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Fixed Income: Out Of The Frying Pan Into The Fire

Wednesday, April 10, 2013 - 7:43 AM
Readers may find the article titled "Fixed Income: Out of the Frying Pan, Into the Fire" to be of interest. It is available at Yahoo Finance. Its premise is that "Investors - the savers in the economy - are underrepresented in the Fed's most unbalanced approach to balancing its dual objectives. Lost are the needs of the forgotten men (and women)."


P.S. 51hh, I think the article's advice is mainly intended for those who are already fixed income investors. It is warning them that the 30 year bond bull market is ending, and giving the reasons why this is so, and offering advice as to which fixed income sectors are less vulnerable. The article also says something that people here have already been saying: that Fed policy is pushing investors into riskier asset classes.

Coincidentally, this morning there was also an article that PIMCO is now bullish on U.S. Treasurys! Leaves one wondering who to believe.
WilWil242 posts since
Feb 26, 2010
Rep Points: 1,285
1. Wednesday, April 10, 2013 - 8:02 AM
The proposal to diversify into various bonds may not be prudent, IMHO.  When the stock market tanked, even a diversified equity portfolio suffered significantly.  Most investors, including myself, do not understand bonds.  To blindly go into various bonds is a prescription for disaster.

It may be safer to diversify (in small protions) into equity, in terms of mutual funds run by professionals, according to one's risk tolerance, time horizon, and experience/knowledge. 

One can learn about mutual funds from Morningstar Discuss forums and other websites.  There is relatively fewer sources for learning about bonds, and bonds are simply boring.
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427