Preachin' to the choir

Discussion of the Bond portion of the Permanent Portfolio

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Kevin K.
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Preachin' to the choir

Post by Kevin K. » Tue Nov 09, 2021 4:34 pm

Good post on interest rate scenarios by Cullen Roche. Should make PP'ers feel good about the portfolio's bond barbell.

https://www.pragcap.com/what-if-its-all-going-to-zero/
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Kriegsspiel
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Re: Preachin' to the choir

Post by Kriegsspiel » Tue Nov 09, 2021 6:16 pm

As I’ve explained before, this is as true in a low rate environment as it is in a high rate environment. In fact, if you’re a bond holder holding bonds with the proper time horizon (holding bonds to maturity) then you actually want rates to RISE because then you can rebalance your bond portfolio into higher income generating instruments.
If everything appreciates, I'm not going to complain. In the context of the PP, I'd like for interest rates to rise as stocks and gold go up so that I can get more coupon payments/get more runway for bonds. Of course, we don't hold LTTs to maturity. I suspect it would be best if interest rates go up while stocks/gold go up, so that they have some runway in the event of a stock market/gold crash and smooth everything out.
Of course, smart asset allocation isn’t an all-or-nothing endeavor. We don’t need to choose to hold only hyperinflation hedges OR deflation hedges. We can choose to hold a diverse array of assets that protect us regardless of what happens.

I’ve stated many times in the last few months that this might be the single most confusing investment environment in history. Which is why we shouldn’t discount any potential scenario – including one where long-term interest rates go to 0% and bonds end up outperforming most other asset classes.
Cullen is down with the PP.
You there, Ephialtes. May you live forever.
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Vil
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Re: Preachin' to the choir

Post by Vil » Wed Nov 10, 2021 3:35 am

Yeah, well.. he's indeed preaching the forum's sermon - rates go up, but they can go down as well... (sometimes I think I am falling prey to some very sophisticated forum generator tool, good that it's MJ to have the #LTTGold_Crap and #DontFightTheFed stuff around.. but he might be part of the tool's logic .. to look slightly more plausible ;D)..
Joke aside, have anyone read his (Cullen Roche) book ? I fear the title of the book (Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance) does not show any sense of humility to the unknown ..
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Kriegsspiel
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Re: Preachin' to the choir

Post by Kriegsspiel » Wed Nov 10, 2021 5:21 am

I read it a few years ago, it was good.
You there, Ephialtes. May you live forever.
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