I can't speak for others, but for me, there seems to be an asymmetical risk to the downside when you get to tiny positive or negative coupon rates for long duration bonds. Unless you are prepared to sell out of your position very quickly, and you have specific targets for so doing, being long in lo...

Thanks for all the comments and ideas. On corporate bonds, I am not so sure this is a good idea. Bond market history is littered with clusters of defaults. We study corporate bond default rates using an extensive new data set spanning the 1866–2008 period. We find that the corporate bond market has ...

Yes, I could migrate myself. But I have a decent job, friends, family, etc here. Off topic I think Europe has kind of lost its will to live. It has become an old-age home. The old geezers favor capital gains over wage gains. With rates this low, the logical thing to do would be to invest in the futu...

Hello Craig thanks for tuning in. I actually bought & read your book :) I fully agree with you on the pointlessness of holding 1% 30yr EUR bonds. I was thinking of replacing the bonds with more of the other elements for the time being (stocks, gold, cash 33% each). I am sure others have thought ...

Did I write 1.08%? I mean 0.96% yield on 30yr German gov bond this very morning. I used to game convexity and I made some money on yields collapsing last year. I have the utmost respect for people trying to make money off this central bank scam. But for the long term, buy & hold portfolio, 0.96%...

The fundamental issue with the EUR 30yr bonds 1% yield is this: Does it reflect the market's view? Is it a true market event or a central bank scam? The answer should be clear. It is not market participants buying deflation protection. It is the central bank buying these bonds to the tune of 50 bill...

I know about bond convexity. But 1.01% on a 30 year bond in a questionable currency (EUR) remains a sh*tty deal. So as a EUR citizen with a Permanent Portfolio I have four options now: 1) Take the sh*tty deal (30yr 1.01% EUR German gov bond). 2) Hope & pray for currency appreciation in a better ...

Food for thought in regards to bonds. ---- Nobel laureate #1 is Maurice Allais, a French economist who received the prize in 1988 and is most famous for a paradox that he discovered in the 1950’s. As an example, imagine that you can choose between getting one million dollars with certainty vs. one m...

I don't want to defect from PP. But the question is, do Harry Browne's thoughts on bonds have validity in an age where negative rates on the safest bonds are normal? 1) Why take on 30 year duration risks for 1% return? When I can get no duration risk for 0% return, that seems to be a much better dea...

Hi German government bonds have negative rates up to 7 years now. 1 year: -0.44% 7 year: -0.05% 30 year: +1.08% I refuse to buy a 30 year bond yielding 1%. I just refuse to do that. No thanks. Physical EUR cash seems better and better for half the PP portfolio (cash & bond portion). Does anybody...

Hi I understand your concern about funding retirement in a low-yield world. However stock market's don't always go up plus they are absolutely unpredictable. You want to beat average market returns of PP by investing in more of an extreme fashion. You could end up losing more money instead of making...

The primary goal of an insurance company is to make money. So, on average, as PPer are obessed with averages, the average plan holder has to pay in say 5% more than he will get out (that's the markup of the company). Is it therefore financially justified to buy insurance for unlikely, but devastatin...

In the long run we're all dead, as Keynes said. The sooner or later we all gonna end up in a terrifying situation, filled with pain, regrets and imminent death. That's the price we humans pay for being so goddamn clever - knowing about the inevitability of our own, forthcoming death. So it is kind o...

Bonds move like stocks in the short to medium term - it's random walk. Random, by chance, haphazard. Don't try to explain short-term moves. Read up "A random walk down Wall Street". 30yr rates could be 5% next week. Or 1% the week after. It's a fool's game to try to predict. The key is to ...

When I, as a European, pay in fact close to 70% taxes on my income (taking into account direct and indirect taxation, VAT and mandatory social plans plus mandatory public TV channel tax) I presume a grain of low-tax uber-libertarianism would be very good for this society.

If you want to read up on this whole third world-deflation theme, I highly recommend this blog: http://ponziworld.blogspot.ca/2013/03/the-globalization-virus.html As long as there is a differential in cost/price between the two markets, then the arbitrage makes money. In the context of global trade,...

The problem is that stocks and bonds move in lockstep quite some time, which explains the good performance of anything 60/40 or Bogleheads over the past decades. Ray Dalio himself stated that a 60/40 is basically a one-way bet on stocks, which is why he doesn't like that portfolio. What most people ...

I'm happy to see some other PPs admitting that European government bonds are toxic for the most part and that the yields don't justify buying a 30yr bond. As the blogger FOFOFA wrote, a fiat currency regime always depends on human greed and the subliminal lust for more. Save your money, lend it to t...

There are a lot of US citizens posting here. As a European I am always fascinated by their love for the stock market. Look at Japan - twenty year bear market in stocks. Can't that happen in the US? If long-term investing in the stock market would make one rich, there would be a lot of rich people. B...

European long-term bonds - you get a very low yield in a depreciating currency. Unheard of in decades of financial history. ECB QE is competetitive devaluation. Exporting deflation. Onshoring jobs. Driving up inflation, devaluing debts. That's all fine by me - but I wouldn't put my savings into EUR ...

With all due respect to your research, but one cannot compute markets. Risk & Value at risk models work... until they don't. Example: LTCM. I recommend the book "A random walk down Wall Street". Let's assume Harry Browne would have come up with an optimal PP weighting of 21.7/18.9/27.3...

I wouldn't open up a brokerage account unless having at least 10.000 EUR to invest.

Plus two months of living expenses readily available all the time in a savings account, which ought not to be invested at all.

Don't get greedy and save up some real money first.

I will abandon the Permanent Portfolio and lend all my money to Ireland for 2 years at negative -0.02% yield. (source: http://pigbonds.info/Staatsanleihen/Irland)

That seems like a great deal!!!

do you think that long bonds are a better deflation hedge than extra cash with rates this low? Implicit in my question is that one needs to consider interest rate risk as part of the overall picture. That is the big conundrum in a nutshell. PP diehards would buy their home country bonds nevertheles...

Some thoughts come to my mind in regards to low interest rates. Back in the 70s, with nominal long-term yields in the US around 7%, people called LTTs "certificates of confiscation", because the real, inflation-adjusted yield was negative. So we have to be careful to dismiss negative nomin...