The rules behind bond duration principles include the need to reinvest the periodic dividends of funds in which the bonds are held. There is a somewhat similar principle with stocks that have an assured high income. REITs are one example.
If high periodic returns are reinvested in the same entity, you get a similar durations effect. Such purchases help mitigate risk and reduce average costs of long-term holdings; hit-and-miss market-timing is avoided. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)
No comments:
Post a Comment