Bonds’ Museum of Illusions

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As we close out the year, Sam Pennell, First Vice President - Investment Officer and PIM Portfolio Manager of the 282 Group of Wells Fargo Advisors, shares what to take note of, and what may be a mirage of importance for yield and bonds.  He shares his thoughts on where income investors should be focused 2024. 
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All investing involves some degree of risk, whether it is associated with market volatility, purchasing power or a specific security, including the possible loss of principal.
Investments in fixed-income securities are subject to market, interest rate, credit and other risks. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can cause a bond’s price to fall. Credit risk is the risk that an issuer will default on payments of interest and/or principal. This risk is heightened in lower rated bonds. If sold prior to maturity, fixed income securities are subject to market risk. All fixed income investments may be worth less than their original cost upon redemption or maturity.
Bond laddering does not assure a profit or protect against loss in a declining market.
Duration is an estimate of how a portfolio or bond will react to changes in interest rates, representing the approximate change in price for a 1% change in yield.