BLV
Vanguard Long-Term Bond Index Fund ETF Shares
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Why do people say invest in bonds to diversify, hedge. I have a position in BLV that Ive held for 5 years, it is down 20%
Thoughts on potential recovery and rejection of SPY
If today's plunge is due to hawkish fed why are bond funds not down?
What happens to bond *funds* when the fed raises interest rates?
Wu-Tang Financial. I need to diversify my bonds. BND v. BLV
Expected bond ETF price changes vs yields and deciding when to hold or sell.
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There are fee only advisors - but tbh - I'm not really sure how good or bad that sort of service is because - it's a one time sessions. Since you already have a relationship with a brokerage - you could check if they have a wealth management or investment advisory business that you can talk with. Your proposed allocation seems fine. A few observations: BND is an intermediate duration fund with average duration of about 7 years and BLV is a long duration fund with average duration of 13 years, so there is duration risk. So they are both very different profiles. GLD is not a hedge. What are you trying to hedge for?
Yesterday I posted about kids accounts, today I want to ask about my own account. US ex-pat, so limited to US ETFs but less of a need for HSA and the like. I have a local pension (functions I guess similar to a 401k) and don't make enough money beyond that to invest in both a taxable brokerage and also a Roth IRA. So currently in a taxable brokerage account but there's no specific purpose other than long-term growth. I have a provident fund from work as well which is separate. Currently it's a mess with no clear strategy, major overlap (I have VOO, SPY, and QQQ \[which I know is different but just based on weights has a lot of overlap\]). I'm looking at a long-term strategy of simplifying, though that will also require short-term figuring out the best way to do so without a severe tax hit, even though the account isn't so big (only $20K). I'm looking at an idea that would see: 1. 35% VOO 2. 20% VXUS 3. 10% AVUV 4. 10% BND or BLV?? (my emergency fund is held in my local, non American account, so not looking for something like SGOV) 5. 5% GLD?? (some type of hedge??) 6. Remainder on sectoral fund(s)? Right now, it's a mess. There's just so much of this and that sprinkled around and that's dumb (for me) because I want passive investment. I'm not looking to actively manage and constantly readjust. So even if what I wrote is a ton, it's still a massive overhaul and simplification. Maybe I need to sit with an investment advisor, but I'm curious if there's one that'll sit for just a couple of hours for a small portfolio like mine because I'm not looking to move away to a managed portfolio (for a variety of reasons).
I agree, but if you look at the Fed balance sheet it’s down 2T and you know the next Fed chair will buy down long term rates till it no longer works. I actually just bought some BLV because at 5% I’m comfortable with the risk for a couple years.
$JAAA, $BSV (short end corp plus government) and VGLT (lower fee TLT.) $BLV is long end corp plus govt. I bought some TMF today for a trade.
I would get BLV rather than TLT b/c of the latter's lower expense ratio and slightly higher yield. You could also consider SPHY (high-yield corp bond, 7.6% yield). A commodities ETF like CMDY is another option as an inflation hedge. I wouldn't abandon the stock market entirely though - in fact now might be a great buying opportunity.
A bit concerned about crazy valuations as it was, Trump is Emperor of Chaos and has no desire to do anything for anyone except himself. Things could go sideways fast so I finally shifted a big chunk of stock into BND, BLV and a few other bond ETF’s. Let’s see how the year goes.
I still don't hold much in bonds as they just don't do much and I'm retired. You can hold an index fund of bonds like BSV and of the bond funds I hold it's only up 1.05%. I also hold BLV, GVI, SHY and both are down YTD. I wouldn't hold much in bonds. If the market tanks, bonds are up, but still.... You could hold some Real Estate ETF like VNQ up 14% this year.
41% VTI, 19% VXUS, 30% BND, 2% BLV, 3% BSV, 5% to money market/SGOV. Intermediate at this point is where you’ll find the most value for fixed income now that the curve is reverting back to normal. This is a pretty passively managed portfolio but IMO bond funds that are actively managed tend to provide more value and better results.
https://www.pimco.com/us/en/resources/education/everything-you-need-to-know-about-bonds Yes you can buy a bond index fund in a mutual fund structure or an ETF structure. Bonds (excluding I-bonds) are priced in a market like stocks, and insofar as markets are efficient and you we don't know more than the aggregated market equilibrium, one type of bond won't look better than another type. However, different bond types have different risk profiles and some may be more suitable for you than others. If you are looking for minimal risk, then short term, high rated bonds are better: USFR or SCHO or money market fund. If you want a little more credit risk for a little more yield, short term commercial bonds like JPST or STOT. If you want broad coverage of lots of types of bonds, there are aggregate funds like BKAG. These cover US treasurys and corporate bonds and agency mortgages but you can add more types of bonds with SCHP inflation linked and BNDX foreign. Long term bonds will be more volatile and may diversify your stock portfolio more: TLT or BLV High yield/junk bonds will have even more credit risk premium than investment grade bonds and will be even more correlated to stocks: HYLB
It's not overconfidence. I'd just rather slightly overcontribute to my emergency fund- a short term bond fund - by 8% for the unlikely event that the fund drops by a historic 8% at the exact time I need the money. this way I have an emergency fund that generally keeps up with inflation over the long term. I really don't like losing money- and that's what a money market will give you against inflation. For what it's worth I previously had my emergency fund in BND/BLV and lost a lot of money -> sold -> money market -> lesson learned that I can't handle that kind of draw down in an emergency fund. I can handle 8%.
RemindMe! 1 Year $BLV $TLT total return
This is such bad advice it is almost offensive. long term bond funds like BLV had a 40% draw down recently. in an emergency fund? Good grief.
Its bad when it inverts, its worse when in uninverts a certain way (bull steepening). Bull doesnt mean bull run for markets, it means bull run for bonds. A dropping front end followed by a more slowly dropping mid and tail of the curve is bull steepening, implying that outlooks for investments in the real economy are so poor that banks and institutions are loading up on long dated bonds. Since the start of Q3 2024 when more and more economic data started point to recession (uptick in unemployment, oil prices plummeting, all kinds of stuff the feds recognizing as unwinding and switching tune to being dovish), we have seen longer bonds run and stocks chop around. See the following data. Notice how the correlations are almost opposite. Stock market plummets, bonds shoot up. This is flight to safety behavior. At best, economic slowdown drives some money out of the market into bonds. At worst a recession (imo that case wouldnt be not as bad as 2000 or 2008) which sees a *loy* of money move into 7-25 yr bonds, driving down their yields wgile the fed runs to cut the short term rate to ease the pain on the russel 2000 who are more tied to debt instruments which fix to the 10yr note. https://testfol.io/?d=eJytkd9Lw0AMx%2F%2BVI692cCvqoM86GQgKzoHKKFkvneeudzO9dYzS%2F93U%2BgN8kD0sT5dc8v1%2BQlpYu7BCd4%2BMVQ1ZC3VEjrnBSJBBqtPzkZ6M9BgSIG%2B%2B65INfQ06yMZaIgE0b7n1pcNog4cs8o4SKLB%2BLV3YQ6Z%2Fk7xkeheZJ0J2BxHj4Jz163xvvel7L3WXwDZwLIOzQbheWvBY9dbz27lK9Zk6yKxaBW9qmbe%2BoTpe2cYa6itf5kyyGvqCpn%2F8oi02xIPu8B6U5WtLXJCPn1t1ywQM41rgu%2BSH4OZu8azSC0FgFZmw3vHhtCS9w1Eos%2BupmozGukexPhJXZKyc6LQ44nIUzWI%2BU48PKoaITlXIG4qnQhDpfxCW3QdF7uvD
Long-term bond ETFs like BLV could do well if rates drop. Just be aware that if rates fall slowly. bond prices might not rise as much as expected. but What occurs if inflation rises unexpectedly?
Investing in long-term bond ETFs like BLV can be a good move as rates fall, since they usually appreciate when rates drop. Just be mindful of duration risk (long-term bonds are more sensitive to rate changes) and potential inflation impacts. Diversifying and staying informed will help manage these risks. well, what's your views about that?
It's useless to try to time interest rate changes and the bond market. Pick a bond fund based on your own timeline, not the current interest rates. Long term bond ETFs have higher expected returns but are more risky. The longer the duration of the fund, the more risky it is. The rule of thumb to balance this is to pick a bond fund with a duration of less than your investment horizon. If you want to withdraw in 5-10 years, pick a bond fund with a duration of 5 years to be safe and maybe a little higher if you want to be more aggressive. Looks like BLV has a duration of 14 years which may be too risky. VGIT or GOVT may be good since their durations are 5 and 6 years respectively. [https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders](https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders) Look at these options as they target specific years so they may be better options for you.
>Is there a risk I'm not seeing of buying up long term bond funds when interest rates are set to start coming down? They are yielding 4% and should have some appreciation when the rates drop. Everyone else knows rate cuts are coming , long term rates have already somewhat adjusted in anticipation of the rate cuts. Long term rates peaked in oct of 23 and have fallen since then, what is why BLV is up some 18% since then. So the rate cuts are already baked in, now if rate cuts are faster or there is a lower terminal rate it may appreciate more, if inflation is sticky and rate cuts are slower then anticipated or a higher terminal rate well it may drop I would say if you are ok with a 4% interest rate go for it, but I wouldn't count on it appreciating
You should. BLV and EDV. They will go up over the next few months
My portfolio is popping today. Yield curve is close to inverting. Yields are dropping and will continue to as the FED cuts rates. BLV and EDV are guaranteed wins. Gonna let those appreciate while DCAing into QQQ and MGK during this correction. Gonna make a fuck ton of easy money over the next few months. If you don't like the volatility, then wait a couple days for a small rebound when people start buying the dip, take your profits, and move to long term bonds and sit and wait while you make money and everyone on here is freaking out.
Been given a lot of shit about being long various bonds. Yields are dropping folks. Once the FED begins cutting, bond prices are going to POP. My portfolio is actually up today. Buy the long end of the yield curve (BLV, and EDV) and you will see a GUARANTEED 20-40% appreciation over the next 1-2 years as yields fall WHILE earning 4-4.5% interest. If you are looking to get away from the volatility and high valuations in tech, then do the above for a guaranteed win.
How about a bond barbell? some BLV, yes, but an even bigger helping of 2yr Treasury (SCHO or BSV). mix them in a proportion that achieves the weighted average duration you want.
Absolutely not - you should not wait. If you are really worried about the market (understandably!) then buy bond funds. Bonds have pretty much bottomed out because of high interest rates. All indicators point to interest rate cuts starting this year and continuing from there. This makes funds like SCHQ and BLV extremely safe bets. They will go up in value as interest rates go down and in the meantime earn decent dividends to reinvest.
Hey, Thank you so much for the ideas. Norway has tax sheltering for index funds containing shares of publicly listed companies, but no tax sheltering for bonds or bond funds (fixed interest securities). For security funds, the tax sheltering is: tax free "risk-free rate of return" which compounds every year to increase your cost basis, no tax on distributions or gains until withdrawn from the account, and wealth tax applied to only 80% of the value of the funds. However, none of those benefits exist for fixed interest: wealth tax is applied to 100% NAV, distributions and options premium received are taxed at 22%. So for example, I have 500 BLV purchased for $35,000. In 2023, I received $800 in premiums (short puts, covered calls and/or short strangles) and $1,140 in interest payments ($1,940 pre-tax income). The tax was: $385 in wealth tax, $176 against the premiums received and $250 against the distributions ($811 total tax). So the after tax return of this approach was 3.2% with a maximum exposure of $78,000 during the year (eg: hold 500 BLV and -7 margin secured puts). This means 1.44% after tax return against my maximum exposure, eg if all short puts were assigned due to the underlying sinking. Without any options plays, the after tax return of holding 500 BLV would have also been 1.44% but with much less downside risk. Wouldn't this just erode big time due to inflation? So my question is ultimately how to synthetically have exposure to bonds in a tax effective way in Norway. Mr Bogle probably would have told me to buy the bonds, shut up and focus on my life. Maybe I should just do that?! I'll check out those funds and recommendations. An equity fund correlated positively to bonds could be an interesting proxy. Thanks again!
dude i just looked into BLV and SHY and those monthly dividends are insane. im in. mucho gracias for the advice.
You are welcome! BLV had taken a hanmering the last couple weeks, so now is a good time to get in
I hold BSV and BLV but only for about 2 years now, should just keep riding it out right
NXP for municipals LQD for corporates BLV for long term treasuries VWOB for emerging market bonds SHY for 1-3 year treasuries BIL if you want short term liquidity I lean more towards municipals to avoid income taxes but NXP is one of the better funds that has been consistent for decades.
I just invested BLV today and bought call options on it. Fed will probably decrease the interest rate so, long term bond ETFs are currently a good investment
OP this worked perfectly during covid and now you can buy the longer dated bonds paying grade rates as part of a normal portfolio. It will absolutely be dry powder during the next recession and I’m doing it with about 20% of our portfolio. Another 8% is in cash rolling puts on tlt while collecting money mkt rates on top of premiums. Has the mkt outperformed over the last six months, of course. Am I still going to make 10% on my cash selling puts this year, yes, if not more. The longer dated bonds, BLV, are a 3 year bet that require nothing more than looking at the Fed dot plot map.
Realized some nice losses on BLV 2023 and immediately went into TLT. Hopefully I can write it off for tax loss harvesting purposes....
It's unlikely rates go down that low, we would need to be in another great recession type of scenario. Right now, the Fed Funds rate is 5.25% to 5.50%. It would take a lot of rate cuts over a long period to get back to 1%. Once people get a sniff of a rate cut, bond holders can move to long term treasuries, they benefit from rate cuts by going up in value, BLV was up 19% and 16% in 2019 and 2020 when the Fed was cutting rates and adding stimulus. Inverse effect when the Feds are raising rates, went down 27% in 2022.
Hi all - quick question on a proper way to track my personal performance with my investments. Some context beforehand: 1. I’m 32M, $130k a year salary. 2. I have a 401k and contribute 100% of company match. 3. I have financial advisors - they have me in a Roth, IRA, and a couple life insurance products. 4. I have an emergency fund in a HYSA. Okay so that being said, I’m blessed enough to have some money left over after my monthly expenses and “play money.” So I started investing into some ETFs as well (VXUS, VOO, SCHD, SCHF, BSV, BLV, BIV). I may have too many ETFs, so I’m considering divesting in some and reinvesting in ones I have. So my question: does anyone have advice on how to track real performance across all my investments? I’m thinking of just a simple excel that I update quarterly and that tracks real market returns together with what I’ve invested against expenses. And then I’d like to extrapolate for potential future performance to see where the investments could be in 5, 10, 15+ years. This type of modeling would also help me with the divesting piece above. I just don’t really know how to do all of this, so any advice would be greatly appreciated.
My bond fund shares increase in price at the mere mention of a rate cut. Come join the excitement, buy some BLV or something.
VIG, VYM, and VTI for your equities 20/20/10 BLV, BIV, and BSV for your fixed income 20/20/10 Annual yield is 3.73% so a $1m portfolio would generate $37k/year in dividends and interest Interest rates will drop eventually which will drop the yield. You could load up on some individual bonds to get more consistent cash flow but building and managing a bond portfolio can be difficult.
Super weird that everyone is so emotionally responsive to your comments, feels like a bunch of people in here are wallstreetbets investors who know nothing except “To ThE MoOn🚀🚀” but I actually appreciate the analysis. My question is why don’t you use that money and invest in bonds or bond ETFs like BLV or BND? If the market because unstable and investors get scared they will usually do well, and if not, they also pay above 4% dividend instead of the cash just sitting there. Any particular reason?
Leap straddles on SPY, or long into 50/50 VOO/BLV Or….look at your life. What product or company do you use most often? Pick three representative stocks and pop in 500 each.
You can combine dividends and growth much to the dismay of the herd. There are opportunities out there for that approach. I would focus on, as most have suggested, simple strategies. Maybe you’re 50% VOO, 25% SCHD and 25% Corp/Gov Bonds (VCIT or BLV). Here’s the rationale - VOO is being propped up by the ‘magnificent seven’ right now. It’ll give you the exposure to the growth you want. SCHD will give you the exposure to quality companies with strong balance sheets outside of tech. I actually recommend bonds for the first time in 20 years because there’s actual upside to be had and intermediates, at relatively low risk, are yielding close to 5% with room to boom once inflation is defeated. You can’t beat the monthly DRIP on these at the present and most people on this sub ignore bonds at their peril.
I just did a backtest for 60/40 bond split from Dec 31, 2007 to Dec 31, 2009 VTI and BLV max drawdown was (barely) less than 30%, and a complete recovery by 2010.
I like a combination of BLV and TLT.
I invest SCHB, HDV and BLV using dividend generated by Money market funds which weight 80% in my portfolio.
VCLT (long term corporate) or BLV (long term index).
You are 3.6% i believe. BLV holders get above 4% around 4.5%. Youre losing a 100bps. Plus rates are nvr going down so forget about price appreciation. I was only bullish in Q4 abt long term bonds. Next yr its going 5.5% or 6%.
My portfolio: 15% BLV(long term bond etf); 30% VYMI(international high dividend yield etf); 30% SPYD(SP500 high dividend yield etf); 15% SPLG (SP500 index etf); 10% QQQM (Nasdaq 100 index etf)
VOO in retirement funds, september 21st put all my taxable into long term treasury fund BLV. When it continued to crash i tax loss harvested, or tried to, realizing losses and dumping it into TLT. The pain continues. The monthly dividend is bittersweet as the rest of my gains are on burning to the ground.
In retirement accounts I’m 100% VOO or equivalent funds. In my taxable I try to be strategic to see if I can get lucky and beat the market. No luck so far. Grabbed up a bunch of TLT and BLV around september 21st and experienced a good drop. It’s my gamble play though so I might have to sit on it for awhile
I see BLV as a taxable bond, which appears to be the equalivant of the mutual fund. The dividend is higher - 4.72% than TLH, but lower than VBLLX. The expense and expense is smaller - 0.05% than TLH and same as VBLLX. I do think that the longer duration might be the better bet especially if we are in a higher for longer environment. Rather just keep piling in the 10-20 (TLH) and 20-30 (TLT) duration range. But I might keep an eye on BLV to diversify if needed - i.e. shorter duration bonds.
So how are we feeling about BLV now?
Gobble up those losses for tax purposes and diversify asap. 50%VT 50%BLV Bonds are legit this week ;)
Would you say BLV or BND would be preferable for a bond fund? Or something else
Tax loss harvesting :'-) Getting murdered on BLV and TLT
You could be extra regarded like me and drop most of your portfolio into BLV....I can feel the burn.
Even the boglehead popular total bond market BND was 69.96 in 2008 and it's currently trading at 69.39...Vanguard's old and popular fund VBMFX, is at all time lows and below even the 2000 recession lows of 9.37 and it's now 9.11. Definitely due your own research, but tell me if you find the same conclusions. News outlets probably don't want to cause fear, we all heard that bonds got hammered in 2022 but 2023 is looking pretty horrible too! "BLV tracks a market value-weighted index of investment grade USD denominated government, corporate, and foreign debt and least 10 years to maturity." Number of holdings 2,999. There are other popular funds like TLT and EDV (20 year treasuries and 30 year bond fund respectfully.) These are VERY high duration risk and bonds in general are a very interesting animal. You can see that BLV is down 43.45% from it's all time high in August 2020.
I had no idea bond funds were lower than 08 right now. Could you explain on a high level how owning something like BLV differs from something like an index fund? My understanding is the bond price fluctuates, but pays a set amount of interest along the way, allowing you to get some income and hopefully, sell the bond itself at a gain later as well. Am I off on this?
I personally don't like having much cash around, I experienced the opportunity cost of playing it much too safe for much too long. I moved mostly into BLV within the previous month. High duration risk. Down -3.62% so far. It's currently at all time lows; lower than the great financial crisis of 2008. I have high hopes long term, all my retirement accounts are filled with big boring index funds like VOO, and that's where I'm funneling future investments going forward. What I'm doing is a big gamble; might be sitting here for awhile trying to catch this falling knife. There is large upside only if the feds are done raising interest rates, if they go up, I'm going to experience more pain, if they stop or start going down, big dub.
Nothing wrong with renting for life if you love it. You can always build equity in business, stocks, bonds, gold and other assets. Short term treasuries are paying over 5%. It's a great time to sock away some money for a down payment. I personally just rent and grow my portfolio via VOO and short term gamble play into long term bond fund BLV. Took several years, but I could technically pay rent via dividends and interest and live for free basically; currently living that DRIP life.
I’d like to learn more about bonds, any recommendation? I should have bought EDV instead of BLV. Oh well. Close enough
Inflation risk and duration risk; if we have pesky high inflation coupled with rising interest rates, those 30 years are likely to bounce 30% for every 100 basis points. That said, I went all in on BLV in my taxable and am down 6% in a week trying to catch the falling knife. EDV looks quite exciting. I'm expecting some significant price appreciation when they finally drop interest rates.
Long term bonds. I'm down 6% in a week, but it's at near 20 year lows, 2022 was arguably the worst year in the past 200 years. I personally did BLV, but TLT is better if you're trading it, EDV has maximum amounts of beta and volatility. I put most of my capital in my taxable into long term bonds. I might be stuck in these funds for awhile, I can't see interest rates going up another 500 basis points.
what kind of bonds? I attempted to catch the falling knife, went full r-tard into BLV. Down 6% in one week. Might be hodl'ing for awhile....
Those long term bond fund ETFs are interesting. Before I saw your comment I didn’t realize just how much they’ve gotten killed the past 3 years. BLV is at all time low, you have a good point betting on it. Are you thinking that if the market crashes the fed will lower rates and spike BLV?
Trying to decide what to do with my bond interest from BLV and TLT; do I go full regard and start building a position in EDV or do I start rebuilding my position into VOO?
I strive for at least 50%, sometimes I go full monk mode and invest 75%. Mostly boring index funds and lately my big gamble is long term bond funds BLV and TLT. With the interest payments I can’t decide if I should double down into EDV, or regrow my position into VOO…..probably VOO.
junk bond fallen angels ANGL has a 30 day sec yield of 7.43% according to my brokerage account. Might be regarded to do that when you can lose a lot more value by buying BLV and TLT like my dumb@$$ has done....lawd have mercy
Whatever you do, stay out of bond funds. Someone mentioned $TLT and that is probably the worst advice that anyone could give right now. Bond ETf’s have duration risk. If rates go up, the bond fund goes down. A common thing that I have been saying to people who ask me is this: the JPMorgan CEO, Jamie Dimon said that “investors need to be prepared for 7% interest rates and most of them aren't.” If we get to 7%, and I think this is a very likely possibility, $TLT and every other bond fund drops, and the bond funds with longer duration like $TLT, $BLV, $EDV, etc. drop more than those with a shorter duration. Think of it as leverage really, longer duration bonds move a lot more with the same increases which just means more volatility. To add to this, the $MOVE index is very high which suggests worse news is coming. Something you probably don’t want at your age. I would suggest doing something that a lot of more seasoned investors are doing, up to even Warren Buffett. As often as you can, buy 3 and 6 month treasuries. This way if rates continue to climb, you aren’t going to be stuck holding something that has low rates. For example, I’m still holding a couple 1-2 Year CDs at 4.5% that I thought was a great opportunity when I bought them, now I’m kicking myself. If rates start to go down, you can dump a little more money into longer duration treasuries or CD’s. At your age, I really think this is the best way. If you don’t want to buy Treasuries or CD’s directly, Money Market funds (Think $SWVXX for Schwab, every broker has their own), or ultra short duration treasury funds ($BIL, $SVOV, etc.) are also very good ideas and all are currently giving over 5% with no loss of capital. These also get adjusted with the rates so you are usually getting the best deal (minus a fee, of course). Please be careful with bond ETF’s, especially with the current uncertainty in the treasury market. I would only start to purchase bond ETF’s when we have clear direction from the fed that they are done raising rates. Good luck with your investments!
I can't imagine we're going too much higher on interest rates, I'm going all in on BLV and TLT going forward, I expect to get burned to ashes before I arise in victory.
Balls deep into BLV. I’m not on leverage but it feels regarded of me, but if this shit drops below 2008 all time lows I’m going to 😂
Mostly VOO and long term bonds here BLV and TLT
Personally going to catch falling knives on TLT and BLV. Get 4-5% interest while I wait for the elusive fee pivot. Getting murdered in the meantime. Multi decade low. I’m going to keep buying till shtf, then when the system breaks and the feds cut, it’ll blow up in value as the market implodes, I’ll sell and buy the actual dip on VOO. Then I’m done gambling for awhile
I have SGOV(0-3 month treasury etf, analogous to BIL mentioned above), and commence to re-allocate some to BLV(long term bond etf)
I bought and HODL'ing a similar risk long term bond fund BLV. Cost basis is like 69 bucks. I'm experiencing pain so far, but it pays monthly interest I can use to lower my cost basis, WHEN the feds start dumping rates, this thing's gotta blow up, right? It out performed SPY from 2008 to 2016 just about
 it’ll probably turn out better then my recent long position into BLV
I did. All in on BLV
I was bored with SCHD so I sold all my holdings and loaded up on BLV. Feds gotta be done hiking. 2 dollars away from all time lows. Pays a thicc 5.23% 30 day sec
🤔 BTFD boomer style into BLV/TLT?!
Just waiting for schd to tell us when it’s ex dividend date will be and how much…might start plowing into long term bond BLV every payday cause it’s paying over 5% and when the feds finally cut it should gain a bit
Just starting out. Will probably add to the list in time, but not a huge amount, I'd think. VOO- 35% VYM- 35% BLV- 30%
If you want to lock them in, but BLV
Two years ago when I retired I followed the traditional advice and diversified my retirement portfolio and put 20% into BLV. We’ll guess what, when stocks were moving down BLV was moving down faster! When my transfer was complete I payed $100-$105 per share for BLV. Now BLV is $77 per share! It has been my biggest loser by far. How long before it reaches $100 per share again?
That’s what I’ve always heard, but that hasn’t been my experience. Two years ago I diversified my holdings as follows: 20% VBR, 20% VTI, 20% BLV, 20% IAU, 20%. Cash. The biggest loser by far is bond fund BLV. Here is my breakdown: BLV down $36000, VBR down $4500, VTI up $3600, IAU up $6000, and of course cash up maybe $5000. How long will I have to hold BLV just to recoup the $36000 I’m down? Never mind make anything.
So if you read my newsletters you will know that I personally am in Stagflation - High unemployment camp termed as Full employment Stagnation. In this challenging env i expect growth to be low, inflation to be high persistent and sticky. So overall I trade the stock mkt this decade, long the commodities metals and short bonds. But since i do believe in the lag impact of monetary policy I personally wanna hedge for deflationary bust so i buy bonds but i don't want yields to be too low so I avoid TLT 2.x% and i like BLV 4.y% ( if yields climb it might give 5%). If Fed in future cuts rates to 0% TLT will give 40% appreciation and BLV will give 30% appreciation. So BLV works okay for me.
As they say, no one can time the market. For all we know, the bottom of the bond market could've been on July 7th. If Powell raises rates in July, however, the bond funds are likely to drop again, at least for a decent period of time, at least 2 weeks or more... I would think. The bond market at one point already "priced in" no more rate increases, which is why I believe those funds started moving up at one point. I originally was lucky and bought into $VTIP right near the bottom, but I have since moved out as my time horizon wasn't long enough to wait on the small gains and dividend it would've provided. The longer maturity funds are the ones that will pay very well once the increases stop and eventually get lowered. That being said, I am waiting for 20+ year (think $BLV, $TLT, and even general bond funds, like $BND, etc.) to bottom so I can jump back in and do some more LEAP calls. After powell talks, that might be the best opportunity. It's going to be free money, like when he announced when they were going to start raising rates over a year and a half ago. My bond positions are as follows: ~50% of port to 3-18 month Treasuries and CDs at around 5.3% on average ~2% of port to $FIJEX Several $TLT 1/19/24 $105C Several $TLT 1/19/24 $95P Several $TLT 7/28/24 $100P I'm hoping to pick up 800 shares of TMF at around $6.50.
Yes, I have the same thought. Have a look at BLV as well if you want a higher yield and a potentially bigger NAV change when rates eventually drop.
“Feels” - is a tricky word. A single bond has more risk than an ETF holding a wide variety of bonds. Check out BLV while you’re at it. It’s Vanguard’s long term bond fund vs. BND which has a range of maturities.
All I heard was, it's time to look into buying some BLV... Most bond ETFs are down thanks to rate hikes, so a good time to balance out positions!
Yes, yields in BLV would decrease, also, but they would decrease more slowly. Every bond ETF should have information on the average duration. For BLV, it is ~14 years. It is important to always look at the yield in dollars (not %) when you bought. Existing bonds do not have yield variance, relative to the price they were bought at - it is a fixed number of payments, in exchange for an upfront payment, at discount. However, when selling a bond you own, if the markets are buying lower yielding % bonds, you could sell your bond (fixed set of payments) for a higher price than what you bought it for, since buyers are willing to buy smaller % yields. The longer your payments (duration) the more people will be willing to pay in falling rates environment, because they think they will be able to sell the bond at a higher price. BLV being a bond fund follows this market and is why the aggregate pricing of the bonds in the fund changes on a daily basis.
I see. And if savings account rates go down from these historic highs, it will be because rates have dropped again and thus bond yield as well. But, buying BLV only gives indirect exposure to bond yields, right? The yield of that would reflect the allocation of short and long-term bonds and would inevitably go down in a period of low yield?
>Why do people say invest in bonds to diversify... [This is mainly why](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=2&startYear=1985&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=SPY&allocation1_1=80&allocation1_2=80&symbol2=TLT&allocation2_1=20&symbol3=SHV&allocation3_2=20). The stock and bond portfolio had better risk adjusted returns than the stock and cash portfolio of equivalent risk. (If one is unsatisfied with the unleveraged stock and bond portfolio, there are also leveraged versions that outperform 100% stocks). Over the long term, on average, bonds have had a modest risk premium over cash and have been uncorrelated with stocks. They were particularly good diversifiers in in 2008 and 2000 which were the big salient bear markets as of when you bought your bond fund. >..., hedge However, over the longer term, they have roughly zero correlation with stocks, not negative correlation as they did in semi-recent history, which is why they are called a diversifier and responsible knowledgeable people did not call them a hedge. It follows that they would sometimes be *positively correlated* with stocks, causing your portfolio losses that are sometimes larger than an "equivalent-risk" portfolio using stocks and cash. And unfortunately that's what happened last year. >I have a position in BLV that Ive held for 5 years, it is down 20% Others have already mentioned this but you are actually up ~5%, not down 20%. It is a common mistake people make to neglect dividends (or the reverse, looking only at dividends) rather than total return. >I've always heard that bonds are supposed to be a safe "investment" Short term high quality bonds are equivalent to cash. They are safe and not really much of an investment, in the sense that the risk-free asset represents saving without making any investment. Longer term bonds have term risk. Low quality bonds have credit risk. You can juice either or both of those types of risk to get bonds with a lot of risk. Such bonds are not safe; they may or may not be a good investment. I'm sorry if you heard differently and/or did not understand what you heard. >and that as you retire you should put diversify the mix of stocks into more bond positions. To some extent, retirees should derisk to offset sequence of returns risk, and bonds are generally be a better way to do that than cash, for the reasons mentioned above. Personally, I think industry standard glide paths and that 'age minus x in bonds' rule of thumb' are too conservative given the data. But such advice also needs to account for the emotional side of people depending on their portfolio during a crash, so eh...
To all the people explaining why OP is dumb for misunderstanding why his investment lost value.... look at it from the perspective of the consumer. He's saying he bought BLV 5 years ago. During that time, people were buying bonds, yes? People were selling them, yes? Perhaps even all you galaxy brains were. To now say "Well in a rising rate environment, it's OBVIOUS that was a bad move" it was not 5 years ago a rising rate environment. Yes, someone could have guessed rates were low and so would rise. But prior to that no one expected them to get as low as they did. It's sort of like if someone bought SPY in 2020 and then said "Hey, my SPY investment lost value" and you dogpile them saying it was obvious COVID and stimmies would wreck the economy. Okay? Your hindsight is not helpful. He's asking why bonds are as popular a 'hedge' as they are despite them not reliably trading uncorrelated to equities. That's my take anyway. I honestly have the same objection to bonds. Yeah, you can make 5%. Cool. So's my savings account. The oft-sold benefit of them is that they protect value when equities lose value. And that's not the case, not by a long shot. The fed's ability to directly control bond NAV and coupons means you are sacrificing the 'safety' of bonds, while also sacrificing the upside of equities.
Any reason to buy into BLV right now, when savings accounts are offering almost the same yield?
At a real ELI5 level, "hedging" means "buy something that will go up when your main investment goes down". So consider: BLV is "down 20%", but what has the thing it is hedging against done? S&P500 is up 61% over the last 5 years. Other good posts are offering more detail on the other things you need to think about, but at the 30,000 foot view, you bought bonds right before a supercharged 5-year run in stocks.
BLV are all long duration bonds. a couple years ago long duration bonds were yielding like 1%. now new bonds being sold are yielding around 4%. Naturally the old bonds got dumped until their price fell enough for their yield to be near 4%.
bonds face value have an inverse relationship with yield to maturity. You bought into BLV before the FED announced rate hikes. Just bad timing. Like others have said, bonds are ideal for consistent income streams through coupons payments. (Which isn't being taken into account in the return you're seeing) This is a great example to be mindful of what you're investing in and what the greater macro environment looks like. It's probably not the best decision to jump into bonds with ~0% interest rates
BLV played out pretty great during the 2020 pandemic. I think OP and maybe others don't factor in that BLV hold past bonds and the difference between the rates of those to current rate of bonds will impact the price of the ETF shares? Anyways, whatever rate BLV was paying during 2020 (I think maybe 2-3%) when the Fed cut their rates to near 0% meant it was a great time to sell. Now BLV is starting to look pretty attractive. No longer heavily oversold, but Fed still talking about hikes. Maybe if it tanks again? Not sure how you'll have to play it to get a better return/risk than just putting it in VOO though. Maybe LEAPs?
Good post. Will just also note for OP: >I've always heard that bonds are supposed to be a safe "investment" and that as you retire you should put diversify the mix of stocks into more bond positions. Traditionally it's been said to have a **60/40 portfolio** where *bond exposure will cause drag but offer protection in form of diversity from equities* ***while also providing hedge***. Another problem with BLV is that it is LONG TERM bonds and LONG TERM bonds only. Fed rate hikes has inverted the yield curve where the 0-5yrs are yielding more than the 10-30yr (what you're holding in your fund). If you had bought something like TBIL or UTWO. Then those would have fallen but vastly outperformed the S&P500 due to that falling much more. A good note to remember about bond diversification: ***It promises nothing about outsized returns, the lack of downward movements, exemption from volatility, or 0 risk of loss.*** If anything adding bonds means actively adding a drag on your portfolio and potential maximum return (assuming no rebalancing). That's why many on r/investing and even professionals FAs/Fiduciaries would now recommend something like 80/20 or even more if you're under 30 or have high risk tolerance. If you had BLV for 5 years then GOOD investors/traders would have told you to reduce exposure and raise cash in 2020 and buy stocks when they were cheap. Or maybe diversify into shorter notes, maybe switch to gold, or just straight cash. The point of the 60/40 is that bonds and stocks tend to have inverse correlation because stocks go down when economy is bad or there is some black swan event, the fed will usually cut rates to save the economy, and that would spike the price of bonds. That would allow instant exit via sale to market due to demand and price hike. 2022 stock downturn wasn't an economic downturn but a Fed induced correction. The Fed was not dealing with an economic downturn but an overheating economy. They HAD to rise rates to temper inflation. Higher rates tanked the stock markets, but higher UST rates means no one wants to your near 0% rate bonds.
>I've held a small position in BLV for over 5 years and its the worst performing position I have. Why do people invest in "bonds" at all? You didn't invest in bonds. You invested in a bond fund whose underlying assets are long-term bonds. Bond funds are subject to market. interest rate, and inflation risk. Holding actual bonds is only subject to inflation risk.