QE2 and LT bonds

[LNGTERMER]

How do people feel about re-balancing into the LT bonds in light of the on going QE2 program?
I did just that, since the future is unknown lets see how that unfolds.

[MediumTex]

I think LT bonds are a great buy right now.

I don't know if that answers the question, but I think that bond yields will go much lower before they go much higher.

For someone just setting up a PP, I think that they have a great entry point for the LT bond portion.

[LNGTERMER]

thanks MT, it's a difficult emotional task to buy into a falling asset. All of my instincts are telling me to buy into the rising ones even though my rational mind backed with experience is saying otherwise. I guess all those millions of years where mother nature instilled hard wired herd mentality of running away from the lion and following the other sheep/zebra or whatever is still with us-at least it's still with me  :D-. It would not have made any sense then to run solo away from the comfort of the herd. Well I chose to follow my rational mind and stick to the plan so, we'll see. So far the PP has been great to me I switched at once in mid July of this year and will continue the course.

[MediumTex]

If you are already in, just enjoy the ride.

Crazy and unexpected things will happen, no doubt.  It's more fun to watch when you are protected.

For some people (I am one), it takes a lot of psychological practice to really get comfortable with the PP.

The reptilian brain hates the PP.

[6 Iron]

... it's a difficult emotional task to buy into a falling asset. All of my instincts are telling me to buy into the rising ones even though my rational mind backed with experience is saying otherwise. I guess all those millions of years where mother nature instilled hard wired herd mentality of running away from the lion and following the other sheep/zebra ....

Lngtermer, nicely stated, and dovetails to some degree with Dan Ariely's book, Predictably Irrational. Our gut instincts can occasionally get us into trouble. I think that one of the best things that this forum provides is the intellectual support to overcome bad herd instinct.

[craigr]

Also remember that the markets have priced in this information already. We won't know what the right decision was until many years later. The portfolio design helps diversify asset class risks and has a good track record of doing so. Every portfolio design has risks involved, but I agree strongly with Browne that if you don't own all the assets you don't have all the protection.

[Lone Wolf]

Good question.  I don't know what the effect will ultimately be here.  Maybe it really will permanently tug down yields and blow air into this "treasury bubble" that everyone is assuring me we are in.  For that reason, I'm glad to be holding a nice position in long-term treasuries.

Bernanke's (almost explicitly stated) goal is to blow a stock market bubble to get people spending again when they feel artificially rich.  So I should probably hold some stocks in case that succeeds.

In addition, I consider all of this to be horrible mistreatment of the currency.  So I am very glad to hold gold.

It feels like a good time to be holding the Permanent Portfolio rather than spending the whole evening biting my nails!  The markets really are fascinating to watch.  It's nice to be able to watch them without feeling terrified.

[MediumTex]

Weeeeeee!!!!!

Look at those t-bonds go.

TLT up 2.55% so far today.

Cyclical inflation, meet secular deflation.

[Storm]

Yep, time for the bonds to start carrying the portfolio again...  Everyone got a hard reality check with Ireland defaults and now realized we're still deleveraging.