SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Residential Real Estate Crash Index
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: patron_anejo_por_favor who wrote (124623)5/22/2008 8:46:00 AM
From: ChanceIsRead Replies (1) of 306849
 
RE: Long Bond - Lehman 1-3 Year Treasury Bond Fund (SHY)

Patron, I couldn't agree more with you about the perils of the long bond. I read one sharp, old, Wall Street sage recommending buying the short bonds. One can easily do that through the iShares (SHY) short bond ETF.

ishares.com

Of course that is for the wimps who don't want to get short.

The short bonds are less volatile or sensitive to rate changes. In the current climate, short rates aren't getting any lower, so the potential for capital appreciation isn't there. Short rates could easily go up from here so that there is real possibility of cap losses. Of course with the short maturity, those losses get wiped out upon redemption.

Same sage also suggests that the government can't monkey with the very short bonds (less than six months?). Apparently the government has been known to extend maturity at will...eg turning a one year bond into a 1.5 year bond. I don't know when that last happened, but the motivation is certainly there today for the government to do that if our foreign friends stop buying. I guess its kind of like signing up for one tour of duty in Iraq, and being invited back for a second or third, where declining the invitation is not an option.

I am concerned because my wife's federal retirement program options are severely limited - US Treasuries, US small caps, foreign stocks, and perhaps a few others. I am not pleased by the choices. We are overweighted on the foreign stocks to get some protection via the falling dollar. I don't think we can go to cash, which of course is the ultimate US short bond. Certainly better than the long bond these days.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News