Question about Buying T-Bonds
Posted: Fri Jul 05, 2013 6:46 pm
I used Gumby's excellent tutorial to buy my first batch of treasury bonds on Fidelity about a year ago but upon further reflection I have a question about the advice......
For the Permanent Portfolio, we don't care what the coupon is. We just want the longest Treasury bond we can find, because longer Treasuries are more powerful. We've found the longest Treasury available here at the bottom of our list, so let's buy it. Click on the "Trade" button next to that Treasury bond.
Can somebody explain the reasoning behind this? The example that Gumby shows displays a choice between bonds with a 4.625 coupon at the top and 3.75 at the bottom with maturity dates within about 18 months or so. He says take the one at the bottom. Why is that "more powerful" than the ones with higher coupon above it? Can anyone explain?

For the Permanent Portfolio, we don't care what the coupon is. We just want the longest Treasury bond we can find, because longer Treasuries are more powerful. We've found the longest Treasury available here at the bottom of our list, so let's buy it. Click on the "Trade" button next to that Treasury bond.
Can somebody explain the reasoning behind this? The example that Gumby shows displays a choice between bonds with a 4.625 coupon at the top and 3.75 at the bottom with maturity dates within about 18 months or so. He says take the one at the bottom. Why is that "more powerful" than the ones with higher coupon above it? Can anyone explain?
