[barbegal]

This seems overly complicated. The market for bonds reflects the current inflation and interest conditions so selling bonds at any moment in time should on average be as profitable as holding them to maturity (except for broker fees which are usually quite small). I would just buy bonds and sell them if and when required.

[JackFr]

> The market for bonds reflects the current inflation and interest conditions.

To say that the bond market "reflects current interest conditions" is like saying the stock market reflects current stock prices.

A dollar today is not the same as a dollar a year from now, which is also not the same as a dollar two years from now, and thus they have different prices.

I don't disagree with your conclusion. This is a technique for matching asset & liability timing (not really a market strategy), more suited to the corporate treasury than the retail investor.

[jterenzio]

I'm not sure that works universally. If you buy a bond with a 2% yield today that matures in 3 years and you decide to sell in 1 year instead and at that point the current rate is 3% the price you sell at will be lower than the price you paid so you won't make a 2% return in the first year...

Re: fees depends on your platform. Fidelity charges no fees or markups for treasuries but if your platform does it's something to consider in addition to bid/ask spread.

[barbegal]

What you're missing is that on average the market would have factored that into the price of the 1 year bond.

If you look at past data there is on average no difference between buying 1 year bonds and keeping them to maturity and buying 3 year bonds and selling after 1 year.

The only case maybe for buying 1 year bonds is where you have another contract which matures in 1 year denominated in the same currency. E.g. I have a mortgage payment of $1020 that I have to make in 1 year so I should invest $1000 into a bond that pays 2% interest.

[dmoy]

> past data

Can you link that data? Is it data from the past 5-10 years? Or much more historical?

[barbegal]

This paper has data up to 2016 https://www.valueeconomics.com/data/The%20Bond%20Ladder%20Fa...

[piker]

> (except for broker fees which are usually quite small)

Not quite. Commissions are charged on equities. Markups are charged on bonds. Markups are the difference between what the broker paid and how much a retail investor has to pay the broker and are much more opaque. They can be quite hefty. One just doesn't notice.

[jterenzio]

It depends. In my article I pointed out that with Fidelity there are no commissions or markups on treasuries on the secondary market. If there were, it would definitely change the calculus.

[pishpash]

There's always the bid-ask spread.

[jterenzio]

I mentioned it my post that and it's something to consider. With treasuries the spread is fairly tight.