We had a deflationary period from July 2008 through January 2009 when the CPI dropped 3.2%.  Stocks dropped 35%, long bonds were up 20%, and gold was flat.  So your conclusion sounds valid based on recent history.

barrett, you provided a starting interest rate (3.24%), an ending interest rate (2.5%/2.0%) and a coupon rate (3.75%), but did not provide a time frame.  I'll assume 12 months.  If my formulas are right, a decline to 2.5% will cause the present value of your bonds to increase 15.2%.  Adding to that ...

Forbes had an article a year or so ago called "Ten Books Every Investor Should Read."  I found used copies of each of them for a few bucks apiece.  Ben Graham's was the first on the list: The Intelligent Investor by Benjamin Graham The Great Crash of 1929 by John Kenneth Galbraith Common S...

Shin guards and knee high socks.

Two words:  shin guards.

Yes, Germany certainly is forcing the action.  The USA would too if they could, but Germany is far superior at possessing the ball.  Tim Howard is looking sharp in goal and the USA defensive line is doing a great job so far.  If things are still tied at the 75 minute mark, kshartle's strategy may em...

The purpose of my post was to hopefully cause at least one PP'er to watch the match who otherwise might not have    Bummer that you're already in the office, kshartle.  Should be an extremely interesting match.

I don't think you'll see either team in major defensive mode, kshartle, unless a goal gets scored.  And then the team that scores might do so since they would have to give up two before things turn disastrous.  Playing in defensive mode can really backfire since the best way to prevent a goal is to ...

The first tie-break is goal differential.  A Portugal win would likely advance the U.S. because Portugal lost their first match 0-4.  A Ghana win coupled with a U.S. loss would make things dicey.

"At least one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed's main benchmark interest rate, to rise back to its long-term average of around 4 percent in Bernanke's lifetime, one source who had spoken to the guest said." h...

This "environmentally balanced" portfolio endorsed by Advisor Perspectives, Inc. in April of 2012 sounds really familiar.

http://www.advisorperspectives.com/news ... sified.pdf

I think I just answered my own question.  The year old bonds may now be worth only $23,000, but the 3.60% interest is being paid on $25,000.  The new $23,000 bonds will be paying 4.00%,  but 4.00% on only $23,000.  That must be the "wash" you are referring to.

Still not sure that I follow.  The performance of the bond portion of the PP, in a rising interest rate environment, equals the decline in the present value of the bonds, partially offset by interest earned.  If interest rates go from 3.60% today to 4.00% in a year, then let's say my $25,000 bonds h...

I understand the concept of re-balancing.  I'm referring to the notion of replacing, in a rising interest rate environment, year old bonds paying a lower interest rate with new bonds paying a higher rate.  For example, if interest rates increase steadily to 8% in late 2017, I'm calculating a 39% los...

If my 30 year treasuries have dropped in value after, say, 5 years, (when there are 25 years remaining to maturity) might it make sense to sell the treasuries at that time to lock in a tax loss (this is in a taxable account), and then use the proceeds to buy new 30 year treasuries?  Maybe it would ...

barrett,

I don't have a calculator, but you're welcome to my Excel spreadsheet.  It's tailored to measure the effect of Dick Bove's prediction on LTT's, but you could adapt it to other scenarios.  It is at...

https://drive.google.com/file/d/0B041bR ... sp=sharing

If 10-year treasury yields were to hit 8% in late 2017, then I'm assuming 30-year treasury yields would hit 9%.  Based on 9%, I'm calculating a 39% hit to the bond portion of the PP between now and late 2017.  A 25% PP allocation to 10-year treasuries instead would only lose 18% over the same time f...

1

VTI  +12%
TLT      -6%
GLD  -10%
SHY      0%

HBPP    -1%

History and statistics tell me that the PP has less than a 2% chance of declining two years in a row, so I see it as a 98% chance of gaining next year, no matter what gold does.  Statistically, I would be taking twice the risk with a 60-40 or traditional portfolio.  Two thoughts:  (1) How can one r...

Gold ETFs Under Pressure; Banks See More Pain By ETFtrends.com | ETF Trends – 24 minutes ago Gold, once the darling in the investment world, is losing its luster, and exchange traded funds that track the precious metal could continue to weaken, with large banks anticipating further declines in the b...

I looked at six periods of rising interest rates since 1977 and calculated the performance of the asset classes and the HBPP as a whole.  I also looked at where we are today.  I realize that HBPP veterans have done this 100 times.  I did not factor in any rebalancing. In period one, 6/30/77 to 2/29/...

The daily 30-year Treasury bond interest rate is available on yahoo finance going back to 2/15/77.  But does anyone know how to convert this series of interest rates into an index that can be used to back test the HBPP?

Yes, the present value of the $1000 itself (excluding the interest stream) in 30 years at 15.21% is $12.30.

$12.30 X ((1 + .1521/2) ^ 60) = $1000

Add in the PV of the interest stream, $38.50 twice a year for 30 years, and you get to $512.

We're talking 30 year bonds.  So the PV of a $1000 bond with a 7.70% coupon rate when the prevailing rate is 15.21% is $12.30.  Add the PV of the interest stream and you get to $512.