Monday, June 14, 2010

That Corporate Bond Bugaboo

This has to be constantly repeated whenever cycles appear in the corporate bond market or the economy, because the financial media NEVER gets it straight.

Yes, we all know that bond prices drop whenever interest rates go up or there is a specter of upcoming inflation.

But that does not mean you avoid or sell your bonds and run for the hills.

The financial media always takes these symptoms as a cue to get out of bonds or an excuse for buying I Treasury bonds or TIPS, the so-called protection against inflation.

I have constantly harped on this subject, advising how to wisely use DURATION as a tool for overcoming and actually profiting from inflation, using corporate bonds. ( See the Earl J Weinreb NewsHole® comments.)

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