I decided to post about bonds since I have been reading about this subject so many times and for several years already.
The concept is "when rates rise, bonds are doomed".
So let's test it based on the past. The Fed raised the federal funds rate from 12/2015 at 0.25-0.50 to 12/2018 at 2.25-2.5%, see (link
This looks like a pretty good possible scenario starting in 2-3 years. Let's see the effect on different fund categories from 12/31/2015 to 12/31/2018.Below is a total performance for 3 years.
PIMIX (Multi sector) +18.75...PTIAX 14.3%
VWALX(HY Muni) +10.45...OPTAX(HY Muni) 16.7%...HYD(HY Muni index) 13.3%
MUNI (Investment grade Munis) +5.5%
BIV (all investment grade, 50% treasuries + 50% Corp) +6.7
VBTLX=BND (US tot bond index) +6.2%
VCIT (investment grade Corp) 9.15%...LQD (longer duration than VCIT, investment grade Corp) 9.3%
EIFAX (bank loan managed) 19.1%...BKLN(BL index) 10.9%
HYG (High yield) +18.5%
DODIX(core plus managed bond fund) +9.9%
VWIAX (conservative allocation about 40/60) +16.3%
So, every time you read or hear that rising rates is the end of the world please disregard it.
Bonds have a place for many investors portfolios, especially if you want to lower volatility.
If you don't care, whatever the reason then by all means, invest it all in stocks.
Article:“Why Rising Interest Rates Are Good For Banks” - LINK
I hope some mfo members found the grammatical worksheets helpful.
And yes, our language is “backwards” (among other things) in a lot of ways from the rest of the world.
It’s rather natural nowadays for even accomplished writers and speakers to occassionally split their infinitives (as I just did for illustration). I don’t think the split infinitive prohibition is much adhered to any more. Quite frankly, I never understood the reason for its existence in the first place. Still, in formal writing or speaking, I’d try to avoid running asunder of the rule.
That “dangling“ term sounds to me like a phrase some whack of an English teacher invented one Friday afternoon when he noticed half his class beginning to doze off. It refers to a phrase in a sentence that is so misplaced as to cast doubt about what it’s referencing. They tend to be quite obvious in a sentence to even casual readers because they muddle the meaning so much. So, other than the entertainment value the phrase may elicit for people like yourself, they probably don’t even deserve a name.
In self defense: Let me say that when a glaring grammatical error (in this case involving subject / verb agreement) appears on what amounts to the board’s headline page it doesn’t reflect well on the board. Such errors within the normal course of communication (inside a thread) are much easier to overlook.
COME, HOME, TOMB. I see the vowel O in all three but the sound is different. All I know that in Hebrew and Spanish (which I learn briefly) it's very clear how to pronounce words.
The English grammar and tenses(link) are ridiculous. I have been using a language/grammar app for years, but it can't catch all my stupid mistakes
Then look at Prepositions and particles and my head is spinning.
Kick in = start
Kick off = start
Wow, how the above can be equal. How can off = start. My logic says OFF is the opposite of ON which mean no start.
I can also admit that I was never good at languages but English has so many exceptions and illogical rules.
and yes, it is increasingly ignored, although when gross ('who doesn't want to loudly and enthusiastically and without stopping sing the praises of this site?') it is nicer to rewrite
danglers simply show inattention to what one is saying, but often have fine comic effects: 'having eaten our lunch, the ferry departed for the islands' ... as a thoughtful progressive, Gaetz took strong exception to his opponent's policies ... a girl of 13, my wife found our daughter more and more selfconscious
The arrival of the Internet and email ?make/?makes communication with family so much easier. The answer is makes (singular) because the subject is arrival
My OP :Why rising rates isn't that bad for bonds. I thought that rising is the subject too
(economics is a dismal subject, e.g.)
Kick in = start
Kick off = start
FD, Thanks for responding. What you’ve posted above are actually known as prepositional verbs. (To be perfectly honest, I had to look that one up.) You’ve used the verb form of “kick“ and followed it with a preposition. These tend to be mostly colloquial (casual) expressions, not often found in formal writing.
Prepositions are quite easy to comprehend. Think of one as: a “linking word” having a noun or pronoun as an “object“. Examples: in, on, by. Prepositional phrases add additional meaning to other parts of the sentence. Example: “in this post”: In this example the preposition “in” is followed by its object “post“ and explains where the information was presented. If you think you see a preposition standing alone (having no object) it’s probably serving as an adverb.
Regarding your “COME, HOME, TOMB “, with just 26 letters and only 5 vowels in the language, it’s necessary to assign various pronunciations for the same letter or combination thereof. I agree that that aspect of pronunciation would be most difficult to assimilate. I’d imagine some of the hardest for folks to get their heads around would be combinations of letters which produce sounds (neighbor, phantom). However, this issue should not pose a problem in written discourse as we’re dealing with in your “rising interest rates” post.
I respect those like you who are multi-lingual. I don’t know any other languages, but had a couple years of Latin in HS from a very fine teacher. That experience did more to help me understand and enjoy the English language than anything else. Helping teenagers understand the poetry of Shakespeare (during another life) also contributed to my appreciation for the language. Sorry I wasn’t a bit more polite in my original intrusion into your choice of wording. Didn’t realize than that English was a second language. Just trying to be helpful. As I remarked to @Graust, you do communicate quite well. However, I think those three simple worksheets I linked would be helpful to anyone (even @Old_Joe) who might need a bit of added instruction.
PS - Regarding “Particles”, I assume you intended “participials”. Let’s save that one for another day!
Quick note to @FD1000 - The error in your thread title is pretty basic - not something most educated readers wouldn’t at least notice.
What I think happened is that you considered “rising rates” to be singular in form. Actually, in conventional use “rising rates” is plural. Therefore, the plural form of the verb (are) is the correct choice. You’re using a contraction here, so the word you need is “aren’t” Sentence reads properly: “Why rising interest rates aren’t that bad for bonds.“
On the other hand, if discussing just one particular interest rate, the singular verb form “is” would be accurate. Example using a singular verb form: “Why the bank’s rising mortgage rate isn’t good for the home-buyer.”
Just trying to help.
On the topic of interest rates:
Certainly folks invested in short duration bonds, money market instruments and the like would welcome rising rates. Banks are one business that are predicted to do better with higher rates because they can lend money at those rates. But longer-dated bonds would not do well - at least not until after the sharply rising rate trend had subsided.
What I’m really wondering is what would happen to the S&P type stocks over a protracted period of rising rates? Has there ever been a period in history during which rates in the U.S. have fallen so far for so long? Longer term rates have fallen from around 20% in the 80s to what? Around 3% now? Regardless of the exact number, that’s been one long steep slide. And it’s persisted for more than 30 years by my count. It’s so unique that there’s not a good deal to go on in trying to assess the impact on many other investments. At some point, if rates rise enough, people may begin to consider bonds a good alternative to equities and begin shifting money away from the stock market.
What I posted about singularity was a somewhat extreme or unusual example, though the rhetorical casting w/ the why ... bad does some excusing. My analogs of politics and economics are rather crude. Most eds other than me in absentminded mode probably would've changed it to rising rates aren't....
FD - Their example (above) utilizes a prepositional phrase (“of the internet and email”) which works as a modifier describing the subject which is “arrival.” So, they do have a singular subject in arrival. The word “rising” in your sentence serves as an adjective describing rates. So “rates” is your subject. However, “rising” is an unusual adjective in that it is derived from the verb “rise.” In English, when you create an adjective out of a verb it is called a “participial.” However, it works in the sentence as any other adjective would. I can certainly understand how that can be confusing
What you appear to have is an independent (main) clause in declarative voice starting with the adverb “why.” An independent clause is considered a sentence. Your subject, than, is “rates.” I think common usage by and large would support that. I’m inclined, however, to think that technically, you may not really have an independent clause at all, but, rather a subordinate clause (technically not a complete sentence).
Here’s what I mean: “Why rising interest rates isn’t that bad for bonds .....” really doesn’t express a complete thought. Starting with “why” leaves us wondering a bit about what complete thought is being expressed, To do that (technically speaking) you would need to add a main verb. The complete sentence might read:
“Why rising interest rates aren’t that bad for bonds is apparent in a number of ways.”
Here it is dissected a bit more: “Why rising interest rates aren’t bad for bonds / is / apparent / in a number of ways.”
In the above 4 word groupings there exist:
(1) an introductory subordinate (adverbial) clause serving as subject
(2) a main verb (is)
(3) a predicate adjective (apparent)
(4) a prepositional phrase which serves to modify the main verb (Some would say the prepositional phrase modifies the predicate adjective.)
Actually, since your statement serves as title of the thread, it need not be a sentence. Most titles aren’t. None of this alters the fact that “rates” is your subject - be it within a main or subordinate clause.
I really wasn't joking about my virtually complete ignorance of the definition or meaning of all of the grammatical terminology that you are referencing. For example, I could no more define for you what any of the following might mean-
• prepositional phrase
• independent main clause
• subordinate clause
• predicate adjective (apparent)
• pronominal adjective
• singular verb form
• introductory subordinate (adverbial) clause serving as
than I could explain to you the fine points of molecular biology. And even if I were somehow able to acquire that grammatical knowledge, how exactly would I then apply it when I sit down to write something?
When I write something, I just mentally process it as if someone were sitting here talking to me. It either sounds "right" or it doesn't.
So, I would certainly totally flunk any standard test on grammatical usage. But I do believe that, in my life, I've somehow managed to communicate reasonably effectively in spite of that limitation.
After learning Spanish only one year compare to many years in English I wish the most common world language would be Spanish. It's easier to learn, speak and read.
Interesting facts: I immigrated in my mid 30 and worked in IT, most of my co-workers were Asian/Indians. My wife stated that my English got worse over the years
Another observation: Israel is similar to the US. It has immigrants from around the world. The worse Hebrew speakers after several years are the English ones, especially Americans. The immigrants who speak German, French, Spanish, Russian, and Arabic have better accent, grammar and fluency. What makes English so complicated? Many exceptions, a lot more words with small nuances, the sentence structure is unique, and too many tenses.
Anyway, the bad thing for most investors who look for bonds as ballast for stock is the fact that BND+BIV pay about 2% but most still need it, especially retirees who have enough money and worry about volatility. PTIAX can be a compromise fund with a decent volatility + 4% annual distributions.
For me it's not a big problem since I'm trading bond funds using momentum and looking for good performance. Most of that performance came from MBS/securitized funds such as PIMIX,IOFIX but in the last several years HY Munis (NHMAX,OPTAX,ORNAX,GWMEX) also made me money.
Can you write and speak adequately with no knowledge of grammar? Certainly. Can you drive without understanding how various tire compounds interact with the pavement under differing weather conditions? Sure. Can you make lots of money investing in stocks without any knowledge of standard accounting procedures? Of course. On the other hand, you’d be an even better writer if you understood grammar, an even safer driver if you understood the way various tires interact with wet / dry pavement, and a much smarter investor if you understood standard accounting procedures. Don’t count learning short in any endeavor
@hank- I certainly don't: "I've somehow managed to communicate reasonably effectively in spite of that limitation".
BTW, I thought that your "driving" analogy was particularly effective.
Note- referring to that last seemingly simple sentence, I hesitated as I typed the word "driving", realizing that I needed to be careful there or I would be constructing a "driving analogy", which would create a potentially confusing word combination. (What the hell is a driving analogy? An analogy driven by something?)
When speaking, we frequently use subtle changes in voice pitch or tonal emphasis to avoid such traps. I chose to solve that particular situation by placing "driving" in quotes, so as to visually separate it from "analogy". These kinds of things are always happening in writing, and I'd really be surprised if there is a "rule book" that covers every such situation. It seems to me that the trick in writing is to use whatever device works to emulate the subtle characteristics of speech.
FD's headline is a bit tricky. I probably would have just reworded it to "Why a rise in rates isn't..." just to avoid having to think about it too much.
Maybe the rule should be, if you must go off topic, let it be about grammar! It brings out the best in us, it seems.
I think a good deal of the problem is that the OP is a trader, while most of us hold bond funds for stability and over longer periods than 3 years.
But, hey, don't get me wrong; I love that my bonds are doing well despite low yields. I just don't believe it can continue for long.