Bonds are another essential tool for any investor’s toolbox. Roger Nusbaum for Random Roger’s Big Picture offers some tips on how to watch the bond market:

  • Look at bonds from the long-term, big picture view.
  • Yields work opposite to price, when the yield is low, as it has been for several years, the price is high and vice versa.
  • When rates are low, it’s generally better to avoid risk.
  • Watch out for inverted yield curves; they indicate something is off in the bond market.
  • When yields are low, shortening maturity reduces risk.
  • Limiting exposure to emerging markets or high-yield debt can reduce risk.
  • Watch credit spreads. In general, when spreads are wider, the yield advantage should be larger.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.