Want
a quick test of someone who considers himself a financial guru? Ask
them about buying bonds with the threat of inflation.
When
he starts talking TIPS, (for inflation-protected Treasury bonds)
without asking how long you intend to hold the bonds, he has flunked
the first step.
Then
ask him to explain the duration principle behind the purchase of
bonds. And how the usage of duration can overcome the effects of
inflation. Chances are he will flub that too.
( See the Earl J. Weinreb
NewsHole® comments.)
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