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Assessing Just How Much Bond Investors Lost

Thursday, 23 May 2013 | 7:55 AM ET
Source: The Ohio Art Company

Bond yields have surged in the month of May. So just how much have retail investors lost?

Almost five years.

On July 25, 2012, the 10-Year Treasury yield hit a low of 1.38 percent. And on Wednesday, yields finished the day just shy of 2.04 percent, as investors became concerned that the Federal Reserve will taper quantitative easing sooner than previously expected.

(Read More: Fed Mulls Tapering as Soon as June: Minutes)

That huge move in yields translates into a gigantic difference in how long it takes bond investors to get their money back. To make up for this jump in yields, bondholders would theoretically have to hold their bonds for 4.8 years longer to make the same amount of money that they would receive if they bought bonds today.

Worse, if bond yields continue to rise on the theory that the Federal Reserve is about to taper its bond purchases, then those who bought bonds at the bottom will be missing out on more and more money. Adding insult to injury, the S&P 500 has appreciated by 24 percent since then.

Futures Now: Bond Yields Soar on Bernanke
The Futures Now team; Jim Iuorio, TJM Institutional Services; and Jeff Kilburg, KKM Financial discuss movement in the bond market following comments from Fed chief Ben Bernanke.

Interestingly, most "Futures Now" fans appear to believe that stocks will be a better investment than bonds for the rest of the year. In an unscientific poll, 46 percent of respondents said stocks will be the better investment, while only 23 percent selected bonds. That's less than the 31 percent who picked "Eh, Who Knows."

("Futures Now" Poll: Are Stocks or Bonds the Better Investment?)

Then again, modesty may be a good investor's most important quality.

— By CNBC's Alex Rosenberg

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