Formal ladders have their disadvantages, but the basic idea of holding a group of bonds with different maturities still has merit. Its a reasonable diversification strategy that also stabilizes your portfolio income stream.Paul,On the above, we agree. How to get there is where we depart. No matter the interest-rate environment, there are mis-pricings in both directions on the yield-curve: some bonds are "cheap", some are "expensive", most are trendline. If an investor is hell-bent on building a ladder, no matter the costs, then he/she buys according to plan to create a ladder of whatever length and how many ever rungs are deemed to be needed.OTOH, if the would-be buyer is a value investor, he/she buys what should be bought anywhere on the yield-curve and ignores possible gaps in the ladder. The result --paradoxically, if enough purchases are made over a reasonable buying time-- is that a very tightly-runged ladder will result, and huge cost-savings (aka, higher yields) can be obtained. The admitted downside to my method is that it takes the intention to hold for a longer time frame than most supposedly long-term investors, in fact, use, and it takes more a persistent and consistent buyer than most investors are. I'm shopping at least twice weekly, although I might not be buying. I doubt very many fixed-income investors shop even twice monthly. That's my argument with building ladders as a supposed defense against the inability to predict the direction of interest-rates. I agree that the predicting can't be done successful, so why even try? But value investing can be done in the here and now. "This is cheap. That isn't cheap." The simple-mindedness of laddering costs investors money. But it's their money to spend, right? So I shouldn't protest. In fact, in posting the link, I helped to facilitate laddering. But I think its would-be users should be aware of the costs they might be paying. Charlie
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