Just made a purchase at 5.088 for 30 year LTTs

[ppnewbie]

Its hard to buy something that nobody wants!

[foglifter]

Its hard to buy something that nobody wants!

You are a brave guy! I keep thinking about adding more LTTs into my all-in-the-red positions I opened in 2019. The bond king Gundlach thinks this is a good time to buy, albeit he calls it a short-term trade - well, he's certainly not a buy-and-hold investor.

Jeffrey Gundlach just said long-duration Treasurys will make a good short-term trade in a recession.
He expects a downturn to hit in the first half of 2024, which will push bond prices back up.

[ppnewbie]

I was actually just thinking that. All of my LTT purchases are in the red. But I do like the 5.088 interest rate.

[boglerdude]

EDV down 33% since launch in 08. I backed up the truck early August at 3.3% 12-Month Yield. Today it's 4%. 5.17% SEC yield.

Trading it is pain. Can swing 2.5% in a day. Setting your limit order just outside the previous day's trading range is good enough I suppose.

[Matthew19]

Its hard to buy something that nobody wants!

You nailed this buy, and hopefully all credit goes towards the built in rebalancing of the PP.

[ppnewbie]

I actually made the purchase because I am in the building a balast phase of investing, for my VP (GOLD, SCV, LTT) AND rebalance my Golden Butterfly Frankenstein. I was thinking if I could live with the yield if if rates went higher and 5.088 percent. And I could. Its good income, regardless of what would happen to the price of the bond. Also on another note, I think yields are going to go back to 5.

Its funny all the talking heads were screaming about multiple rate cuts a two months ago. Even Jerome Powell, was talking about cuts. I was wondering how that could happen based on the prices I saw at McDonalds and Costco and also observing how financial media is pretty much pure entertainment. Also "Chief Strategist", "Global Heads of Equity" etc, that appear on these shows are just super smart people finding patterns in noise, then getting paid for it, regardless of the outcome. They are great entertainers. Anyways nobody has a clue what will happen including me, but they are very clever.

[boglerdude]

+ if they're buying Jerome Powell dinner (on their yacht) and he tells them he's cutting in June, they arent telling you until after they're positioned.

[vnatale]

+ if they're buying Jerome Powell dinner (on their yacht) and he tells them he's cutting in June, they arent telling you until after they're positioned.

Makes sense!

[ppnewbie]

I love financial media. Its so entertaining and so wildly uncorrelated with reality. I will be a buyer again at five percent.

[dualstow]

Bought a sliver of long bonds. I’m under weight.

[ppnewbie]

Yield is going up!

[vnatale]

Yield is going up!

So far at this point my ever-present investing procrastinating inertia is paying off. I am still get big-time returns off my significant cash holding by having it all in the Vanguard Treasury Money Market Fund (VUSXX), which I've got a lot of other people into.

[dualstow]

VUSXX is king

[vnatale]

VUSXX is king

For 1+ years it has been. Prior to then all it offered was safety with near zero return.

[dualstow]

Depends on how far back you go.

[ppnewbie]

I want yield and volatility.

[vnatale]

Depends on how far back you go.

I converted all my cash holdings to it in March 2020. From then until about January 2023 it paid nothing. I had owned some of it prior to then.

But prior to January 2023 and starting around October 2008 did any money market fund pay anything much above 0.0%?

[dualstow]

More importantly, are you buying 30-year treasuries?

[vnatale]

More importantly, are you buying 30-year treasuries?

Not yet. But my main point was that at this point I'm not losing out in locking in the long-term rates because they've still been available.

[dualstow]

Sounds like you’re not losing out buying insurance because your house has not yet caught fire.

[Jack Jones]

Sounds like you’re not losing out buying insurance because your house has not yet caught fire.

[vnatale]

Sounds like you’re not losing out buying insurance because your house has not yet caught fire.

I do not accept that as being an apt analogy.

[boglerdude]

Vanguard funds:

Money market 5.27%

Intermediate treasury 4.5%, 5 year duration

LTT 4.46%, 15 year duration

EDV 4.87%, 25 year duration

What does inverted yield curve mean for PP theory. When would it make sense to shorten duration

[whatchamacallit]

That has been a tough problem for me as well boglerdude.

I have been doing the intermediate term option as my solution by using the GOVT etf which does also have slice of long term treasuries but is effectively an intermediate fund.

This has just now made me wonder if an even better option would be to use an active intermediate bond fund. From what I have read, the active bond funds do have a much better chance of outperforming a bond index fund.

Even though an active bond fund would be taking on some quality risk it would be lowering the duration risk so it may end up being even less risky than a long term Treasury fund.


So maybe a good replacement for LTT is something like:

Fidelity Total Bond ETF
https://digital.fidelity.com/prgw/digit ... mbols=FBND

Fidelity® Total Bond Fund
https://fundresearch.fidelity.com/mutua ... /31617K881

[Kevin K.]

Vanguard funds:

Money market 5.27%

Intermediate treasury 4.5%, 5 year duration

LTT 4.46%, 15 year duration

EDV 4.87%, 25 year duration

What does inverted yield curve mean for PP theory. When would it make sense to shorten duration

IMHO using LTT's at all in these circumstances makes no sense. One could make an argument for a modest allocation to 5 year ITT's but otherwise I much prefer "cash" in the form of SGOL or Vanguard Treasury MM fund and a "barbell" of VGSH and VTIP.

Good post on this topic on Bogleheads today by one of the more eminent academics out there:

https://www.bogleheads.org/forum/viewtopic.php?t=430882