probably be looking at shorter term bonds.

[moneymaker]

Yep that’s kinda what I was afraid of if the stock market tanks and interest rates go up most of us are screwed. Louise Yamada is covering this right now on Bloomberg. Many people may be investing in long term bonds to get the better rates, when in fact they should probably be looking at shorter term bonds.

[Author]

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