If you’ve been paying attention to the financial markets lately, you’ve probably noticed that interest rates have been increasing, resulting in a decrease in bond prices. Other recent developments, such as Elon Musk’s Twitter acquisition and the decreased performance of popular growth stocks, have a lot of people questioning if it is time to adjust their portfolios. In today’s episode, Grant reviews the relationship between interest rates and bonds, how investors should react to increasing interest rates, and some of the stock price behaviors related to acquisitions.
Show Notes
[03:30] Market Updates – Grant recaps some of the interesting developments in the financial markets.
[05:26] Growth Stocks – In recent months, some of the popular growth stocks, such as Netflix and Amazon, have not been performing very well. Grant shares his thoughts on the implications of this trend.
[07:18] Bonds and Interest Rates – Grant dives into how the value of bonds fluctuates based on the interest rates and some of the methods used to evaluate bonds.
[13:31] Responding to Interest Rates – How investors should respond to increasing interest rates and why this is not a good reason to sell your bonds.
[20:25] Bond Funds – How bond funds work, differences between stock funds and bond funds, and how to evaluate bond funds.
[27:14] 60/40 Portfolios – Grant shares his thoughts on whether 60/40 portfolios are a good asset class to invest in.
[29:46] Twitter Share Prices – Grant discusses Elon Musk’s acquisition of Twitter, and what this means for investors.
Resources
The dynamics of bond duration and rising rates
investor.vanguard.com/investor-resources-education/news/the-dynamics-of-bond-duration-and-rising-rates
Rising rates don’t negate benefits of bonds
investor.vanguard.com/investor-resources-education/news/rising-rates-dont-negate-benefits-of-bonds
AARP Bulletin: Don’t Ditch Those Bonds
www.aarp.org/money/investing/info-09-2013/dont-ditch-those-bonds.html