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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (8995)	10/3/2001 11:50:14 AM
From: MetalTrader	Read Replies (2) \| Respond to of 23153

da, now?? with all these beautiful equity set-ups??? mt

To: chowder who wrote (8995)	10/3/2001 12:51:06 PM
From: energyplay	Respond to of 23153

Why long term bond funds ? Number 1, I'm making a directional bet that interest rates will continue to fall. Longer duration bond funds are much more sensitve to this than shorter duraion bond funds. If I'm wrong, and rates move up, I will loose money. However, I think there will be great demand for safe yield, which will push rates down. Two, look at the yield curve -there's a nice one in the back section of the Wall Street Journal everyday. Short term rates - under 2-3 years have been knocked down by the September 11 attack, and the Fed liquidity flood. So for 2 years, I would get about 1.5%, for 5-10 (intermediate) about 3.5-4.5% and longer term about 5.5%. The longer term stuff actually moved up on fears of future inflation. I think we will still see deflation for a while, so I expect this 0.25 to 0.5% premium to go away. 5% in a slightly deflationary environment wtih safety is a good deal - not a great deal, but pretty good. Reason 3 - this applies to all bond & money market funds - the stock environment is confusing to me right now. I would like to wait for energy to hit bottom - but when ? I don't think it will be next week, it may be January, it could take until late May or longer... Reason 4 - You don't have to watch this every day - once a week is fine. I have personal reasons for reducing my investment work load. Also, the safety will help me sleep at night. I have been reading some books on bonds. I would recomned The Bond Bible, by Marilyn Cohen, It's readable, which is Very important. While it is mostly about individual bonds, this provides the background you will need to buy the right bond funds. It doesn't provide every bit of inforamtion, but covers the key points well, and it's not overly long.