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Industry Discussions / Real Estate Inv. Trusts: REITs


Subject:  Re: REIT Preferred Pricing Anomalies Date:  2/21/2020  9:55 PM
Author:  Valuemongeragain Number:  85574 of 86504

To consider only today as your ending date for various periods is somewhat cherry picking. Of course bonds look good when bonds yields are hitting record lows. We started these debates 5-10 years ago when rates were similar. In between they have been higher. If you are funding retirement those in between years are/were just as important as today.

So BND annualized returns ending Feb 20, 2020 for 1, 5, & 10 years were 9.98%, 4.66%, & 3.82%.

What if you used 1, 5 & 10 year returns, but ending not 20 Feb 2020, but 20 Feb 2019?

I do not have total returns for those ending dates, but do have capital appreciation or loss amounts.

Over 1, 5 & 10 years the annualized gain/loss amount would be (2.09%), (0.62%) & 1.37%. I guess you would add in about 2% for the yield. So a year ago the 1 year would be a lot lower and the five year considerably lower as well. For the ten year period only about a half percent difference between the two different ending dates.

In forty years the Barclay's Bond Index (BABI)has had 4 years with negative annual total returns. They were 1994, 1999, 2013 and 2018. Note two of them are in the last 7 years. Its not that bonds haven't lost value before, but previously higher yields buffered the decreases in values.

Throw in inflation and it is even worse.

It is not so much what bonds have returned for the last 1, 5 or 10 years because if it is then equities were where you should have been. What is important is what bonds or equities will return over the next 1, 5 or 10 years.

To say that long-term bonds are where you should have been based on today's values are like saying tech stocks is where you should be invested based on recent history in say Feb 2000.
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