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Bail on Bonds? Thumbnail

Bail on Bonds?

I grew up on a wheat farm in the SE corner of Washington state, an area The National Geographic affectionately labeled “A Paradise called the Palouse.” 

Whitman County is the #1 county in the nation in wheat production, and our wheat farm is nestled on the Snake River Canyon, pictured above. In 1980, I decided to move on from my summer job on the farm and spent a year working for Merrill Lynch, trading in the wheat pit at the Chicago Board of Trade (CBOT).    

I felt like I had died and gone to heaven. After trading ended for the day, I would catch afternoon Cub games at Wrigley Field. That sure beat driving a dusty old combine on the farm. 

That was also the summer I signed up for a CBOT class to learn the fundamentals of bonds, because bonds were a little confusing to me. 

  • When interest rates go up, why do bond prices go down?
  • Do I want to own something that goes down in value?
  • But wait, wouldn't I want to own a bond that pays more interest?
  • Does that mean that I want bond prices to go up or down? 

In this four-minute Loomis/Sayles video, “Unleashing the Superpower of Bonds,” you can learn just about everything about bonds that I learned in the four weeks it took to finish the CBOT class. 

With interest rates up for the year, your bond funds are likely to be down in value.

Is it time to bail on bonds?

Maybe, maybe not.

Want to build a portfolio and financial plan that weathers these fluctuations? Strategize with me and let's get you on track.