Does it make sense to buy long bonds now?

[sfaludi]

The 30 year treasury bond presently yield about 1.5% - which is well below inflation.

The value of these bonds will drop if and when interest rates are allowed to normalize, and rise only if investors accept larger negative effective interest rates,

What is the point if buying these bonds now?

The only good reason I see for holding these bonds now is the tax consequences on unrealized gains.

PS: I have been doing PP for years and +40% on TLT.

[mathjak107]

I lightened up a lot on them ...I am in the Bridgewater camp here ...they sold off their position in Tlt .....

Rates have a very limited down side and the only power the fed will have is spending to reflate us ...that is not good for long term bonds at all

[Cortopassi]

The value of these bonds will drop if and when interest rates are allowed to normalize

What is normalized? Hah. The US will blow up if that happens.

I see negative rates more than higher rates in our future.

This says current inflation rate is 1%?

https://www.usinflationcalculator.com/i ... ion-rates/

[mathjak107]

There likely will be no choice as the govt spends to reinflate us and inflation rises when they can’t lower rates any more .....I think rising inflation is inevitable .....

Just the mere fact that the fed said they will let inflation spike higher sent chills through the long term bond market ...I think Tlt lost 5% since that announcement

[Cortopassi]

There likely will be no choice as the govt spends to reinflate us and inflation rises when they can’t lower rates any more .....I think rising inflation is inevitable .....

Just the mere fact that the fed said they will let inflation spike higher sent chills through the long term bond market ...I think Tlt lost 5% since that announcement

He announced that Aug 27th

[boglerdude]

What have investors been doing in germany and Japan?

[mathjak107]

tlt is down about 3% the last month and about 9% off its high of 179.70 , so rates have clearly risen .

[europeanwizard]

What have investors been doing in germany

We're confused and don't know what to do:
viewtopic.php?f=3&t=10957
viewtopic.php?t=9082
viewtopic.php?f=1&t=9770&p=172861#p172861

As a European, I'm on the verge of dumping my bonds and thus leaving the Permanent Portfolio. But I don't know what else to do, except stay in cash. And I don't mean cash in the sense of a money market funds, that ship has long since sailed.

[Hal]

What have investors been doing in germany

We're confused and don't know what to do:
viewtopic.php?f=3&t=10957
viewtopic.php?t=9082
viewtopic.php?f=1&t=9770&p=172861#p172861

As a European, I'm on the verge of dumping my bonds and thus leaving the Permanent Portfolio. But I don't know what else to do, except stay in cash. And I don't mean cash in the sense of a money market funds, that ship has long since sailed.

My pennies worth.....

If you are going to leave the PP, then
1. Watch: https://www.youtube.com/watch?v=a4_U6bS-cU4
2. Read: https://edelweissjournal.com
3. Consider a portfolio like this: https://www.youtube.com/watch?v=E0GQ1Gx8YCw

I am actually running a variable portfolio similar to this. So far so good

[mathjak107]

i sold off all of TLT now . kept gold but at a reduced level (250k)

bonds are short term treasuries , a total bond fund , a bit of an actively managed high income fund and an ultra conservative bond fund .

interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500

[amdda01]

i sold off all of TLT now . kept gold but at a reduced level (250k)

MJ,
Double-checking - Are you saying you have absolutely no TLT in your portfolio now?

[mathjak107]

i sold off all of TLT now . kept gold but at a reduced level (250k)

MJ,
Double-checking - Are you saying you have absolutely no TLT in your portfolio now?

none as of yesterday ... risks far out weigh any likely gain potential ... i am in the bridgewater camp on this ..they dumped 290 million of tlt .....

[Tortoise]

interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500

Can you provide a source for your beta calculation?

I looked it up just now, and according to Yahoo Finance, the betas for SPY and TLT are 1.00 and 3.03, respectively. Doesn't that mean TLT's beta is 3x (not 1/3) that of SPY? (I'll admit I know very little about beta. So just let me know if I misunderstood something.)

[mathjak107]

interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500

Can you provide a source for your beta calculation?

I looked it up just now, and according to Yahoo Finance, the betas for SPY and TLT are 1.00 and 3.03, respectively. Doesn't that mean TLT's beta is 3x (not 1/3) that of SPY? (I'll admit I know very little about beta. So just let me know if I misunderstood something.)

morningstar has all the betas on the various funds.

in the case of this portfolio , it is a portfolio i have used for a long time from the fidelity insight newsletter and they calculate it daily .

[mathjak107]

interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500

Can you provide a source for your beta calculation?

I looked it up just now, and according to Yahoo Finance, the betas for SPY and TLT are 1.00 and 3.03, respectively. Doesn't that mean TLT's beta is 3x (not 1/3) that of SPY? (I'll admit I know very little about beta. So just let me know if I misunderstood something.)

morningstar has all the betas on the various funds.

in the case of this portfolio , it is a portfolio i have used for a long time from the fidelity insight newsletter and they calculate it daily .

i can't disclose the current models but this is an old example ...... so nobody use it as the models are different today ......

i have used them since 1987 and used the growth model for decades in my accumulation stage . in retirement i use the income model ... if we have a nice drop i will put money in the more aggressive models but not at the point we are in now

[Tortoise]

morningstar has all the betas on the various funds.

in the case of this portfolio , it is a portfolio i have used for a long time from the fidelity insight newsletter and they calculate it daily .

It sounds like we're talking about different things here. I'm talking about LTTs (e.g., TLT), but you are talking about some kind of portfolio.

When you said, "interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500", I thought you were saying that LTTs aren't nearly as volatile as stocks (S&P 500) right now. But as I pointed out, the beta of TLT is 3x that of SPY, implying that LTTs are currently much more volatile than stocks.

[mathjak107]

morningstar has all the betas on the various funds.

in the case of this portfolio , it is a portfolio i have used for a long time from the fidelity insight newsletter and they calculate it daily .

It sounds like we're talking about different things here. I'm talking about LTTs (e.g., TLT), but you are talking about some kind of portfolio.

When you said, "interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500", I thought you were saying that LTTs aren't nearly as volatile as stocks (S&P 500) right now. But as I pointed out, the beta of TLT is 3x that of SPY, implying that LTTs are currently much more volatile than stocks.

no , i sold all long term bonds the other day ... instead i am using the insight portfolio and keeping the gold from the pp.... so i own a different bond component and the same 25% in equities and same 25% in gold and 25% in cash proxies .

to much risk in TLT at this stage for my taste

[johnnywitt]

What have investors been doing in germany

We're confused and don't know what to do:
viewtopic.php?f=3&t=10957
viewtopic.php?t=9082
viewtopic.php?f=1&t=9770&p=172861#p172861

As a European, I'm on the verge of dumping my bonds and thus leaving the Permanent Portfolio. But I don't know what else to do, except stay in cash. And I don't mean cash in the sense of a money market funds, that ship has long since sailed.

My pennies worth.....

If you are going to leave the PP, then
1. Watch: https://www.youtube.com/watch?v=a4_U6bS-cU4
2. Read: https://edelweissjournal.com
3. Consider a portfolio like this: https://www.youtube.com/watch?v=E0GQ1Gx8YCw

I am actually running a variable portfolio similar to this. So far so good

Hal, thanks so much for the Links. I was aware of the Anthony Dedan interview on RV and had watched it when it came out last year, but I was unaware of Edelweiss & Belangp.
So, are you still running a PP for your core portfolio and only running the Belangp Portfolio in your VP?

Again, thanks for the Links.

[amdda01]

no , i sold all long term bonds the other day ... instead i am using the insight portfolio and keeping the gold from the pp.... so i own a different bond component and the same 25% in equities and same 25% in gold and 25% in cash proxies .

to much risk in TLT at this stage for my taste

MJ,

Just curious - What would it take to bring ya back to TLT?

[mathjak107]

at least 2 to 2-1/2% in rates and even then I need to evaluate..it was a 40 year drop to get here ....the return trip back up may not stop for quite a long time .

[doodle]

at least 2 to 2-1/2% in rates and even then I need to evaluate..it was a 40 year drop to get here ....the return trip back up may not stop for quite a long time .

I don't see how we get back to higher rates at all considering the amount of debt in system and the way asset prices are tied to low rates. A reversal especially a quick one would be brutal and politically unconscionable. After all, everything is on government life support these days. There is no free market.

[mathjak107]

at least 2 to 2-1/2% in rates and even then I need to evaluate..it was a 40 year drop to get here ....the return trip back up may not stop for quite a long time .

I don't see how we get back to higher rates at all considering the amount of debt in system and the way asset prices are tied to low rates. A reversal especially a quick one would be brutal and politically unconscionable. After all, everything is on government life support these days. There is no free market.

bond investors will want more yield to take the risk with bonds ..at the end of the day it is the worlds bond investors that decide what is proper compensation.

there is little compelling argument when yields are 1.50% going out 30 years and the fed says their target is 2-3% inflation .

[doodle]

at least 2 to 2-1/2% in rates and even then I need to evaluate..it was a 40 year drop to get here ....the return trip back up may not stop for quite a long time .

I don't see how we get back to higher rates at all considering the amount of debt in system and the way asset prices are tied to low rates. A reversal especially a quick one would be brutal and politically unconscionable. After all, everything is on government life support these days. There is no free market.

bond investors will want more yield to take the risk with bonds ..at the end of the day it is the worlds bond investors that decide what is proper compensation.

there is little compelling argument when yields are 1.50% going out 30 years and the fed says their target is 2-3% inflation .

Is it? Or does the Fed control rates? There is some debate to how much influence they can exert on long end of curve but the do have the ability theoretically to ensure auctions never fail.

Europe and Japan are negative now. Why not us next?

[doodle]

To me it seems we are employing this same stupid policy.

https://www.investopedia.com/articles ... japan.asp

[mathjak107]

at least 2 to 2-1/2% in rates and even then I need to evaluate..it was a 40 year drop to get here ....the return trip back up may not stop for quite a long time .

I don't see how we get back to higher rates at all considering the amount of debt in system and the way asset prices are tied to low rates. A reversal especially a quick one would be brutal and politically unconscionable. After all, everything is on government life support these days. There is no free market.

bond investors will want more yield to take the risk with bonds ..at the end of the day it is the worlds bond investors that decide what is proper compensation.

there is little compelling argument when yields are 1.50% going out 30 years and the fed says their target is 2-3% inflation .

Is it? Or does the Fed control rates? There is some debate to how much influence they can exert on long end of curve but the do have the ability theoretically to ensure auctions never fail.

Europe and Japan are negative now. Why not us next?

the inverted yield curves happen when the bond investors disagree with what the fed is doing . so it is the bond investors in the drivers seat ..the fed may do a bit of influencing if it can but if bond investors want more they will get more.

if the world bond investors drive up rates the fed could have a very hard time stopping that .

we are very different then japan or europe . they use negative rates to force banks to make loans . babnks in europe and japan do not do what banks here do ...... they shy away from lots of deals unlike our banks .

our banks have no problems when it comes to making loans ...the negative rates act as a tax on money not loaned out by banks in europe and japan ....