Big Misconceptions in Bond Investing

(New York)

The Wall Street Journal has published an article arguing that many investors are wary of the bond market purely because of misunderstandings. This may also be the reason that many lose money in the market. One of the key elements that seem to be poorly understood is that fact that the bond market is not unified in the way stocks are. It is composed of hugely variant types of bonds, all with their own pricing, so views such as "the bond market is overpriced" are too generalized to be relevant. Additionally, many seem to forget that one of the primary purposes of bonds in a portfolio is to hedge against stock losses.

FINSUM : It seems there is still a lot of room for human advisors to educate clients about the opportunities and risks in the bond market. This seems especially true at a time when stocks are doing so well.

  • bonds
  • investors
  • advisors

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.