Chart o’ the Day: Interest Rate Risk Illustrated

Posted by

The below chart comes to us from Altegris CIO Jack Rivkin’s excellent mid-year market update. It’s a reminder that if when interest rates do begin to rise, some areas of the bond market are likely to surprise investors who’ve been reaching on duration for that extra few bits of current yield. They may end up getting a harsh lesson in why total return is more important than current income.

Here’s Mr. Rivkin:

Historically, in a rising rate environment, different yield vehicles carry different degrees of risk. The table below provides a comparison of risk relative to a one percent increase in rates. Our suggestion is at this stage in the fixed income markets one should be moving holdings to the left, lowering duration.

Screen Shot 2014-08-05 at 9.37.02 AM

 

Source:

The Mid-Year Update: An Eventful First Half. (Altegris)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  2. gilbert commented on Dec 09

    .

    ñýíêñ çà èíôó!!

  4. taxi cheltenham to birmingham airport commented on Sep 17

    … [Trackback]

    […] Read More Information here on that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  5. replica designer watches commented on Sep 18

    … [Trackback]

    […] Read More on on that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  6. Bitcoin Era Review commented on Sep 21

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  7. bitcoin loophole review 2020 commented on Sep 25

    … [Trackback]

    […] Read More Info here to that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  8. Small child commented on Sep 25

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  9. blazing trader review 2020 commented on Sep 28

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  10. immediate edge review commented on Sep 29

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  11. online dating commented on Oct 14

    … [Trackback]

    […] Read More Information here to that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  12. Quality engineering commented on Nov 11

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  13. gucci diamond digital watch replica commented on Nov 16

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  14. Digital transformation technologies commented on Nov 27

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

  15. bestroofguy.com commented on Dec 06

    … [Trackback]

    […] There you can find 19067 additional Information to that Topic: thereformedbroker.com/2014/08/05/chart-o-the-day-interest-rate-risk-illustrated/ […]

HowIInvestMyMoney