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Bond guru Jeff Gundlach warns that risk of rising interest rates extends beyond bond markets,...

Bond guru Jeff Gundlach warns that risk of rising interest rates extends beyond bond markets, citing MLPs in particular: "People are moving away from bond investments for obvious reasons but are going into things that are like going from the frying pan into the fire. Look at MLPs: If interest rates rise, you are going to get killed on a lot of these vehicles because they have a lot of leverage and a lot of interest rate risk."
Comments (11)
  • Clayton Rulli
    , contributor
    Comments (2480) | Send Message
     
    Bonds have risk too, no?
    9 May 2013, 02:21 PM Reply Like
  • IncomeYield
    , contributor
    Comments (1476) | Send Message
     
    He said that. But most bond buyers intend to hold to maturity so they don't care about market risk, only credit risk.
    9 May 2013, 02:23 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2485) | Send Message
     
    As long as the MLPs are not issuing floating rate debt, the buisness models should be fine. Unit prices will come down, since their yield should be viewed in relation to treasury spreads, but thats (to me) a well known risk. The wild card here is the tax implications from selling an MLP may prevent people who have been holding for the last few years from dumping shares at the first sign on an interest rate rise, since their cost basis after the distributions could be substantially lower than their original purchase prices.
    9 May 2013, 02:27 PM Reply Like
  • rheimerl
    , contributor
    Comments (338) | Send Message
     
    so....................... what to do??? where to go????.... dont totally disagree with this..but should we all just crawl in our holes?
    9 May 2013, 02:25 PM Reply Like
  • pollyserial
    , contributor
    Comments (1055) | Send Message
     
    lol
    9 May 2013, 02:36 PM Reply Like
  • marketwatcher23
    , contributor
    Comments (935) | Send Message
     
    Go chase yield because Bernank will give us all advance notice before he exits.
    9 May 2013, 02:26 PM Reply Like
  • IPOChaser
    , contributor
    Comments (52) | Send Message
     
    Disagree. "Advance" notice is not possible. The moment such notice would hit the wire rates will likely skyrocket, not when QE actually ends/slow down.
    9 May 2013, 02:31 PM Reply Like
  • pollyserial
    , contributor
    Comments (1055) | Send Message
     
    Sorry, but the Bernank will only give advance notice to his future employers before he exits.
    9 May 2013, 02:37 PM Reply Like
  • kgerickson
    , contributor
    Comments (157) | Send Message
     
    Just send your money to Jeff..... the latest media darling... who will eventually crash and burn. Easiest answer, just take buffets advise.
    9 May 2013, 02:29 PM Reply Like
  • pollyserial
    , contributor
    Comments (1055) | Send Message
     
    And Buffet's advice...is the same as Gundlach's. Sell corporate debt.
    9 May 2013, 02:38 PM Reply Like
  • bd4uandu
    , contributor
    Comments (1798) | Send Message
     
    Are not BDC's vulnerable to rising rates also?
    9 May 2013, 02:47 PM Reply Like
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