This's also a good testament to the fact that one should adjust risk tolerance over time -- this is a diversified bond portfolio, but it's still much higher risk than someone near retirement should have had. Looking at a 401k like this just prior to retirement can really swing your perspective towards socialism, fast.
Luckily, many of us have 30 more years for things to work out. :)
ADVANCED MICRO DEVICES INC 7.75000% 11/01/2012 ↓-32.87%
AMKOR TECHNOLOGY INC SR NT 9.25000% 06/01/2016 ↓-34.36%
AVENTINE RENEWABLE ENERGY HLDG 10.00000% 04/01/2017 ↓-73.97%
BOSTON SCIENTIFIC CORP 5.45000% 06/15/2014 ↓-11.98%
BOWATER INC DEB 9.50000% 10/15/2012 ↓-71.62%
CENVEO CORP SR SB NT 7.87500% 12/01/2013 ↓-27.05%
CHESAPEAKE ENERGY CORP 6.87500% 11/15/2020 ↑4.25%
CHIQUITA BRANDS INTL INC 7.50000% 11/01/2014 ↓-21.38%
CLEAR CHANNEL COMMUNICATIONS DEB 7.250% 10/15/2027 ↓-75.49%
CLEAR CHANNEL COMM NOTES 5.500% 09/15/2014 ↓-67.57%
COLUMBIA HCA HEALTHCARE MTN BE 8.70000% 02/10/2010 ↓-8.92%
COLUMBIA HCA HEALTHCARE MTN BE 7.75000% 07/15/2036 ↓-41.17%
DEAN FOODS CO SR NT 6.90000% 10/15/2017 ↓-15.75%
DENNYS HLDGS INC SR NT 10.00000% 10/01/2012 ↓-22.00%
DILLARD DEPT STORES INC 6.62500% 01/15/2018 NT ↓-48.89%
DOLE FOOD INC SR NT 8.87500% 03/15/2011 ↓-31.11%
FORD MTR CO DEL DEB 8.87500% 01/15/2022 ↓-67.18%
FREEPORT-MCMORAN COPPER & GOLD 8.37500% 04/01/2017 ↓-3.49%
HERTZ CORP SR SB NT 10.50000% 01/01/2016 ↓-43.47%
ITT CORP NEW DEB 7.37500% 11/15/2015 ↓-25.14%
LIBERTY MEDIA CORP DEBENTURES 8.500% 07/15/2029 ↑11.49%
LOWE'S COMPANIES INC BONDS 5.500% 10/15/2035 ↓-30.60%
MAGNACHIP SEMICONDUCTOR S A 6.87500% 12/15/2011 ↓-91.22%
MEDIACOM BROADBAND LLC & MEDIA 8.50000% 10/15/2015 ↓-7.06%
MICHAELS STORES INC SR SB 11.37500% 11/01/2016 ↓-72.00%
NEIMAN MARCUS GROUP INC 9.00000% 10/15/2015 ↓-46.03%
PEP BOYS MANNY MOE & JACK 7.50000% 12/15/2014 ↓-47.90%
QWEST COMMUNICATIONS INTL INC 7.50000% 02/15/2014 ↓-24.99%
R H DONNELLEY CORP SR NT-1A 6.87500% 01/15/2013 ↓-73.41%
REMINGTON ARMS INC NEW 10.50000% 02/01/2011 ↓-23.12%
RITE AID CORP SR NT 8.62500% 03/01/2015 ↓-64.77%
SMITHFIELD FOODS INC SR NT 7.00000% 08/01/2011 ↓-21.50%
SOLO CUP CO SR SB NT 8.50000% 02/15/2014 ↓-24.44%
SOUTHWEST AIRLS CO DEB 7.37500% 03/01/2027 ↓-23.30%
STONE CONTAINER CORP SR NT 8.37500% 07/01/2012 ↓-47.30%
TIME WARNER COMPANIES INC 6.87500% 06/15/2018 ↓-18.94%
TIMES MIRROR CO NEW DEB 7.25000% 03/01/2013 ↓-80.89%
TRIBUNE CO NEW NT 4.875% 08/15/2010 ↓-65.62%
U S CONCRETE INC SR SB 8.37500% 04/01/2014 ↓-25.40%
UNISYS CORP SR NT 8.00000% 10/15/2012 ↓-41.58%
UNISYS CORP SR NT 8.50000% 10/15/2015 ↓-42.17%
UNITED RENTALS NORTH AMER INC 7.00000% 02/15/2014 ↓-23.58%
WEYERHAEUSER CO DEB 6.95000% 10/01/2027 ↓-30.83%
10 comments:
Parts of my IRA look very similar to yours and so I'm just going to be patient on that one as either I'll work until I die, or, I have enough to retire for one year, whichever comes first.
Where I am getting worried is the mutual fund I took out for the kids for "start-up" money upon graduation from high school. This was designed for whatever they decided to pursue after high school (college, trade, job, etc.) but now it's looking really weak. Most of that money was in bonds which are not doing well and I'm debating to wait another year or 5 years to let it clean itself up. I have to believe 5 years from now it will have at least regained most of its value, but these days I'm not sure. Those people who have kids getting ready for college who invested in state funds for this purpose are probably also getting worried about how they'll pay for college, if at all.
whee. look at all those fun red arrows. :-)
Bonds are different from equities: bear in mind that the price of a bond can tank without you actually losing any money.
Oh that's interesting....I had not realized this. I was assuming that the value of the bond mutual fund was directly tied to the value of the bond. However, if I understand you correctly, assuming a company actually will pay out what you bought the bond for, it doesn't matter if the price drops. Where you lose money is if you sell it when the price drops.
Did I get it right?
That's correct, assuming all payments are made. It's SUPER important to distinguish between the nominal value of a bond, its price, and the yield that results from combining the price and value.
It's also particularly important to remember that lots of bonds aren't fully paid out -- that's why there're different credit-ratings, risk premia (higher interest rates), etc. The nominal value reflected in the net-present-value of future dividend payments is only good so long as those payments actually get made!
This's also why bond pricing is a good economic indicator: unlike equity prices, which reflect the projected earnings potential of a firm, bond prices reflect the projected credit-worthiness of the firm.
P.S. ...unless the mutual fund sells the bond and takes a loss rather than crossing their fingers that all payments will be made.
Well, it could be worse...
Always! :)
Hey, wait - does this mean that if you were older you'd be a socialist?
(sorry, couldn't help myself)
Damn I was going to buy a new Hummer in late 2012 and drive around the country for a vacation, Now I am going to have to shave my head and join the Hari.s, Muslims, Jews, Jehovah s, Mormons, Christians, and a few other wing nut groups just to cover all my bases.
[url=http://2012earth.net/stop_frighten.html
]Astronomical picture
[/url] - some truth about 2012
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