Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
The answer depends on why you own bonds in the first place.
If the answer is: to serve as a hedge against economic contraction and equity bear markets, then you should stick with Treasuries, because they serve this purpose better than any other bonds.
If the answer is: to reduce total portfolio risk, then a total bond market fund (in tax-deferred accounts) &/or high quality munis should serve the purpose.
If the answer is: to generate postive real returns, then you're in the wrong place! Most people don't realize that historically the bond market has generated negative real returns more often (in 5-, 10-, 20-year periods) than the stock market. And starting from today's yields, negative real returns are a pretty sure bet over the next five and ten years.
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ihckennedy wrote:The answer depends on why you own bonds in the first place.
If the answer is: ...
And if the answer is "some of each" than break your FI portfolio into "some of each".
A scientist looks for THE answer to a problem, an engineer looks for AN answer. Investing is not a science.
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Doesn't this tell all we need to know ?
“There are two times in a man's life when he should not speculate: when he can't afford it, and when he can.”
― Mark Twain
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larryswedroe wrote:You made the mistake of painting all munis with the same brush
And you made the mistake of attributing Mr. Swensen's statement to me; I simply reported a passage from his book.
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.
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My apologies but my assumption was you agreed which was why you cited it. Might have said, while I don't agree here is what Swensen had to say.
at any rate I think the case is clear, that junk munis should be avoided for same reason Swensen states you should avoid junk bonds
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