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Russell’s review: In normal times, I encourage most investors to stick with intermediate-term bonds and forget about short-term bonds that typically yield considerably less. Recently, however, with interest rates so low, low, low, I’ve been leaning my client portfolios more to the short term. Reason: When interest rates rise, as they eventually

In the words of Bill Gross, who runs the world’s largest bond fund at the Pacific Investment Management Company (PIMCO), ‘bond markets have power because they’re the fundamental base for all markets. The cost of credit, the interest rate [on a benchmark bond], ultimately determines the value of stocks, homes, all asset classes.’

High-yield bonds—which Graham calls “second-grade” or “lower-grade” and today are called “junk bonds”—get a brisk thumbs-down from Graham.

Since we own our bonds in VBTLX—Vanguard’s Total Bond Index Fund—most of the risks in owning individual bonds go away. At last count, and this will vary a bit, the fund holds 7,843 bonds. All are investment grade (top quality) and none rated lower than Baa (see Stage 4). This reduces default risk. The fund holds bonds of widely differing maturity