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Re: The Bond Dream Room

Posted: Fri Sep 06, 2019 9:40 am
by jhogue
The key question for potential EE bond investors this:

Do you have a 20 year plan for your money? If you don’t, then you should never buy EE bonds. If you do have a 20 year plan (or longer), then EE bonds might have a useful role in your portfolio.

Pugchief’s worry that rates may rise above 4.00% reminds me of the warnings I got from “professional” financial advisors not to buy 30 year T bonds when I shifted to the HBPP back in 2013: The conventional wisdom then—and now too—was that interest rates "have no place to go but up!"

Re: The Bond Dream Room

Posted: Fri Sep 06, 2019 10:47 am
by ochotona
Given my age, I can only really buy $30,000 of these things, I own none now. 2019, 2020, 2021 then I turn 60 in 2021. I don't mind betting on really low inflation risk with less than 2% of my portfolio. If I'm wrong, no great harm done. If the 30 year goes stays at 2%, I'm happy. It'll just be more deep cash.

Re: The Bond Dream Room

Posted: Fri Sep 06, 2019 4:23 pm
by jhogue
I certainly do not consider EE bonds to be “a pointless waste.” A couple of specific, real world examples:

1. The EE bonds we used to pay for our daughter’s college back in 2007-2011 paid 6% p.a. and were both federal tax free and tax deferred. The accumulated interest was also exempt from all state and local taxes. Considering how badly the stock market crashed in 2008-2009, I was pretty happy with our EE bonds’ return ON principal as well as their return OF principal.

2. The current crop of EE bonds, which will return 3.53% if held for 20 years, were first offered in 2003. They achieve their doubling effect less than four years from now in 2023. I see no indication that those who invested in EE bonds then are unhappy with their performance now. Indeed, with 10 years currently at 1.55%; 20 years at 1.83%; and 30 year T bonds hovering around 2.00%, if anything, EE bond investors are a pretty smug bunch right now.

EE bonds are just another tool in the financial toolbox. You just have to make sure you are using the right tool for the right job.

Re: The Bond Dream Room

Posted: Fri Sep 06, 2019 5:27 pm
by dualstow
I’m glad for this thread. i have a bunch of these that I’m supposed to redeem and i keep putting it off and forgetting about them. I-bonds, too.

Re: The Bond Dream Room

Posted: Fri Sep 06, 2019 7:39 pm
by jhogue
You are welcome.

And fortunately we have MangoMan around to keep us on our toes by keeping up to date on our US savings bonds, which, quite literally, have no place to go but up.

It sort of reminds me of the children's story "The Little Engine That Could":
Starting out is a lot of "I think I can... I think I can... I think I can...." To be finally followed by "I knew I could... I knew I could... I knew I could...."

Re: The Bond Dream Room

Posted: Sat Sep 07, 2019 12:53 am
by Smith1776
lol and there's me: the Canadian.

I REALLY feel left out when reading these conversations about EE bonds, I bonds, and the like.

I read these threads and I'm just like "What are these dudes going on about anyway???" :D

Re: The Bond Dream Room

Posted: Sat Sep 07, 2019 7:50 am
by Kriegsspiel
;D smithers you probably know more about US government debt than 90% of Americans. The varieties of bonds aren't too complicated, it's the tax considerations and where you can buy them that are confusing.

Re: The Bond Dream Room

Posted: Sun Sep 08, 2019 3:40 am
by Smith1776
Kriegsspiel wrote:
Sat Sep 07, 2019 7:50 am
;D smithers
Man, I'm rolling with that s%#t.

smithers.jpg
smithers.jpg (37.46 KiB) Viewed 12823 times

Everyone on the board now has permission to call me smithers.

God I love this forum.

Re: The Bond Dream Room

Posted: Mon Sep 09, 2019 9:14 pm
by Ad Orientem
Real US debt levels could be a shocking 2,000% of GDP

https://www.cnbc.com/2019/09/09/real-us ... gests.html

Re: The Bond Dream Room

Posted: Tue Sep 10, 2019 2:49 pm
by ochotona
I felt stupid when I sold my TLT a few days ago.

Re: The Bond Dream Room

Posted: Tue Sep 10, 2019 3:41 pm
by Cortopassi
Now you feel good?? ;)

Re: The Bond Dream Room

Posted: Fri Sep 13, 2019 12:20 pm
by Cortopassi
TLT sure has come back down to earth. These cycles are quite interesting to watch. Like it picks up speed when rolling downhill.

Re: The Bond Dream Room

Posted: Fri Sep 13, 2019 1:14 pm
by Ad Orientem
Volatility seems to be the new norm. To some degree I'm used to that with stocks and gold. But bonds should not be bouncing all over the place.

Re: The Bond Dream Room

Posted: Fri Sep 13, 2019 1:47 pm
by mathjak107
they have been making moves on par with stocks falling hundreds of points. 1.50-2% falls are a lot

Re: The Bond Dream Room

Posted: Mon Sep 16, 2019 5:05 am
by ochotona

Re: The Bond Dream Room

Posted: Mon Sep 16, 2019 8:14 am
by sophie
I like seeing these kinds of bumps in gold and bonds, because they tell us something very important: despite the rise of cryptocurrencies, low interest rates etc they still operate exactly as the Permanent Portfolio needs them to, during times of market stress.

Next time I check the portfolio, I'll rebalance if indicated or buy lagging assets with the new cash. With no hesitation. And I'm in no hurry!

Re: The Bond Dream Room

Posted: Fri Oct 11, 2019 2:25 pm
by ochotona
“These three new ETFs are designed to address the needs that our clients tell us are most important to them,” Schwab also notes. “We are pleased to offer these new low cost ETFs now, as investors are increasingly looking to bond ETFs as a potential source of diversification, liquidity and income.

The Schwab Long-Term U.S. Treasury ETF SCHQ, -1.02% follows the Bloomberg Barclays US Long Treasury Index and of the three ETFs highlighted here, may be the one destined for the best near-term performance if the Federal Reserve lowers interest rates once or twice before the end of this year.

“Long government funds concentrate on bonds backed by the U.S. government or by government-linked agencies,” according to Schwab. “Because these funds have durations of more than six years, they are more sensitive to interest rates, and thus riskier, than funds that have shorter durations.”

Re: The Bond Dream Room

Posted: Fri Oct 11, 2019 3:07 pm
by Tyler
With an ER of only 0.06%, SCHQ is definitely worth a look for PP investors. That's the same as SPTL and less than half the cost of TLT.

Re: The Bond Dream Room

Posted: Sun Nov 03, 2019 8:00 am
by ochotona
We're now at that weird, sick place where 1-year Jumbo CDs from my local credit union have APR 2.06%, for which you'd have to go out to 20+ years on a US Treasury (sigh).

The ghost of Bernanke, I swear.

Re: The Bond Dream Room

Posted: Thu Nov 07, 2019 4:34 pm
by ochotona
A nasty day in LTTs. I'm phobic about them and days like today just confirm the sentiment.

Re: The Bond Dream Room

Posted: Fri Nov 08, 2019 7:55 am
by Kbg
What did you think of the almost 20% increase?

Re: The Bond Dream Room

Posted: Fri Nov 08, 2019 11:27 am
by jhogue
The inversion of the Treasury yield curve disappeared today. The entire curve is now positive from the 3 month T bill to the 30 year T bond. I first noticed the present inversion between the 2 and 3 year T bill in Dec. 2018. Hard to say whether this development portends an end to lower interest rates or the likelihood of a recession.

Re: The Bond Dream Room

Posted: Fri Nov 08, 2019 1:06 pm
by ochotona
Kbg wrote:
Fri Nov 08, 2019 7:55 am
What did you think of the almost 20% increase?
I did what any speculator would, bought TLT in June sold high near the peak. I still hate it.

Re: The Bond Dream Room

Posted: Fri Nov 08, 2019 4:52 pm
by Kbg
ochotona wrote:
Fri Nov 08, 2019 1:06 pm
Kbg wrote:
Fri Nov 08, 2019 7:55 am
What did you think of the almost 20% increase?
I did what any speculator would, bought TLT in June sold high near the peak. I still hate it.
I hereby rename thee...Bondtholomew ;D

Re: The Bond Dream Room

Posted: Fri Nov 08, 2019 5:33 pm
by Kriegsspiel
Kbg wrote:
Fri Nov 08, 2019 4:52 pm
ochotona wrote:
Fri Nov 08, 2019 1:06 pm
Kbg wrote:
Fri Nov 08, 2019 7:55 am
What did you think of the almost 20% increase?
I did what any speculator would, bought TLT in June sold high near the peak. I still hate it.
I hereby rename thee...Bondtholomew ;D
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