Reflections on economic and social trends that impact investor sentiment and behavior.
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Rate-Driven Bond Bear Markets
Western | January 24,2014

Ken Winston discusses rates of return on fixed-income investments in years which interest rates rose

  • Investors are right to be concerned about rising rates. But rising rates do not always mean a negative return for bonds
  • Since 1926, there have been 43 years when interest rates rose. Yet bonds had a positive return in all but 9 of those years
  • Why? Among other causes, the carry or yield on bonds has often been enough to overcome the negative effects of higher rates