bestonlinepokerbonus| Former bond king Bill Gross tells you to stop buying bonds
editor 2024-05-12 15:05:33 Nature 23
Investors need to think about bonds as they did before Gross appeared.
Bill Gross, the former bond king, wantsBestonlinepokerbonusYou knowBestonlinepokerbonusOh, the bond fund is dead.
That may be a bit of an exaggeration from a billionaire peddling bond funds to the public, but that doesn't mean he's wrong.
In 2014, Gross and the long-serving Pacific (601099) Investment Management Company (Pacific Investment Management Co)Bestonlinepokerbonus(.) Parted ways and retired from Janus five years later. He pays particular attention to the concept of "total return", an idea that Pimco helped promote that bond investors should focus not only on interest but also on capital appreciation, just as equity investors focus on both dividends and share prices.
'The problem is that mathematical computing is no longer good for investors, 'Mr. Gross said in a recent article on his website. When Gross promoted the idea of total return in the 1980s, the yield on long-term government bonds was 15%. As bond prices rise when interest rates fall, once interest rates start to fall, there is plenty of room for prices to rise.
Currently, the yield on the 10-year Treasury note is 4. 5%Bestonlinepokerbonus.4%, which greatly reduces the room for pricing errors.
At the same time, bond investors have suffered heavy losses in recent years due to rising interest rates. Mr Gross said that while bond bulls had long believed that the Fed's rate cut would soon reverse that trend, investors should not expect such an outcome.
A key reason is the increase in outstanding public debt, which grew by 10% last year. In the end, he believes, no matter what measures the Fed takes, the fast-growing supply of Treasuries will make it difficult for long-term bonds to keep prices rising.
"those who advocate lower interest rates must cope with an inexorable rise in the supply of US Treasuries and a possible Sisyphean fall in bond prices," Gross wrote. "the total return is dead. Don't let them sell bond funds to you."
Gross has always had a gift for provocation and no longer needs to worry about selling his bond fund to investors.
As he mentioned, the Vanguard Comprehensive Bond Market Index Fund (Vanguard Total Bond Market Index Fund), a popular and representative fund, has not just experienced a recession of a year or two.
Over the past five years, the company's average annual total return has been negative. Five years is a long waiting time for retirees, especially given that bonds are considered the most reliable part of a conservative portfolio.
Of course, most income investors may not insist on buying bond funds because they have strong views on the yield curve or the speed at which Treasuries are issued. Instead, they have no choice. The stock market remains volatile, with an average dividend yield well below 2 per cent, and alternatives tend to be expensive and illiquid.
One solution is to retain income assets, including bonds, but abandon the total return mentality pioneered by Mr Gross. To do this, try to look at the overall performance figures of your portfolio. Instead, just invest your assets in bonds and instruments like certificates of deposit to cope with emergencies and upcoming living expenses, and invest the rest in the stock market for a long time.
The ladder of bonds or certificates of deposit, including the purchase of a series of bonds with continuous maturity, should help investors deal with fixed-income investments effectively. Short-term bonds, such as six-month Treasuries, which currently yield 5.4%, will give you the highest possible interest rate. Longer-term notes, such as five-year notes with a 4.6% yield, pay slightly lower interest rates, but can provide a guarantee for several years if interest rates fall or the stock market enters a bear market.
In other words, investors need to think about bonds as they did before Gross appeared. Think of them not as an opportunity to squeeze some extra performance points out of your portfolio, but as a financial planning tool: a way to protect your savings and lock in income that you need to use to pay for your budget.
Wen | Ian Salisbury
Editor | Yu Zhou
This article was first posted on the official account of Wechat: Barron Weekly. The content of the article belongs to the author's personal point of view and does not represent the position of Hexun. Investors operate accordingly, at their own risk.
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