Bloomberg writes "Investors Bound for Shock If Rising Rates Sink Bonds, Cohen Says". The article says, "Investors who poured more than half a trillion dollars into bond mutual funds since 2007 will experience a market crash when interest rates rise, according to Marilyn Cohen, a Los Angeles money manager. Cohen lays out a grim scenario in 'Surviving the Bond Bear Market' (John Wiley & Sons Inc.), co-written with husband Chris Malburg. Rates will surge if the global economy strengthens or because investors lose faith in governments with growing deficits, said Cohen, whose book came out this month." The piece quotes Cohen, "The baby boomers, who really have been all-in to all kinds of bonds and bond funds since the end of the credit crisis, they've never lived through a bear market with skin in the game. It'll freak people out." Bloomberg adds, "Fixed-income mutual funds took in net deposits of $645 billion from 2008 through 2010, according to the Washington-based Investment Company Institute.... Cohen recommended putting as much as 25 percent of a portfolio in money-market funds, which invest in short-term Treasury bills and commercial paper. Their yields rise along with interest rates."
