Talk:Bond basics

Excellent primer on bonds, but wondering about the neutrality of some of the advice, especially: "Ensure that your bond holdings are built around a core of Treasuries". More generally, is the purpose of a wiki page to give advice or to present factual information? The guidelines I'm directed to in the Wiki help link suggest it's the latter (neutrality, no original research).

Not quite ready to jump in and change anything, but wanted to at least bring this up and see what the reaction is.

--Kevin M 20:19, 15 April 2010 (UTC)

In giving some guidance, I had tried to balance a few factors. The first was that the pages on the wiki tend to have a "Role in the Portfolio" section, which tries explaining how to use the asset in a Bogleheadish fashion. Without this section, the pages tend to be content that is available anywhere--simple definitions and explanations. The second is that advice on this topic varies widely among Bogleheads and experts, but that to my knowledge *all* such advice for bonds includes a substantial helping of Treasuries. For instance, Rick Ferri, who has perhaps the most aggressive bond position of any of the major experts widely looked to by Bogleheads, argues for the inclusion of a substantial proportion of high yield bonds in a bond portfolio. But his portfolios all include a nice dollop of Treasuries nonetheless. The third factor was that, having once taken the Hippocratic Oath, I felt a duty to "first do no harm" by not leading any investor whose decision would be primarily based on this page into taking undue risks. There's plenty of room for other kinds of bonds in portfolios, but investors need to understand the incremental risks they are taking over Treasuries and ensure they're comfortable with that. Fourth, and finally, Mr. Bogle's opinion should weigh heavily on anything that carries the label "Boglehead," and his recommendation is for funds like IT Bond Index or Total Bond Market, all of which are built around a core of Treasuries.

I think that changes are most welcome and would be great, but I would be extremely cautious in leading readers to any conclusion other than ST/IT Treasuries/TIPS being the safest and anything else involving taking increasing amounts of risk.

--Linuxizer 00:39, 14 April 2010 (UTC)

My opinion is aligned with Linuxizer. The wiki needs to be objective, but with an understanding that opinions should follow the investing philosophy of the Boglehead forum. "Do no harm" is the best advice, as most readers (like myself) are looking to the wiki as a factual tutorial. References cited should be from authoritative sources.

See Individual Bonds vs a Bond Fund for an example where the advice depends on assumptions used by the author. This page is marked Controversial as there was no forum consensus on objectivity. However, the advise is extremely helpful and should remain.

In case you are not familiar with editing the wiki, see this thread for help using the edit toolbar: NEW WIKI TOOLBAR NOW AVAILABLE. The Sig button (4th from right) will insert your signature.

--LadyGeek 02:47, 14 April 2010 (UTC)

Appreciate the comments, and all the work you are doing on the wiki.

Before reading your comments, in thinking about how I would change the page, I thought the Role in Portfolio section should simply be removed, as it seems to me more appropriate in a page on asset allocation. After seeing that it was included because it seems to be a standard, my next inclination would be to remove everything except the first couple of sentences, since that pretty much covers the basics of bonds with respect to their role in a portfolio (although mention of diversification and low correlation with stocks might be added). If that's too drastic, I would remove the advice toward the end, as it's expressing opinion (admittedly in agreement with the majority, but not all, of prolific forum posters), and not coming from a reference.

Regarding "without this section ...", if there's no value to the page other than the advice, why not just point readers to other references that do the job? You must have felt there was some value in writing up the majority of the page that didn't present specific recommendations. Not meaing to be argumentative -- truly wondering.

Regarding the advice, here's a quote from Bogle that contradicts it: "Investors in a high tax brackets, however, would hold a very low-cost quasi-index portfoio of high-grade intermediate-term municipal bonds". Also, Bernstein in his latest book gives several examples of portfolios that don't include treasuries in the bond portion. Taylor has posted that one is likely to do fine with any of Vanguard's short or intermediate term bond funds (not just treasuries).

Regarding "do no harm", treasuries have interest rate risk. From a return perspective, an individual investor might be better off with short term FDIC insured CDs (although I realize they aren't bonds). I'm simply mentioning this to illustrate that there are low-risk ways to build out your fixed income allocation other than around treasuries.

I must say I feel guilty simply suggesting deleting stuff after all of your hard work, and wouldn't presume to act on it without getting some consensus first.

Thanks again for taking the time to explain and educate me in boglehead wiki protocol. I see that it deviates somewhat from wikipedia protocol, and was mislead by the wiki help.

--Kevin M 20:19, 15 April 2010 (UTC)

The wiki has a sandbox area for you to develop whatever you want. Just put the page in Category:Development. As long as nothing else links to it, it's invisible to the main wiki (but you can find it).

I would suggest to take the existing bond page and copy it to a new page with a different title and change the category to Development. Have fun and write it whatever way you want. Then, get a consensus before modifying the "published" wiki page.

For example, I've gathered all the definitions of duration (definitions removed, math only --LadyGeek 12:31, 2 January 2011 (EST)) on one page with the intent to make everything consistent. I'm learning bonds and will get to it as soon as I think I understand the concepts. It's open to anyone, feel free to update.

If you think the wiki help is misleading, please make suggestions (on that page). There hasn't been that much activity in that area.

--LadyGeek 00:07, 16 April 2010 (UTC)

I added style boxes to both bonds and stocks, with the hope of providing a background to the style box in Bond Market Indexing. Please review. Tables were created using the Word to Wiki Converter with minor editing.

Questions:

1. Can any comparison be made between the stock and bond style boxes? For example: least risk is at the top, most risk at bottom. I'm not sure how to (if you can) compare horizontal (Value / Blend / Growth) to (short / intermediate / long) term duration / maturity.

1a. Is there any advantage to discussing the VG Balanced fund style box, perhaps as an example?

2. Is there such a thing as a bond index style box vs. the ones shown on the bond page? --LadyGeek 02:48, 9 June 2010 (UTC)

Reference to duration definitions removed above (development page was updated) --LadyGeek 12:31, 2 January 2011 (EST)