Since 1981, interest rates have steadily fallen. For bond values, that represents the Garden of Eden, as bond values are inversely related to interest rates. And to be clear, inversely related means that bond values move in the opposite direction as interest rates.

Here’s the problem. As you are probably aware, interest rates are about as close to zero as you can get. That means that they have only one direction to move – up. When interest rates move up, bond values fall.

If bond values fall, we have a bear market in bonds. And given that no one has seen such a thing since 1981 (33 years ago), it is not surprising that very few people will be prepared.  Many of us started investing after 1981 and really have no experience watching bond values and bond funds drop.

If you are concerned about this issue, here’s a great article (that has a pretty chart) – Click here for article

In the meantime, it’s always a good idea to have our team double-check your portfolio. Give us a call at 215-657-9200.