I take it your astrologer's prediction is the basis of your certainty about how interest rates will rise, since no one else, including the Fed governors themselves have this information.
The issue that Buffett and everyone else is pointing to is that the problem with bonds is structural. Unlike markets which go up and down randomly, bond prices follow strict rules. The probability that interest rates will rise is very high. What happens when they start to rise is unknown, but it's safe to say that the people who are in bonds now because they are telling themselves "I will get out when rates start to rise" will dump their bonds when they do. And when that happens it's anyone's guess what happens. It will affect the liquidity of bonds and it will have a strong affect on the prices of Bond Funds which have to sell bonds to pay for redemptions.
There's no rule that says that bond prices have to adhere to the duration rule. Prices respond to demand. If the demand for bonds drops, then the funds will have to sell their bonds at whatever they can get, which might be less than the current NAV suggests--resulting in dramatic drops in NAV.
Perhaps very slow changes in interest rates will slow this process, but they won't stop it, and as long as rates keep dropping your fund NAV will be below current levels. New bonds will replace old ones, more slowly than has been the case over the past 30 years when bonds got called a lot, since companies don't call bonds when rates are rising. But if rates continue to rise, their prices continue to drop, too. Best case you have locked in today's rotten yields for the length of the current duration (unlikely) Worst case you've locked them in for a decade or more--during which time you have to pray that inflation stays at whatever your bond fund is yielding this week.
There really is a reason all these experts are warning people that bonds are not the safe haven they have been for the past 30 years.
now that i've said that i also said i was diversified. that is why they say diversify. my prediction is as good as anybody else's.(it's also as bad as anyone else.r we don't know. since you and i have had dueling e-mails for the past several weeks we both have our ideas. if i new for sure whats going to happen i'd have it all in whatever it is.
can you tell me what is going to happen for sure. the way i see it on gnma as opposed to direct treasuries if interests rates start to go up-mortgages also go up. refinancing s to lower rates go down. that is why i have no direct investments in bond fund of treasuries.(although i do have target date funds that do)
ps -i'm beginning to think you lie in wait for my posts so you can tear them to shreds
another thing while i'm at it. what credit union in mass gave you the 2 percent cd's