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|Subject: Re: Yesterday’s Damage? None to Bonds||Date: 5/7/2010 3:15 PM|
|Author: brucedoe||Number: 30778 of 35505|
I addressed some of our bond holdings on http://boards.fool.com/Message.asp?mid=28496992
I didn't mention in that post that we still have some bonds acquired years ago that are still underwater (A BAC bond paying 5.45% maturing in 2028 down by a tad less than 6% and a GE 5.125% bond maturing in 2029 down 7.65%.* I have felt I need to get at least 5% on bonds.), but they two have been increasing and are now less than 6 and 8% underwater. Our 1.6% 10-yr TIPS is up by 20.28% and our 2% TIPS is up by 25.87%. We also have a large 5-yr tradeable CD paying 5% maturing in 2013 that is up 8.46% above maturity (and it pays interest monthly). I'm tempted to trade that in, but the 5% monthly income is still nice.
I have limited experience in bonds, but it seems to me that bonds generally follow stocks but by smaller amounts. That is when stocks are down, bonds are down too but not by as much. Therefore I am delighted that in this downdraft on stocks, bonds are up.
* In spite of what the market may say, 5+% on a corporate bond is about 1% above a 30-yr Treasury and seems good to me. I know there are people that are panicking and feel that both BAC and GE are going down the tubes. Sorry, but that is nonsense. BAC is too big to fail and GE has yet to have even a negative quarter in earnings.
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