The Ebb and Flow of Bond Prices

If you have been following the financial press and have seen news of the recent fall in bond prices, I don't want you to worry. A decline in bond prices is part of the natural ebb and flow (like the ocean in the picture above) between the bonds and stock mutual funds in your portfolio. As you know from conversations with me we do not try to predict the future (I have no psychic powers) and so we do not know if the decline in bond prices will continue or reverse course now or later. What we do know is that as bond prices have fallen, stock prices are near all time highs: the S&P500 index is up 23 percent in the last year. Stocks are the best counterbalance to bonds. Your portfolio at Rogowski Wealth Management is almost certainly made up of both stocks and bonds, so when bonds ebb, stocks flow.

If you would like to read more about the recent fall in bond prices, the Money section of New York Times has a more technical article about these trends. http://tinyurl.com/mkyzpec