Investors typically think of bonds as the safe, sleepy part of their portfolio. And, for the most part, they’re exactly right—bonds can be pretty boring. Though that wasn’t the case in 2022. After enduring the worst calendar year in bonds in decades, well, no one is calling the bond market boring anymore.
Last week, I discussed the bond basics—what a bond is, how bond prices and yields relate to one another, and the difference between measures like maturity and duration as well as yields and interest rates. If you need a refresher or are just joining us, now would be a good time to go back and read that first installment of my bond series.
This week I’ll be talking about the trade-offs that bond and bond fund investors face when deciding who they lend money to and for how long.