larryswedroe wrote:It seems to this article makes one of the most grevious of errors, confusing strategy with outcome.
larryswedroe wrote:It seems to this article makes one of the most grevious of errors, confusing strategy with outcome. Either a strategy is right or it’s wrong BEFORE we know the outcome. Only fools judge strategies by outcomes without considering what alternative universes might have shown up. What if in fact instead of a deflationary recession like we had we experienced an inflationary one like we had in the 1970s, when stocks and long bonds both did poorly. Would you have come to the same conclusion?
larryswedroe wrote:A quick look at Vanguard's funds on M* shows only about 1 year difference in the maturity/duration of the intermediate and longer term fund. That's strange. Certainly would not call a 6.5 year fund long term. So I don't get that.
Occupier wrote:Right now interest rates are at historic lows. The most likely direction is up at some unknown point in the future. When that happens the value of the bonds, or bond fund will decline by their duration. Typical durations for funds, Short term 2 - 3 years, Intermediate term 5-7 years, long term 15-20 years. Most of my lifetime interest rates have been around 5-6% instead of the present 2-3%. If they return to 5% Short term bond funds will decline by 4-9% Intermediate term bond funds will decline by 10 to 21% and long term bond funds will decline by 30% to 60%. So just how intelligent is it to hold long term bonds now earning around 3%? If your name is Dale G, you might think the answer is very intelligent now, but you also might think different in the future. Dave
Levett wrote:This strategy/outcome mantra has always struck me as somewhat limited.
First there is very little difference, to my surprise between the two funds, only a year. I was shocked to see that. To me long term is at least 10 years. That is misleading by Vanguard IMO...
On that we would agree, never noticed that before
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