Bonds

What’s going on with the yield curve, and how does it impact you?

While 2022 became the first year ever for bonds to end with a negative five-year annualized return, markets have now recalibrated, resulting in higher yields (and higher future returns).

I’m a longtime fan of Professor Jeremy Siegel and his book, Stocks for the Long Run, but new research from a retired professor named Edward McQuarrie extends Siegel’s analysis of stocks versus bonds performance; finding that the two may be closer in returns than originally thought.

Stocks and bonds come with their own “risk premium” to investors, and the riskier an asset is, “the stronger the trend in the Random Walk”. To see that trend in a Random Walk assert itself, you have to stick around for the long run.

Even if you’re not one to pay attention to investment forecasts, we’re all likely curious of what 2023 will bring to our wallets.

Of course you want to know what sort of return you might expect upon investing your money, but how possible is that when it comes to a stocks and bonds portfolio?

Today’s investment world has polarizing opinions on a variety of topics, concepts and financial vehicles, and surprisingly, that can include individual bonds versus bond funds. What is the difference between the two?

Plain and simple, the laws of risk and reward are off. A five-year treasury shows the exact same yield as a 10-year treasury, and it’s not making much sense to investors.