It’s impossible to survey the current bond market without shuddering. A team of analysts at Bank of America calls it “the greatest bond bear market of all time.”
Fixed-income investors have been experiencing calamitous price declines in the bond market since summer 2020. Some 30-year U.S. Treasuries have lost 50 percent of their value, the Bank of America team noted.
As interest rates have risen over the past few years, breathtaking price movements have been occurring with dismaying frequency. And as losses have mounted, it’s been easy to give up on bonds.
But if you have lost your taste for them — or have never owned them at all — I still believe that investment-grade bonds are worthwhile for many, if not all, investors. In fact, the higher yields and lower prices in the market today mean that this is an excellent time to buy bonds.
For most people, the easiest way to do this is through a broad low-cost mutual fund or exchange-traded fund. Bonds make sense because, despite their recent problems, they still have traditional virtues.