What Happens if Interest Rates Rise?

By Michael Batnick of The Irrelevant Investor

The lower interest rates go, the less people worry about rising rates.

When rates are at 4% for example, it seems entirely possible that they can go to 7%. “Oh no, what’ll happen to my principal?”

But with rates hovering around 1%, the idea that rates are going to shoot to 4% or higher isn’t front and center. Right now, investors are saying, “Oh no, what happened to my income?”

Obviously bonds are very sensitive to changes in interest rates, but they’re hardly alone in this manner. I thought this snippet from GMO’s most recent quarterly letter, which hits on this topic, was worth sharing…. Read More