Marilyn Cohen is president of Envision Capital Management Inc., a Los Angeles–based registered investment adviser. She is co-author with Christopher R. Malburg of the recently published “Surviving the Bond Bear Market: Bondland’s Nuclear Winter” (John Wiley & Sons, 2011) and writes Marilyn Cohen’s Bond Smart Investor newsletter at www.newsletters.forbes.com.


Discussion

Louis from FL posted over 3 years ago:

Excellent article. Hopefully we will not follow Japan with further decreases in the interest rates.


A from HI posted over 3 years ago:

Great!


J c from TN posted over 3 years ago:

Great article, but please help me with the math related to the municipal bond. The table shows as interest rates rise the value of the municipal rises as well.

The value of the Municipal bond makes a big difference in the overall portfolio value.

Thanks and I look forward to an explanation.

JC in Tn.


Judith from UT posted over 3 years ago:

Very interesting article, but for those of us without the funds necessary to buy a balanced portfolio of individual bonds, is there a mutual fund alternative? Do any mutual funds invest in CIPS?


Larry from FL posted over 3 years ago:

Will inflation and rising interest rates push bond prices down or not? You must answer the question in order to decide on a bond strategy..Like most things ,,,people act upon an uncertain future.


Ingemar from CA posted over 3 years ago:

Very interesting article. Where can one find listing of available variable interest rates and CIPS ?


Charles Rotblut from IL posted over 3 years ago:

The spreadsheet included with our annual mutual fund guide lists the following inflation-protected bond funds: AmCent Inf-Adj Bond Inv (ACITX), AmCent Inflation Prot Bd Inv (APOIX), Fidelity Inflation-Protec Bd (FINPX)
PIMCO Real Ret D (PRRDX), Schwab Inflation Prot (SWRSX), T. Rowe Price Infl Pro Bd (PRIPX), TIAA-CREF InflLkRtl (TCILX) and Vanguard Infl-Prot Secs (VIPSX)


I have not looked at their individual portfolios, so I cannot tell you if they hold mostly TIPS or CIPS, however. The mutual fund guide is located at:
http://www.aaii.com/guides/article/top-mutual-fund-intro-2011

-Charles


James from PA posted over 3 years ago:

Interesting article. None of the funds listed are predominately CIPS. TIPS seem to range from 77% to 100%, according to the sector data in free Morningstar. This took all of 6 minutes using google & MS accelerator keys.


Reginald from GA posted over 3 years ago:

I could not duplicate the green fields numbers in your spred sheet.
reg


Bruce from TN posted over 2 years ago:

For sort term bonds it seems that those that carry insurance would be highly attractive.
What percentage of municipal bonds carry insurance?


Dom from WA posted over 2 years ago:

Dont get your spreadsheet on bond duration.

How is the


Dom from WA posted over 2 years ago:

oops, hit enter key...

How is the total cost different from the purchase price for each bond security? How are the value changes for each respective bond relative to the particular interest rate scenario, e.g. how exactly does the Big Blue bonds decline $5,484 w/ a 150 bps increase. I think formulas would help a lot here...


Rob from CA posted 10 months ago:

Under your 'Bond Fund Strategies' section you describe loss of value with interest rate increases. When is it a paper loss and when is it an actual loss? If an investor (vice timer/speculator) holds a bond fund with a long-term investment horizon, does the investor actually receive increasing interest as bonds in the fund mature and are replaced with higher yielding bonds, and does the bond fund's value increase during this process? If true, rising interest rates would be less of a concern...


SD from TX posted 10 months ago:

I would urge all investors to be very careful in predicting rates beyond 1 or 2 years. No one could have predicted the total return on stocks or bonds in any 10-year rolling period.
It is just too difficult. Take the period between 2000 and 2010 or 1990 and 2000. No one expert predicted the performance of stock or bond markets during these periods.
However, it is reasonable to say that the "party is over" for bond investors despite what you hear from Bill Gross (of Pimco) regarding the virtues of bond investing. Buyer beware.


Nancy & Barry Kronman from FL posted 10 months ago:

Yes, no one can predict rates, but everyone knows the consequences of spending and borrowing much more than you have coming in.


Mark from NJ posted 10 months ago:

This article is from 2011. Today I would highly recommend reading Paul Krugman, who has been right since 2008 that inflation and interest rates are not the things to be feared these days.
Nor are "entitlements," a loaded word that misleads a lot of people. Are big corporations "entitled" to their big tax breaks and subsidies? Agribusiness for the farm subsidies? No, but they still get them, every year. How is that better than giving people money to buy food, which they promptly spend, stimulating the consumer sector?
In sum: try not to be a spending scold. They've been wrong all along.


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