The Bond Dream Room

Discussion of the Bond portion of the Permanent Portfolio

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pmward
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Re: The Bond Dream Room

Post by pmward » Mon Mar 09, 2020 1:04 pm

dualstow wrote:
Mon Mar 09, 2020 12:54 pm
pmward wrote:
Mon Mar 09, 2020 12:13 pm
The large quantity of 30 year treasuries I purchased at auction last Feb... yes only 1 year and a couple weeks ago... up 50%+. When do stocks ever return like that in 1 year?
Another auction buyer! Everyone always asks me why I use an auction and not the secondary market. I don't have a satisfying answer that I can provide.
Do you?

No pressure, but keep in mind that *your answer* could become row 8310 on Vinny's note spreadsheet.

P.S. Just a normal day- EDV is up $15 - Nothing to see here.
I think I just like the auction. It's kind of fun to put my funds in and wait to see what my winnings are, haha. Fidelity has a really good bond platform. Maybe some day I'll do some secondary purchases. For now though, auction has been working well for me both with my long term and short term holdings.
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dualstow
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Re: The Bond Dream Room

Post by dualstow » Mon Mar 09, 2020 1:09 pm

Interesting. Scratch that, Vinny.
I do it because I trust the auction to to give me a better deal that I could find by actively selecting specific bonds, but I did not think that would be the case for you.
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Re: The Bond Dream Room

Post by Kbg » Tue Mar 10, 2020 8:27 am

I will go a bit against standard theory...in times like these active rebalancing can be quite fruitful assuming you are not in a taxable account and you have on OK system for when to rebalance. Yes this is market timing and you will have to actively follow the markets until things chill. When things chill, then go back to bands or annual or whatever system it is you are using for when to rebalance.

Or just stick with what you do which it totally fine.
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Kriegsspiel
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Re: The Bond Dream Room

Post by Kriegsspiel » Tue Mar 10, 2020 9:24 am

Kbg wrote:
Tue Mar 10, 2020 8:27 am
I will go a bit against standard theory...in times like these active rebalancing can be quite fruitful assuming you are not in a taxable account and you have on OK system for when to rebalance. Yes this is market timing and you will have to actively follow the markets until things chill. When things chill, then go back to bands or annual or whatever system it is you are using for when to rebalance.

Or just stick with what you do which it totally fine.
FWIW, I just sold some of my most vintage bonds that were not quite at the 20 year mark. No big deal. 8)
You there, Ephialtes. May you live forever.
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Re: The Bond Dream Room

Post by jhogue » Tue Mar 10, 2020 9:53 am

Kriegsspiel,

If you don't mind my asking, what did you do with the proceeds? Buy 2050 dated T-bonds?? Buy beaten down stocks???
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Kriegsspiel
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Re: The Bond Dream Room

Post by Kriegsspiel » Tue Mar 10, 2020 11:50 am

jhogue wrote:
Tue Mar 10, 2020 9:53 am
Kriegsspiel,

If you don't mind my asking, what did you do with the proceeds? Buy 2050 dated T-bonds?? Buy beaten down stocks???
It's settling into cash; I'll end up buying stocks with some of it.
You there, Ephialtes. May you live forever.
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dualstow
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Re: The Bond Dream Room

Post by dualstow » Tue Mar 10, 2020 3:12 pm

Kriegsspiel wrote:
Tue Mar 10, 2020 9:24 am
FWIW, I just sold some of my most vintage bonds that were not quite at the 20 year mark. No big deal. 8)
I sold 10K worth of notes but they were in the VP and I need the cash. Once again, I don't quite understand why I am entitled to accrued interest but I am happy to receive it.
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Re: The Bond Dream Room

Post by jhogue » Tue Mar 10, 2020 10:29 pm

So, what do we do if real interest rates all along the yield curve turn negative?

1. Use the 35% rebalance band:
-Sell some 30 year T bonds if and when they reach that 35% rebalance band. That should generate a nice pile of cash.

2. Use a low interest rate environment to your financial advantage:
-Now would be a terrific time to refinance or pay off your mortgage, if you have one.
-You might also consider accelerating a new car purchase, if you have been thinking about it. Some of our local auto dealers have recently introduced 72 month auto loans at 0.0% interest.
-Pay off all your credit card balances, if you have any.

3. Don’t accept negative real rates, let alone negative nominal rates.
-Start your own bank run: if rates go negative, close your accounts and demand cash. Make liberal use of your safe deposit box.
-Use the 2% Fidelity Credit Card for all your purchases.
-Buy the lagging asset in the HBPP. This will probably be stocks; maybe some gold.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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dualstow
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Re: The Bond Dream Room

Post by dualstow » Wed Mar 11, 2020 7:21 am

^Seems like good advice all around. ^
I wish there were something left that I wanted to spend money on with that 2% card, other than the usual bills.
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Re: The Bond Dream Room

Post by jhogue » Wed Mar 11, 2020 9:16 am

I have also thought of upgrading my iPhone, iPad, and MacBook Air. Obviously not the same as building equity in my house, but I think it goes back to my larger points that 1) financial crises also represent opportunity, and 2) we don't have to accept a negative yield in interest rates on Cash.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: The Bond Dream Room

Post by dualstow » Wed Mar 11, 2020 9:30 am

Funny, I want to do that, too, especially before Apple lowers the trade-in rewards even further.
I hope Foxconn is back to work.
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Kriegsspiel
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Re: The Bond Dream Room

Post by Kriegsspiel » Wed Mar 11, 2020 5:45 pm

What the fuck is this ridiculous bullshit
A Fixed Income order to sell U S TREASURY BOND was
canceled in your Vanguard Brokerage Account due to a change in the bid
price available. If you wish to replace the order, you should call Vanguard
at the number referenced below.
You there, Ephialtes. May you live forever.
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Re: The Bond Dream Room

Post by dragoncar » Thu Mar 12, 2020 3:39 am

Refis are so popular, everyone raised their rates this week. Nobody can beat my current rate, which is decent (sub-4) but nothing amazing. I guess there is too much demand, not enough processing staff.

I hope it goes lower over the next months, but if coronavirus has a large impact, the supply side might continue to slide due to office closures and sick workers. Appraisal could tank. W2 income could go boom.
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Re: The Bond Dream Room

Post by jhogue » Thu Mar 12, 2020 8:15 am

Mortgage rates follow moves in the current 10 year Treasury interest rate, which is 0.70%. This is a historic low. Bankrate.com latest national survey 15 year mortgage is 3.1%-3.2% .

My mortgage rate has been 0.00% for the last six years. I paid the balance off when I could not find a breakeven refi deal.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: The Bond Dream Room

Post by Kriegsspiel » Thu Mar 12, 2020 8:20 am

dragoncar wrote:
Thu Mar 12, 2020 3:39 am
Refis are so popular, everyone raised their rates this week. Nobody can beat my current rate, which is decent (sub-4) but nothing amazing. I guess there is too much demand, not enough processing staff.

I hope it goes lower over the next months, but if coronavirus has a large impact, the supply side might continue to slide due to office closures and sick workers. Appraisal could tank. W2 income could go boom.
I saw a story where a mortgage company was posting HIGHER RATES THAN THEY WERE ACTUALLY OFFERING on their website to decrease the amount of calls they were getting from rate-hunters. I just can't even.
You there, Ephialtes. May you live forever.
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jhogue
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Re: The Bond Dream Room

Post by jhogue » Thu Mar 12, 2020 8:44 am

Seems like a nice job opportunity for recently out-of-work stock brokers.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: The Bond Dream Room

Post by sophie » Thu Mar 12, 2020 9:49 am

Kriegsspiel wrote:
Thu Mar 12, 2020 8:20 am
dragoncar wrote:
Thu Mar 12, 2020 3:39 am
Refis are so popular, everyone raised their rates this week. Nobody can beat my current rate, which is decent (sub-4) but nothing amazing. I guess there is too much demand, not enough processing staff.

I hope it goes lower over the next months, but if coronavirus has a large impact, the supply side might continue to slide due to office closures and sick workers. Appraisal could tank. W2 income could go boom.
I saw a story where a mortgage company was posting HIGHER RATES THAN THEY WERE ACTUALLY OFFERING on their website to decrease the amount of calls they were getting from rate-hunters. I just can't even.
That explains a lot. The mortgage refi rates quoted on Chase's website went from 3.35% to 4.125% while bond yields went DOWN. Ridiculous. I guess just watch and wait for now. With the 10 year rate being what it is, it's ridiculous for 30 year fixed mortgages to be over 3%.
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Re: The Bond Dream Room

Post by pmward » Thu Mar 12, 2020 11:40 am

Yeah, mortgages cannot drop as fast as bonds. I mean if the 30 year rate dropped to 2% this week, literally every homeowner in America would be refinancing. They will be ramping up staffing, but it takes time to recruit and get people trained so in the meantime there will be a delay in mortgage rates dropping simply due to the staffing bottleneck.
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Re: The Bond Dream Room

Post by Cortopassi » Thu Mar 12, 2020 12:25 pm

Fed buying bonds.

And that worked for about 1.5 hours....

All I've ever read is when people lose confidence in the Fed, everyone will run to gold. Hope that happens.
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Re: The Bond Dream Room

Post by Ad Orientem » Thu Mar 12, 2020 3:26 pm

Stocks and bonds are moving together in the same direction. That could be a sign of serious trouble...

https://www.nytimes.com/2020/03/12/upsh ... virus.html
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Re: The Bond Dream Room

Post by Kbg » Thu Mar 12, 2020 6:35 pm

Definitely...I actually saw something local for 2.25% for a 15 year and I moved that night...and of course we know the bank couldn't process fast enough and the window was missed.
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Re: The Bond Dream Room

Post by shekels » Thu Mar 12, 2020 6:56 pm

Cortopassi wrote:
Thu Mar 12, 2020 12:25 pm
Fed buying bonds.

And that worked for about 1.5 hours....

All I've ever read is when people lose confidence in the Fed, everyone will run to gold. Hope that happens.
I always thought that it was when they lose confidence in their Government, when gold took off.
¯\_(ツ)_/¯
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Re: The Bond Dream Room

Post by jhogue » Thu Mar 12, 2020 8:05 pm

Kriegsspiel wrote:
Wed Mar 11, 2020 5:45 pm
What the fuck is this ridiculous bullshit
A Fixed Income order to sell U S TREASURY BOND was
canceled in your Vanguard Brokerage Account due to a change in the bid
price available. If you wish to replace the order, you should call Vanguard
at the number referenced below.
Kriegs,
Did your bond order go through?

There was unprecedented volatility in the bond market this week.
See:
https://www.marketwatch.com/story/fierc ... =home-page
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Kriegsspiel
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Re: The Bond Dream Room

Post by Kriegsspiel » Thu Mar 12, 2020 8:25 pm

jhogue wrote:
Thu Mar 12, 2020 8:05 pm
Kriegsspiel wrote:
Wed Mar 11, 2020 5:45 pm
What the fuck is this ridiculous bullshit
A Fixed Income order to sell U S TREASURY BOND was
canceled in your Vanguard Brokerage Account due to a change in the bid
price available. If you wish to replace the order, you should call Vanguard
at the number referenced below.
Kriegs,
Did your bond order go through?

There was unprecedented volatility in the bond market this week.
See:
https://www.marketwatch.com/story/fierc ... =home-page
No. They're still sitting in my account, worth 13% less.
You there, Ephialtes. May you live forever.
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dualstow
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Re: The Bond Dream Room

Post by dualstow » Thu Mar 12, 2020 8:54 pm

Cortopassi wrote:
Thu Mar 12, 2020 12:25 pm
Fed buying bonds.

And that worked for about 1.5 hours....
...
Silly Jim Cramer thought he was going to be the hero that saved America.
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