Word: bond
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Dates: during 1990-1999
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...underappreciated irony of bond funds is that while they invest in bonds they don't behave like them. Bond funds cannot guarantee return of principal because, unlike individual bonds (and perhaps your ex), they never mature; bond-fund returns, unlike bonds held until maturity, are tied as much to daily price movement as to the interest rate they pay. And the income generated, rather than being fixed, vacillates with market rates. These differences are so fundamental that it's a stretch even to call them bond funds. They're more like a stock. In fact, if you have money...
...Bond funds do have some good features. They are easy to buy and sell. The minimum investment is in the thousands--not the tens of thousands, as with many individual bonds. And in a stable interest-rate environment, bond funds really are a suitable bond substitute. Just make sure you know what you're getting. There are plenty of low-risk, short-maturity funds. It's the funds that buy 10-, 20- and 30-year bonds that test your emotions. Both types, incidentally, are staples in 401(k) plans. Many people had no idea what they had got into back...
...bond funds suddenly so popular? The Asian economic crisis chased some investors to perceived safe havens like Treasury bonds. But mainly it's a play on interest rates, which could reach dramatic new lows if inflation continues to subside. When rates fall, bond funds excel. That was the case in '95, when T-bond funds returned an average 22%. But there's an insidious side to bond funds even when rates are falling: the income streams they provide decline because fund managers must buy new bonds that pay ever lower interest. The $1 billion PIMCO High Yield Fund paid...
Income erosion is a problem serious enough so that bond funds should probably decline new money in periods when rates are moving down sharply, like now. That won't happen, though. Now that bond funds are turning heads again, their managers want to enjoy it. If only the oglers knew what they were looking...
Real town meetings--I mean the old-fashioned kind in which a town's voting population meets annually to bicker, gossip, elect councilmen, vote on bond issues--are anachronisms today, surviving only in a few eccentric backwaters of Ye Olde New England. But the pseudo town meeting, as developed by the President and his imagemakers, is a ubiquitous political gimmick, practiced by candidates nationwide. Perfected in the President's 1992 campaign, the format is familiar to anyone unlucky enough to own a TV. A television studio--or a hall outfitted like a TV studio--is filled with a carefully screened...