patrick.net

clambo says

Don't expect capital appreciation from a bond fund.
Conversely, a falling NAV of a bond fund should not bother you; the purpose of the fund is income.
If or when interest rates are decreased, the average bond fund NAV should go up.
Over long time periods, the return of a bond fund is just the interest income it pays out.

I agree as a NAV does not show the annual return from the yield.

Right now the yield for Vanguard's Total Bond Market Fund (BND) is 4.7% which is expected given what Treasuries (1 year to 10 year duration) are at now

But I agree as far as the long term for a bond, as far as holding for at least 10 years, hopefully in a couple of years the 10-Year average annual return for BND is at least 1% above annual inflation, as BND recovers

I was just pointing out from summer of 2021 to fall of 2023 how the net asset value (NAV) dropped that much for the ticker BND (as expected because of inflation increasing around start of summer of 2021).

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I do remember hearing on financial news shows that for every 1% increase in interest rates there is generally a 1% drop in price of a bond for every year of duration.

The host of these shows were trying to relate interest rate increases to the value (price or NAV) of the bond.

Quite a few “experts” have been recommending longer duration UST’s, not so much for their yield, but for capital gains after interest rates fall. Of course they have been recommending this for quite a while, while rates remain higher for longer.

Al_Sharpton_for_President says

Quite a few “experts” have been recommending longer duration UST’s, not so much for their yield, but for capital gains after interest rates fall. Of course they have been recommending this for quite a while, while rates remain higher for longer.

Good point, as I figure the worst is behind bond funds until the Fed increases rates in the next inflationary cycle or period.

So the worse is behind bond funds like Vanguard's Total Stock Market Bond Fund for this cycle and likely the next stage is a recession as far as stocks crashing +20% and inflation decreases as well (based on no stagflation conditions). My best guess is all of this will be held off until right after the November election.

Even with the way Vanguard manages its bond funds like the Vanguard Total Stock Market Bond Fund with its bond-ladder-strategy, there will be at least some or a little capital appreciation or gains with bond prices increasing due to interest rates decreasing.

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The stock market is erasing a lot of the COVID pandemic gains.

On one of several websites that track the stock market metrics, I saw that the inflation-adjusted S&P 500 is at the same level it was in October 2021 and only about 13.5% above its January 2021 level.

https://www.multpl.com/inflation-adjusted-s-p-500

This equates to an average annualized real gain of about 3.7% from January 2021.

I suspect it may drop from 3.7% to below 2% by this September as evidenced by recent major earnings disappointments such as today by SalesForce.

Historically the S&P 500's real annual gain or return is at least 7%.

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https://www.crestmontresearch.com/docs/i-rate-10-yr-yield.pdf

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As far as the above post, I was expecting once interest rates decrease a little more and then steady, then the Vanguard Total Bond Market fund (ticker: BND) will steady also.

It was $90 in July 2020 and bottomed to $68 last October, when the 10 year Treasury peaked to 5% (which is now at 4.2%). BND is now $73.

BND average annual return is 2.9% since its creation in April 2007.

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AD says

https://www.crestmontresearch.com/docs/i-rate-10-yr-yield.pdf

Excellent chart, thank you.

The 13-week T bill yield is losing gas.

Eman says

richwicks says

Eman says

DD214 says

As much as some don’t like to admit, this is partially true.

I guess Sam Bankman Fried, Bernie Madoff, Ghislane Maxwell, Jeffrey Epstein, Nancy Pelosi, Joe Biden, Jeff Zuckerberg, Jeff Bezos, Bill Gates, etc are just really good people doing quite well. It's not like they are just criminals or something...

That was why I said it’s partially true as there will always be some exceptions. However, it’s generally true in most cases. 😂

I think real report card comes from god and soul, perhaps the world we leave behind in some ways, and footsteps we followed. i’ve seen poor and people with no opportunity in life never making it, and i’ve seen people who succeeded financially despite hardships. it’s all over the place. I’m sure you’ve seen it all too. at the end we are just dust in the wind.

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As far as bonds, stocks and economy, notice everytime the 10 Yr minus 2 Yr is no more than Zero, within a year there is a recession.

Look at the 2024 values, and if this trend or pattern is true, then expect a recession within 6 to 9 months.

https://fred.stlouisfed.org/series/T10Y2Y

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Vanguard Total Bond Market ETF (ticker: BND)

annual return
2025: 7% year to date
each of last 5 years: - 0.35%
each of last 10 years: 2%
since inception in April 2007: 3.2%

Based on my last post, seems like there is more upside potential for investment-grade bond funds over the next few years after reeling from interest rate increases back in 2022.

AD says

Based on my last post, seems like there is more upside potential for investment-grade bond funds over the next few years after reeling from interest rate increases back in 2022.

Stick with treasuries. The spread between corporates and treasuries is very small because of programmed investments and investor apathy/ That'll change if there is a downturn. People can trust the Rating Companies at their own peril.

Maybe younger generation and even Gen X is a lot more aggressive with asset allocation now, and that is why (as per my recent post on this thread) that less are investing in bond funds.

...................................................................................................................................

https://www.realtor.com/news/trends/housing-affordability-generational-wealth/

Convinced they will never be able to afford a home, many young people are giving up on saving for a down payment and adopting reckless financial habits instead, according to a concerning new study.

The individual financial consequences and generational economic fallout from growing homeownership despair could be profound, according to the study from economists Seung Hyeong Lee of Northwestern University and Younggeun Yoo of the University of Chicago.

The economists find that renters who give up on buying a home start behaving very differently from those who still hope to become homeowners, with the discouraged group squandering their money, slacking off at work, and gambling on risky investments out of desperation.

"Housing has become increasingly out of reach for younger generations, and many households are now abandoning the goal of homeownership altogether," the authors write. "Our empirical evidence demonstrates that renters who no longer expect to become homeowners behave very differently from those still trying to buy a home."

It comes as housing affordability remains at multidecade lows, with home prices at record highs and mortgage rates still elevated. Over the past five years, the typical mortgage payment has increased by 82%, while median incomes have grown by just 26%, according to a recent estimate from John Burns Research and Consulting.

Shaman, the creator of this thread, called it right as Vanguard Total Bond Market ETF (ticker: BND) bottomed around November 2022 when this thread was created.

AD says

Look at the 2024 values, and if this trend or pattern is true, then expect a recession within 6 to 9 months.

Well?

Al_Sharpton_for_President says

AD says

Look at the 2024 values, and if this trend or pattern is true, then expect a recession within 6 to 9 months.

Well?

Trump will fix it.

AD says

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As far as bonds, stocks and economy, notice everytime the 10 Yr minus 2 Yr is no more than Zero, within a year there is a recession.

Look at the 2024 values, and if this trend or pattern is true, then expect a recession within 6 to 9 months.

https://fred.stlouisfed.org/series/T10Y2Y

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Aaaaaaand it didn't happen.

Nothing happens because full force of government keeps this fake economy going.

RWSGFY says

Aaaaaaand it didn't happen.

Because of the Trump Fix.