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Bond prices vs yields

By Terry Savage on May 30, 2022 | Investments

Hello Terry,

Listen to you every Wednesday on the John Williams show.

I have a question that I hope you can answer. I’ve asked this to another financial person and the answer really didn’t address the question.

I know the price of bonds are inverse to their yield. Yields go up, bond prices go down.

But what I don’t understand is this:

Wouldn’t someone purchasing a bond want a high yield (yield=interest rate)? So why are high interest rates bad for bonds (and the people who hold them)?

Thanks.

Joe

Terry Says

I’ve tried to explain this so many times I’m turning blue! So here are links to some recent columns on that topic, in hopes that you — and many others — will finally understand the risk in owning even the best bonds or even in owning the highest yielding bonds!

Yes, they all bear similar titles — but they are different efforts on my part — over the last 5 years — to warn people about bond price risk. Notably, as bad as the stock market was the first quarter of 2022, the bond market performed worse!

https://www.terrysavage.com/you-cant-hide-in-bonds/

https://www.terrysavage.com/beware-of-bonds-3/

https://www.terrysavage.com/beware-of-bonds-2/

https://www.terrysavage.com/beware-of-bonds/

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