Bond Investors Who Time Rates Face Host of Risks
Almost everyone agrees interest rates are headed higher -- but that doesn't necessarily make it any easier to decide when to make a move in bond investments.
To protect against rising interest rates, conventional wisdom says investors should move to shorter-term bonds. But there are risks involved in this market-timing approach.
"The investor who pulls out of long bonds into short-term bonds or cash is losing income while they wait for rates to rise," said John Miller, a fixed-income portfolio manager with Nuveen Investments Inc. in Chicago. "If rates don't rise, they may not be made whole."
Even when bondholders are correct in their interest-rate predictions, it can take a long time to make up what was lost in interest income by sitting in lower-yielding investments.
It is an increasingly important issue for income investors right now. In June, the Federal Reserve raised its target short-term interest rate by a quarter of a percentage point to 1.25%, lifting rates from a 46-year low of 1%. The Federal Reserve is expected to push short-term interest rates even higher in the next several years.
In response, investors have been encouraged to adjust their bond portfolios to protect against what is expected to be an environment of rising rates and falling bond prices. Among the most widely touted is advice that says investors should move to short- and intermediate-term bonds with maturities of 10 years or less. Bonds with shorter maturities provide less in returns, but they also lose less in value when rates rise. Plus, their shorter lifespans allow investors to escape low interest rates sooner.
The most obvious risk of this strategy is that rates don't rise as expected, in which case people who moved lower on the yield curve would have given up higher returns for nothing. In 2001, for example, some investors were convinced that rates were set to tick higher after hitting historic lows. Instead, rates continued to set new lows for the next several years.
Even when bondholders are right in their interest-rate predictions, they lose interest income while they wait in shorter-term bonds or in cash for rates to rise. Consider, for example, that the Federal Reserve starts raising interest rates as expected, but that it has the effect of flattening the yield curve. In other words, rates on short-term bonds rise, but rates on long-term bonds don't follow. In that situation, anyone who moved to the short end of the yield curve would face an even longer waiting period before they could reinvest in long-term bonds.
Depending on how long you wait, where you wait and what rates you finally nab, it could take years to make up the losses, said Roy Youngman, senior vice president at FMSbonds Inc. a Boca Raton, Fla., broker-dealer firm specializing in municipal bonds.
Mr. Youngman crafted a scenario to demonstrate this problem in 2001, when he was trying to convince investors of the merits of not trying to time interest rates. The scenario had one investor with $100,000 who invested immediately in tax-free bonds at a rate of 5.6%. After four years, the investors saw a return of $22,400, not including compounding. A second investor with the same amount of money waited six months to invest until he could lock in a rate of 6%. In the meantime, he invested in cash at a rate of 2.25%. Despite his waiting for the higher rate, it took the second investor more than four years to catch up to the first investor's returns.
债券投资者把握时机并不容易
利率将继续走高的观点已基本成为人们的共识，但对于投资者应到何时调整债券投资的问题并没有因此而变得容易些。
传统观念认为，为了防止因利率上扬而蒙受损失，投资者应该向短期债券转移。但是，在时间的选择上他们仍要面临风险。
Nuveen Investments Inc.驻芝加哥的固定资产投资组合经理约翰?米勒(John Miller)说，“从长期债券中撤出、转而投资短期债券或持有现金的人将在等候利率上扬的过程中丧失部分收益。如果利率不上扬，这部分损失将难以弥补。”
即便债券持有者对利率走势判断正确，因转成低收益率投资而蒙受的利息损失也要在很长时间后才能得到弥补。
眼下对于固定收益投资者而言，这个问题已经越发重要了。6月份，美国联邦储备委员会(Fed)将短期利率从46年低点上调25个基点，至1.25%。市场普遍预计，未来几年它将进一步上调短期利率。
作为对利率预期的反映，投资者一直在积极调整债券组合，以防因利率上扬、债券价格下降而蒙受损失。比较普遍的一种观点是：投资者应该向10年期或10年期以下的短期债券转移。短期债券回报率相对较低，但在利率上扬时其价值缩水的程度也会小些。此外，较短的期限可以让投资者更快地摆脱低利率产品。
这种策略最显而易见的风险是利率不能如期上扬。在这种情况下，向短期债券转移的投资者将不得不放弃更高的回报，而结果却是一无所获。2001年就是很好的例证，部分投资者坚信，利率在触及历史低点后会逐渐走高。然而事实上在随后几年，利率不断走向新低。
即便债券持有者对利率走势判断正确，他们在持有短期债券或现金、等待利率上扬时仍要损失利息收入。想想Fed已经如预期上调利率，但造成的影响却是收益率曲线趋于平缓。换句话说，短期债券利率上扬，但长期债券利率并没有与之同步。在这种情况下，任何向短期利率转移的投资者都要等待更长时间才能对长期债券进行投资。
佛罗里达州经纪公司FMSbonds Inc.的高级副总裁罗伊?扬曼(Roy Youngman)称，你可能要在数年后才能弥补这些损失，具体将取决于你为利率上扬而等待的时间，你在哪种品种上进行等待，以及你最终获得了什么样的利率。
扬曼2001年曾力劝投资者不要等待利率上扬，当时他曾通过一个假设来说明问题。假设一位拥有10万美元资金的投资者立即买入了利率为5.6%的免税债券，4年后他获得了22,400美元的回报（不包括各种杂项）。而另一位拥有等额资金的投资者则一直等待利率上扬，最终在6个月后他将投资锁定在6%的利率水平。在这段等待的时间里，他选择持有现金，利率为2.25%。尽管第二位投资者可能最终等到了较高的利率，但他花了4年多时间才赶上第一位投资者的回报。
(back)Wall Street on Guard for Worst
New York financial institutions have made strides to secure vulnerable buildings and develop backup plans to minimize the impact of a terrorist strike. But it is impossible to know if they have done enough to stay up and running in any immediate aftermath.
The current level of preparedness is crucial in light of the weekend warnings from the government that al Qaeda terrorists had targeted Wall Street and international financial institutions as strike targets.
Many Wall Street firms were caught flat-footed after the Sept. 11, 2001, attacks. Bankers from Lehman Brothers Holdings Inc., for example, had to operate for weeks out of rooms at a Sheraton hotel in midtown Manhattan. Companies in the downtown financial district scrambled for days to recover data on incapacitated network servers.
In the event of another disruption, chances are the picture will be different: Securities firm Morgan Stanley has built additional trading facilities at a new building in Westchester, N.Y., and it plans to give them a test run when the Republican convention comes to Manhattan this month. Goldman Sachs Group Inc. has a new office tower in Jersey City, N.J., where it can dispatch some of its traders. According to people familiar with the matter, Lehman also has beefed up its communications systems and established backup facilities in New Jersey to avoid a repeat of the Sheraton experience.
ON ALERT
? Terrorists Took Time to Get Data
? On Alert, but Work as Usual
In addition, securities exchanges have bolstered contingency plans: The Nasdaq Stock Market, for example, has high-capacity trading platforms that should allow it to handle trades in all 6,679 listed stocks for the U.S. capital markets in the event of an emergency, with a data center in Connecticut and a backup center in Maryland. "Our systems can serve as the backbone for the capital markets," says Nasdaq spokeswoman Bethany Sherman. That could be important if the New York Stock Exchange's backup facilities in a city borough outside of Manhattan weren't viable in the event of a wider catastrophe in the New York metropolitan area.
Security experts say there still are gaps in security and business-continuity plans at big Wall Street firms. Some risks are hard to eliminate in a city teeming with as much activity as New York does. Some fixes are expensive. The weekend terror alert cited the possibility that al Qaeda operatives would use truck bombs. Tzachi Weintraub, a former Israeli army official with a corporate intelligence and security consultancy in New York, says financial institutions have improved visitor security in their lobbies and loading docks but haven't devoted enough resources to monitoring action outside, such as scanning, say, for loitering vehicles. A truck bomb, he points out, can do damage even when parked outside concrete barriers.
Security Market: A police officer stands guard outside the New York Stock Exchange.
Police and security officials swarmed yesterday outside firms and institutions named in the alert, notably Citigroup Inc. and Prudential Financial Inc. At the Citigroup Center office tower in midtown Manhattan, Mayor Michael Bloomberg and New York Gov. George Pataki greeted employees and met with senior executives. First lady Laura Bush and her twin daughters joined them. Across the river, Prudential officials hosted New Jersey Gov. James McGreevey and U.S. Sen. Jon Corzine, and added concrete barriers out front.
In a telephone address to New York employees, Citigroup Chief Executive Charles Prince and other senior executives outlined some of the company's response to the terror alert. Joe Petro, head of Citigroup Security & Investigative Services, told them they were continuing with "things that most of you have seen before," while also "taking less visible measures" that he declined to detail publicly. "The fact that financial institutions are targets was not a surprise to us," added Robert Willumstad, Citigroup's president.
Institutions also went about business as usual. Nasdaq, for example, continued promotional announcements, saying Hall of Fame quarterback John Elway would appear tomorrow at its headquarters to open the trading day and announce a new home-furnishings collection in connection with a listed company. Wall Street investors also appeared to shrug off the news. Financial stocks drooped briefly yesterday morning, but rebounded to close slightly up for the session.
Unquestionably, much has changed on Wall Street during the past three years, starting with getting into the buildings as a visitor. Goldman, Merrill Lynch & Co. and Credit Suisse First Boston, a unit of Credit Suisse Group, are just a few of the firms that require visitors to run their bags through X-ray machines. (Many firms don't look inside food bags or require that they be put on the conveyor belt, however.) Both the Citigroup Center and the bank's actual headquarters across the street are equipped with up-to-the-minute security technology. Among other things, the security desk at Citigroup Center keeps photographs of past visitors in a database and checks it when someone identifies himself as a repeat visitor.
Many Wall Street firms have elevated their security chiefs' rank and authority. Many are law-enforcement veterans who regularly chat with police and federal security agencies.
Some of the security chiefs expressed surprise yesterday that New York police and federal officials had summoned them to meet in person at One Police Plaza on Sunday. Wasn't it risky to put so many such officials in a location, the police headquarters, that itself is considered a possible place of terrorist interest? Those invited hailed from the major exchanges, the Federal Reserve, Morgan Stanley, Lehman Brothers, Goldman, Bear Stearns Cos., Wachovia Corp., American International Group Inc., Citigroup, J.P. Morgan Chase & Co. and MetLife Inc.
A key task for businesses and Wall Street institutions will be to keep their operations running in the event of a major disruption. To that end, companies have been spending considerable time and money to improve their ability to bounce back.
After the 2001 attacks, Dick Grasso, then-chief of the NYSE, contemplated putting the NYSE into two separate locations, the current one at 11 Wall St. and a second spot somewhere outside New York City but still in the state. While the exchange for years has maintained a backup-trading facility within New York City that could accommodate specialists and floor brokers if the Wall Street floor wasn't usable, the concern is that the space may be too close to lower Manhattan in the event of a major catastrophe. In April 2003, Mr. Grasso abandoned the ambitious plan for a more-permanent second location, citing financial and logistical concerns.
At Nasdaq, Chief Information Officer Steve Randich says almost every major system is redundant -- and in some cases has three backups. The basement in its Connecticut center houses two extra brand new generators waiting for use in case of emergency. The center stocks enough diesel to run electrical generators for more than a week in case of total electrical-supply failure. Arrangements with various data carriers and networks ensures automatic rerouting in the event of the failure of any single telecommunications company.
Goldman long has had backup facilities in, among other places, Brooklyn, near Manhattan. Its new Jersey City building, across the Hudson River, is about one-third full and houses at least two trading floors and back-office staff. Deutsche Bank AG said it has measures in place "including backup for our technology, trading facilities and other business functions. These measures have been effective in the past, both on Sept. 11" and last summer's big power blackout, and are being constantly refined.
Merrill Lynch Chief Executive Stan O'Neal said in a memo to employees yesterday, "I want to assure you that we are taking these warnings seriously." While many measures are visible, "we have also taken many additional steps that you probably are not aware of and should not be aware of if they are to be effective."
Cantor Fitzgerald, which as a tenant with floors near the top of one of the Twin Towers lost hundreds of employees on 9/11, said it has taken measures to allow staffers to work amid disruptions. Spokesman Tom Ryan says employees can get phone calls on their regular 212-area-code numbers via computer, wherever they are. The firm last week announced it would establish a new headquarters -- on low floors of a building in midtown Manhattan.
华尔街严阵以待
纽约的众多金融机构纷纷采取措施保护所处建筑大楼的安全，并做好预案，力求将一旦遭受恐怖袭击后的损失降至最低。但你永远也不可能知道准备工作是否充分。
美国政府周末发出警告，称基地组织(al Qaeda)已经将华尔街及国际性金融机构列为下一次攻击的目标。有鉴于此，当前各金融机构的战备状况就显得格外重要。
2001年9月11日那次举世震惊的恐怖袭击令许多华尔街金融机构措手不及。例如，雷曼兄弟(Lehman Brothers Holdings Inc.)的银行家们就不得不在曼哈顿中城的喜来登酒店(Sheraton)办公数周。地处曼哈顿下城金融中心的公司连续多日忙于摆弄陷于瘫痪的网络伺服器，试图恢复数据。
如果业务再次被迫中断，这次的形势会大有改观。证券公司摩根士丹利(Morgan Stanley)已经在纽约州Westchester的一栋新办公楼里准备了备用交易设施。公司计划在本月共和党在曼哈顿召开大会时试运行这些交易设施。高盛(Goldman Sachs Group Inc.)在纽约州泽西市有一栋新的办公楼，必要时可以向那里派驻交易员。据知情人士透露，雷曼兄弟也改善了通讯系统，还在新泽西准备了备用设施，以免重演喜来登酒店的一幕。
证券交易所也做好了应急预案。那斯达克市场在康涅狄格有一个数据中心，在马里兰州还有一个备用中心。一旦出现紧急情况，那斯达克的高性能交易平台依然能够正常运转，如常处理6,679只美国上市股票的交易。那斯达克发言人贝思尼?谢尔曼(Bethany Sherman)称，那斯达克的交易系统可以充任美国资本市场的骨干。这一点非常重要，因为一旦整个纽约市遭受恐怖袭击，纽约证交所设在曼哈顿不远处的备用设施恐怕就会无法投入使用。
安全专家称，华尔街大型金融公司的安全计划和业务应急计划仍然有漏洞。有些风险是难以根除的，尤其是在纽约这样一个活力四射的城市。有些防护措施要价不菲。周末的恐怖预警称基地分子可能会使用卡车炸弹。塔兹?温特劳布(Tzachi Weintraub)曾在以色列陆军服役，目前在纽约的一家企业情报和安全咨询公司任职。他说，金融机构已经加强了大堂和货运平台处的访客安全措施，但外部监控做得还不够，例如监控周围车辆的行驶，及时发现总在周围游荡的车辆等异常情况。他说，卡车炸弹即使停在水泥路障外面，也一样能造成损失。
周一，警报名单上各家金融机构大楼外面都围满了警察和保安人员。其中最知名的就是花旗集团(Citigroup Inc.)和Prudential Financial Inc.。纽约市市长迈克尔?布隆博格(Michael Bloomberg)和纽约州州长乔治?帕特基(George Pataki)并肩站在曼哈顿中城花旗中心(Citigroup Center)办公楼前，迎候员工并与公司高层管理人员会晤。第一夫人劳拉?布什(Laura Bush)和总统的双胞胎女儿也赫然在列。河对岸，Prudential的办公大楼里可以看到新泽西州州长詹姆斯?迈克格维(James McGreevey)和参议员乔恩?科兹尼(Jon Corzine)。大楼外面围满了水泥路障。
花旗集团首席执行长查尔斯?普林斯(Charles Prince)和几位高级主管同纽约的员工召开了一次电话会议，简要介绍了应对恐怖预警的几项措施。花旗集团负责安全事务的主管乔伊?普特罗(Joe Petro)告诉大家，公司一如既往地重视安全，也采取了一些隐秘措施，但他不愿意透露细节。花旗集团总裁罗伯特?威尔斯特(Robert Willumstad)则表示，金融机构是恐怖袭击目标这一点早在意料之中。
金融机构则像往日一样照常运作。例如，那斯达克按照惯例宣布，明天到场敲锣开盘的将是著名的四分卫约翰?埃尔维(John Elway)。华尔街投资者对恐怖预警似乎也不太在意，周一早盘短暂下挫的金融类股至收盘时已略高于前日。
无庸讳言，这三年来华尔街已经改变了很多，首先就是对访客的管理。高盛、美林(Merrill Lynch & Co.)和瑞士信贷集团(Credit Suisse Group)旗下的瑞士信贷第一波士顿(Credit Suisse First Boston)都要求对访客的随身背包进行X光检查，这不过是众多如法炮制的公司中的几例。许多公司虽然不开包检查，但要求访客将背包放在传送带上，接受机器检查。花旗中心，以及街对面花旗集团的总部都装备了最先进的保安技术。例如，花旗中心的安全检查台就有一个所有访客照片的数据库，一旦有人声称自己曾经来访，保安人员就能立即从数据库照片中查找确认。
许多华尔街公司纷纷给安全保卫主管人员升职，扩大他们的权限。许多人都曾是执法部门的资深专家，定期向警察局和联邦安全机构了解情况。
周日，纽约市警察和联邦官员召集金融机构的安全主管，到One Police广场面谈。一些人周一对此表示惊讶。把这么多负责安全保卫的人员召集到同一地点，而且是警察局 总部，这个做法本身不就很危险吗？那里本来不就是恐怖分子的袭击目标之一吗？这些应邀前往的人都来自各大声明显赫的机构：美国联邦储备委员会(Federal Reserve)、摩根士丹利、雷曼兄弟、高盛、贝尔斯登(Bear Stearns Cos.)、Wachovia Corp.、美国国际集团(American International Group Inc.)、花旗集团、摩根大通(J.P. Morgan Chase & Co.)，还有大都会保险(MetLife Inc.)。
华尔街金融机构和公司的一项重要任务就是，一旦遭遇袭击能立即恢复运作。为此，这些机构和公司投入了大量时间和资金。
“911”以后，时任纽约证交所首席执行长迪克?格拉索(Dick Grasso)考虑将纽约证交所的工作分散在两个地方，一个是目前的华尔街11号，另一个在纽约市外，但仍然不出纽约州。多年来，纽约证交所一直都在纽约市内有一处备用交易地点及相应设施，以便一旦地处华尔街的交易场所无法使用时容纳特设经纪商和场内交易员，但问题是这里离曼哈顿下城区太近了，一旦爆发大规模灾难，恐怕不会幸免。2003年4月，格拉索放弃了设立一处永久性后备地点的计划，称财务和后勤难以保障。
而在那斯达克，首席信息长史蒂夫?兰德奇(Steve Randich)称几乎所有的主要系统都有一套备用，有的甚至有三套备用系统。康涅狄格后备中心的地下室里有两套全新的应急发电机组，储备的柴油足够这两套机组在全面停电时供电一周以上。那斯达克还与各家数据和网络运营商签署了协议，一旦某个电讯公司发生故障，其他公司及网络就会自动接转数据和信号。
高盛早就在曼哈顿附近的布鲁克林等地建立了后备设施。在哈德逊河对岸的泽西市，高盛的新办公楼已经启用约三分之一，交易场地至少有两层楼，还配备了相应的后勤人员。德意志银行(Deutsche Bank AG)称，各项措施已经准备妥当，包括技术、交易设施及其他。这些措施已经通过了911事件和去年夏天大面积停电的考验，并且进行定期维护和升级。
美林首席执行长斯坦?奥尼尔(Stan O'Neal)在周一发给员工的备忘录中表示，公司对这些恐怖警告的态度是严肃认真的，员工尽可放心。许多举措是人们可以看到，感受到的，但还有很多看不到，也不应该被看到。
Cantor Fitzgerald在911事件中痛失数百名员工，当时该公司就租用了倒塌的双塔中某一栋的几层顶层办公。公司表示，已经采取措施保证员工可以在紧急情况下继续工作。公司发言人汤姆?莱恩(Tom Ryan)称，员工都登记了一个区号为212的常用电话号码，无论他们身处何方，都能通过电脑接到拨打到这个号码的信息。该公司上周宣布，将在曼哈顿中城某栋大楼的低层设立新的总部。
