Has anyone had to sell their long term bonds at a loss?

Discussion of the Bond portion of the Permanent Portfolio

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dualstow
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Has anyone had to sell their long term bonds at a loss?

Post by dualstow » Wed Apr 13, 2011 7:55 pm

From another thread, I learned that some of you have been following the pp strategy for quite a long time. Have any of you long-timers ever had to sell your 30-year treasuries at a loss when there were only 20 years left to maturity? Were you tempted to hold on until maturity and just find a way to replace the bonds without selling (something I couldn't afford to do)?

I'm curious about this, because I don't think we'd have a reason to unload any of the other 3 assets except for rebalancing, which is of course desirable.
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Re: Has anyone had to sell their long term bonds at a loss?

Post by craigr » Wed Apr 13, 2011 8:13 pm

I sold a small amount of bonds in 2009 that took a loss for tax reasons. I wouldn't hold them to try to recover losses because you could wait a long time. Most of my bonds have somewhere in the 24-27 years maturity right now. I will sell my bonds when they get to 20 years and roll the money into higher yielding bonds along with gold and/or stock profits.
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Re: Has anyone had to sell their long term bonds at a loss?

Post by HB Reader » Wed Apr 13, 2011 10:53 pm

I've sold LT Treasury bonds to replace them with longer-dated ones, but not at a loss as best I can remember.  They were in my IRA and I didn't pay much attention to the specific gains or losses because there were no tax consequences.  I wasn't tempted to hold them to maturity, but I was a little uneasy (I shouldn't have been) about rebuying the longer-dated ones.                   
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Re: Has anyone had to sell their long term bonds at a loss?

Post by dualstow » Thu Apr 14, 2011 9:25 pm

Thanks for the replies.

Yeah, mine are in my 401(k), which doesn't have a whole lot other than 30-year treasuries. So, no tax benefits for me.
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Re: Has anyone had to sell their long term bonds at a loss?

Post by MediumTex » Thu Apr 14, 2011 10:31 pm

dualstow wrote: Thanks for the replies.

Yeah, mine are in my 401(k), which doesn't have a whole lot other than 30-year treasuries. So, no tax benefits for me.
My 401(k) account has only gold and LT bonds (brokerage window).  If someone looked at it in isolation they would say I was crazy.

What's funny, though, is that this two asset combination has performed VERY well in recent years, so I would probably look like a very lucky crazy person.
Last edited by MediumTex on Fri Apr 15, 2011 9:29 am, edited 1 time in total.
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Re: Has anyone had to sell their long term bonds at a loss?

Post by dualstow » Fri Apr 15, 2011 9:19 am

Why put gold in your tax-deferred account instead of stocks? Is it due to gold's higher tax rate when you sell?
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Re: Has anyone had to sell their long term bonds at a loss?

Post by MediumTex » Fri Apr 15, 2011 9:32 am

dualstow wrote: Why put gold in your tax-deferred account instead of stocks? Is it due to gold's higher tax rate when you sell?
No, it's just where I have room. 

I have all my stock holdings in tax deferred accounts (IRAs).

My current 401(k) account is not that large a component of my overall holdings.
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Re: Has anyone had to sell their long term bonds at a loss?

Post by moda0306 » Fri Apr 15, 2011 9:43 am

MT,

Is there a reason you don't have much in tax-deferred accounts?  Do you make an attempt every year to get as much into them as possible or are you happy with your very non-tax-deferred weighted allocation?  If the latter, is there a reason you avoid putting more in there?
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Re: Has anyone had to sell their long term bonds at a loss?

Post by MediumTex » Fri Apr 15, 2011 10:15 am

moda0306 wrote: MT,

Is there a reason you don't have much in tax-deferred accounts?  Do you make an attempt every year to get as much into them as possible or are you happy with your very non-tax-deferred weighted allocation?  If the latter, is there a reason you avoid putting more in there?
It's just the opposite; most of my holdings are in tax deferred accounts.
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Re: Has anyone had to sell their long term bonds at a loss?

Post by moda0306 » Fri Apr 15, 2011 10:47 am

NM,

I skimmed your post too fast.
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