Discussion of the Bond portion of the Permanent Portfolio
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dualstow
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by dualstow » Sat Feb 01, 2020 6:50 am
boglerdude wrote: ↑Fri Jan 31, 2020 9:58 pm
Anybody got junk bonds?
I have a dollop of FALN, downgraded bonds that institutions cant buy. And bogleheads shun. Buy whats hated right? Or am I convincing myself of the narrative...
Buy what’s hated, of quality assets.
What % of your total is in junk?
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boglerdude
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by boglerdude » Sun Feb 02, 2020 10:25 pm
5% so prob doesnt make a difference.
Junk- stock- totalbond- emerging- gold- longtreasury
Hrm. Maybe if the 30yr pops to 3% after the election, like last time, ill move to that.
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sophie
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by sophie » Mon Feb 03, 2020 7:42 am
Wow, the 30 year has now dropped below 2%!
If the 30 year pops up above 3% later this year, that will give me the chance to swap my taxable 3.125% bond that's gained > 25% and is coming up on the 20 year mark (in 2021) for a new 30 year vintage. That would be quite an increase though...still thinking I'm either going to have to donate that holding to my DAF, or suck up the capital gains tax.
Or, perhaps I could put it into the "variable portfolio" and just enjoy the interest payments. What are all of you guys planning to do with your individually held long bonds when they're no longer long?
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dualstow
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by dualstow » Mon Feb 03, 2020 2:19 pm
sophie wrote: ↑Mon Feb 03, 2020 7:42 am
What are all of you guys planning to do with your individually held long bonds when they're no longer long?
I've done it all wrong so far. Why stop now?
I very well might hold on to mine for an extra year or two, but that's easy because I'm underweight in bonds.
And, I'm underweight, because I sold my worst ones early.
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Kbg
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by Kbg » Wed Feb 05, 2020 6:46 am
Rationally you hold if you are carrying something that yields higher than the replacement. There are no interest change scenarios where replacing them does better financially. Eventually as the bonds age that could change, but not for a while.
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dualstow
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by dualstow » Wed Feb 05, 2020 8:24 am
Kbg wrote: ↑Wed Feb 05, 2020 6:46 am
Rationally you hold if you are carrying something that yields higher than the replacement. There are no interest change scenarios where replacing them does better financially. Eventually as the bonds age that could change, but not for a while.
Of course, that’s the opposite of Harry’s advice. You replace the bonds regardless of the fact that the new ones pay less yield, because you need that duration. And you do that by selling what you have if it’s only got 20 years on it. Thank heavens there’s a vp.
Who was it, 6Iron maybe, who said, “I feel like a complete idiot (selling these bonds and buying news ones at these low interest rates).” That was already a few years ago, and the 30-year-yield was higher than the current 2%.
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Kbg
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by Kbg » Wed Feb 05, 2020 8:04 pm
I don’t disagree with HB and one should pay attention to duration as a guidepost as to when to get longer again.
Simplicity is just do the rules, but applying concepts appropriately is better.
Duration and yield tell you everything you you need to know to make a solid bond decision (and taxes if you have a capital gain).
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dualstow
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by dualstow » Fri Feb 21, 2020 2:11 pm
I have some zeroes that are supposed to reach value x in the year 2033, but they're getting close to x now. No point in holding on to zeroes (i.e. payments have been STRIPPED), right?
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dualstow
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by dualstow » Tue Feb 25, 2020 11:15 am
dualstow wrote: ↑Fri Feb 21, 2020 2:11 pm
I have some zeroes that are supposed to reach value x in the year 2033, but they're getting close to x now. No point in holding on to zeroes (i.e. payments have been
STRIPPED), right?
✓ Sold them today. Lovely. Go, long bonds!
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pmward
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by pmward » Tue Feb 25, 2020 1:33 pm
Holy crap, 10 year treasury finally hits new record low in yield. 30 year hits record low yield 2 days in a row. If the stock correction continues this could be a great time to opportunistically "rebalance" some profits from gold/long bonds back into stocks before the Fed starts capitulating and buying the market back up again.
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Ad Orientem
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by Ad Orientem » Tue Feb 25, 2020 5:24 pm
30 year munis yielding 1.6%. I need to lie down.
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Kriegsspiel
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by Kriegsspiel » Tue Feb 25, 2020 6:45 pm
Yea it's getting pretty silly.
You there, Ephialtes. May you live forever.
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Ad Orientem
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by Ad Orientem » Thu Feb 27, 2020 9:01 am
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dualstow
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by dualstow » Thu Feb 27, 2020 3:06 pm
Cortopassi wrote: ↑Thu Feb 27, 2020 2:55 pm
Well at least bonds are holding. I am finding gold's response the past two days a bit strange.
Have you two met?
(
You and gold, I mean)
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Don
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by Don » Fri Feb 28, 2020 4:37 pm
Cortopassi wrote: ↑Thu Feb 27, 2020 2:55 pm
Well at least bonds are holding. I am finding gold's response the past two days a bit strange.
It's almost as if someone was manipulating the markets and sold their gold position today, right before stocks late day rally. Soros?
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Ad Orientem
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by Ad Orientem » Fri Feb 28, 2020 5:10 pm
The volume of market activity is too high for that kind of manipulation. I it were attempted it would have to be on a scale that could not be camouflaged.
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pmward
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by pmward » Tue Mar 03, 2020 11:08 am
Wow did that escalate quickly. Look at the yield curve now after the cut:
https://fixedincome.fidelity.com/ftgw/fi/FILanding
1.03% on the 3 month. .77% on the 2 year. 1.04% on the 10 year. 1.64% on the 30 year. So crazy. At least they uninvited the 90/10 and 2/10 that are most widely followed. But still some pretty extreme inversions on the short to medium range.
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Ad Orientem
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by Ad Orientem » Tue Mar 03, 2020 1:43 pm
The 10 yr T bond has broken below 1%. I said it before and I stand by it. The bond market no longer inhabits the same plane of reality that I am living in.
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Kbg
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by Kbg » Wed Mar 04, 2020 1:42 pm
Where I'm at there is a CU offering a 2.25 15 year loan...put in my loan application last night. This cuts a 1.25 off my current 30 yr. What's crazy is I read something this morning saying they could go lower!
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Ad Orientem
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by Ad Orientem » Thu Mar 05, 2020 9:59 pm
11 pm EST and the 10YT yield is .81%. No, that's not a typo.
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pmward
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by pmward » Fri Mar 06, 2020 9:04 am
Wow, just WTF is up with bonds today??? I'm rebalancing a couple percent of bonds back into stocks today. This is beyond nuts.
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drumminj
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by drumminj » Fri Mar 06, 2020 9:07 am
pmward wrote: ↑Fri Mar 06, 2020 9:04 am
I'm rebalancing a couple percent of bonds back into stocks today.
Did you hit a band, or are you just taking advantage of the recent swings? As of yesterday, my LTT's are still only at 28%.
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pmward
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by pmward » Fri Mar 06, 2020 9:54 am
drumminj wrote: ↑Fri Mar 06, 2020 9:07 am
pmward wrote: ↑Fri Mar 06, 2020 9:04 am
I'm rebalancing a couple percent of bonds back into stocks today.
Did you hit a band, or are you just taking advantage of the recent swings? As of yesterday, my LTT's are still only at 28%.
I generally go more by feel for rebalancing, I'm ~2.5% over allocation on bonds (maybe more after prices are updated on my LTT's this evening), and about equally under on stocks. I'm really tempted to rebalance, because in my trading days anytime I had a ridiculous up day like this and held on to a trade I regretted it. At the same time though, I do believe we have another down leg coming in stocks... and I do think there is a possibility of a 30% correction, which would place us right around those December 2018 lows... and I would love to back the truck up on a big rebalance there. So maybe I should let my winners run and sit on my hands a bit, even though doing so has always bitten me in the past? I'm torn. My initial gut feeling says to rebalance now, but my second thought says to be patient.