BOND MATH: The Theory Behind the Formulas

Conclusion

It is surely an unfair comparison, but sometimes bonds to me are like middle-school-age children. On their own, as individuals, they are fine and usually well behaved. The same can be said for bonds. I understand them and their risk-return profile. I can measure their comparative static properties. The problem is when they run together in portfolios, like children in a shopping mall. It's hard to predict pack behavior using weighted averages of their individual statistics.

You need a really good strategy to build and manage a bond portfolio. That comes next.