What is the Worst Case Scenario for Bonds?


Pragmatic Capitalism has a couple of interesting articles. What is the Worst Case Scenario for Bonds? is the one that held the most interest (pun intended) for me. The reason for preferring this article is that the small amount of money I have invested in bonds is in a bond fund.

A Medium duration bond portfolio (such as a bond aggregate) should not expose you to significant loss of principal even in the case of a sharply rising interest rate environment.

If you aren’t going to read the article to see the limitations on what this quote means, then you might be better off forgetting that you ever saw this post.

The article that led me to the above was Repeat After me: “Bonds Don’t Necessarily Lose Value When Rates Rise”. Maybe this is more the headline you should forget if you aren’t going to read the articles.

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