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Re: why do we invest in bonds with negative real return?

to grayfox and stan1: I agree. I live and work in Denmark, where investors are a lot more "bond fond" than most of you living on the other side of the pond (for no valid reason IMO): The great majority of investors in their 50s and 60s have more than 60% bonds in their portfolios. Obviousl...
by Jesper Dall
Wed Dec 26, 2012 7:16 pm
 
Forum: Investing - Theory, News & General
Topic: why do we invest in bonds with negative real return?
Replies: 75
Views: 5999

Rebalancing - literature about frequency, anyone?

William Bernstein says once every few years. Rick Ferri sticks to annual rebalancing and claims that it does no matter much as long as you get it done. David Swensen mentions the value created by doing it multiple times a year. I am looking for links to literature/articles analyzing and discussing t...
by Jesper Dall
Tue Dec 25, 2012 7:34 pm
 
Forum: Investing - Theory, News & General
Topic: Rebalancing - literature about frequency, anyone?
Replies: 25
Views: 1238

Re: why do we invest in bonds with negative real return?

Thx for thoughtful comments from you all. If we assume that we can determine the financial goals and risk tolerance of the investor, it all makes sense to stick to the overall plan. However, risk is a very elusive concept to most investors, and their risk tolerance depends on the trade-off between r...
by Jesper Dall
Tue Dec 25, 2012 4:39 pm
 
Forum: Investing - Theory, News & General
Topic: why do we invest in bonds with negative real return?
Replies: 75
Views: 5999

Re: why do we invest in bonds with negative real return?

There is no quick fix, obviously, particularly not if you design your portfolio to the maximum risk you (the investor) can bear. But it implies that we are willing to modify the criteria for including an asset class in our portfolio to "...we may include an asset class with expected negative re...
by Jesper Dall
Tue Dec 25, 2012 12:00 pm
 
Forum: Investing - Theory, News & General
Topic: why do we invest in bonds with negative real return?
Replies: 75
Views: 5999

why do we invest in bonds with negative real return?

To quote Rick Ferri: "Securities that only keep pace with inflation are not suitable for a long-term investor" (All About Asset Allocation, p.94). This is the main reason why Rick does not recommend e.g. commodities as an asset class. However, does that rule out bonds as an asset class? Va...
by Jesper Dall
Tue Dec 25, 2012 7:10 am
 
Forum: Investing - Theory, News & General
Topic: why do we invest in bonds with negative real return?
Replies: 75
Views: 5999

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