Really TJH? Now you're scraping the barrel! How about this for pseudo-scientific nonsense:
Back to the solar system. If we told you that, over the last few years, Mercury was tracking progressively closer to the sun, you would likely assume the orbit of Mercury is changing. Although inconceivable based on current scientific knowledge, what if it was determined that Mercury’s orbit was unchanged and the altered distance was due to the re-positioning of the sun?Actually no, I'd "assume" [r. conclude or infer] that you don't know what an orbit is and question the strength of the logic and understanding in your entire article!
TJH, perhaps you could explain in your own words the reasoning behind your rejection of fixed interest securities for at least the ten years or so we have discussed them.
Matt,
Melanie wrote:What we are also wondering is, if some bond prices are currently falling, would it actually be wise to wait till after May before purchase, since any interest rate announcement (e.g. a 0.25% or 0.5% hike) is most likely to push their price further down?
The usual response to this sort of comment is: if you are so confident of what will happen in May and the market's response, then you might as well just make a huge one-way bet on it and get wealthy!
Here are two problems with trying to predict little things like what the Fed will do in May:
1. long-dated or perpetual securities are a claim on a long stream of cashflows. Small events which occur from month to month are unlikely to have as much effect on the many future cashflows as all the other events which are also likely to happen.
2. short-dated bonds are of course a claim on only a few cashflows, but the value of those cashflows is relatively certain and events in May will have minor effects on the yield of those short-dated securities.
IOW it's hard to win here on either short- or long-dated securities. Rather than focus on the myriad short term events, it is better use of time to think about asset allocation, risk management and value.
Unless, as I said, you have a particularly accurate crystal ball, in which case go ahead and bet the bank!
GS