The death of nominal bonds? Implications for the PP?

[AdamA]

Does anyone think that it might be okay to just keep by long term treasuries, even with negative rates?

Maybe if rates continued to drop, you'd make up what you'd lose in interest with what you'd make in capital gains.

[Smith1776]

Does anyone think that it might be okay to just keep by long term treasuries, even with negative rates?

Maybe if rates continued to drop, you'd make up what you'd lose in interest with what you'd make in capital gains.

What I know is that messing with the PP with proposed improvements rather than just trucking along with the strategy more often than not ends up with the person getting egg on their face. There just seems to be some intrinsic law in the universe that makes staying the course more profitable than the most earnest of efforts to improve results.

Somehow I think people who just keep sticking with 4 x 25 and regular rebalancing will do just fine.

[AdamA]

What I know is that messing with the PP with proposed improvements rather than just trucking along with the strategy more often than not ends up with the person getting egg on their face. There just seems to be some intrinsic law in the universe that makes staying the course more profitable than the most earnest of efforts to improve results.

Somehow I think people who just keep sticking with 4 x 25 and regular rebalancing will do just fine.

Yeah, that's my instinct too.

[Kbg]

Still looking into the pros and cons. I’m kinda choking on the fact they are mostly negative yielding right now in nominal and real is even worse.

[Kevin K.]

The well-known and highly-regarded personal finance writer Jonathan Clements has had a couple of recent posts that bear on these issues:

https://humbledollar.com/2020/06/farewell-yield/

https://humbledollar.com/2020/07/my-four-goals/

Now obviously he's not involved in the PP world but I think his observations and personal choice on bonds dovetails well with what Bridgewater is talking about. For as long as we're in a zero-return world he's going with short-term U.S. government bonds only using a barbell of STT"s and short TIPS.

TIPS are of course vilified in the PP book because of their lack of deflation protection and their poor performance in 2008 (which turns out to be for reasons entirely different from those cited in the book - see link below). But there are good reasons that folks like Bridgewater, DFA and retirement planning specialists like Wade Pfau and Zvi Bodie recommend them for specific situations. Here's a link to a short series of articles that does the best job I've seen of explaining how short TIPs can be deployed:

https://movement.capital/history-of-tip ... onds-work/

All this said even Bridgewater if I recall says they're hoping for one more big LTT rally. But I sure don't see anything sacrosanct about putting a full 25% of one's assets in LTT's in this environment. I doubt Harry Browne would own them at all today.