>bonds are better when interest rates are low. Stocks have more
>potential for high returns but, as we have seen, can be risky.
>
>Dana
Bonds are not better when interest rates are low. Bonds are better when
they return more then the other asset classes.
When interest rates go down, government bond prices usually go up. The key
is government bonds. But if you are buying bonds long term those price
spikes are virtually useless as the yield will be reduced to reflect the
increase from par. (I think). The bulge brackets are making pennies on
the dollar but if you have 1000M a day to trade bonds, that is a nice
amount of pennies.
But as a generalization bonds are safer then stock. This is because bond
in company ABC is senior to stock, or equity, in company ABC. In the event
of liquidation, bond holders are paid before equity holders.
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