David Fleer
Bristlecone Value Partners, LLC
12301 Wilshire Blvd., Suite 320
Los Angeles, CA 90025 USA
Work 1-877-806-4141

How Will Higher Interest Rates Impact my Portfolio? (Part 2)

August 13th, 2015

A few of our clients have requested that we expand on our June post about rising rates. In particular, they’ve asked: “why not switch entirely to bonds with shorter maturity, in order to better protect against rising rates?”  We see multiple reasons for not doing so:

  • We have no more faith in our ability to time the bond market than we do in our ability to time the stock market. If you had asked us in 2009 where short-term interest rates would be in 2015, we would not have guessed that they would still be near zero.  Moreover, the timing and magnitude of a rate increase matter a lot: as the chart below shows, the negative price impact from an increase in rates can be rapidly offset by the income received. Read the rest of this entry »
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