Are most people here sticking with Treasuries?

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jason
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Are most people here sticking with Treasuries?

Post by jason » Thu Apr 07, 2022 1:34 pm

I've been doing the HBPP for almost 9 years and I've done decently well with it. It's been a bit frustrating to see inflation soaring lately and my portfolio basically going nowhere or dropping a bit. And it's been especially frustrating to watch Treasuries drop a lot and it seems the stage is set for them to crash further. But at the same time, I am sticking with the PP, and sticking with Treasuries, because I'm too scared about making market timing decisions. I've made wrong decisions more times than I care to remember. Are most people here holding steady with the PP? Are a lot of people here who have been doing the PP for a long time getting out of Treasuries?
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Re: Are most people here sticking with Treasuries?

Post by snedgar » Thu Apr 07, 2022 1:55 pm

I've been all-in for 14 years, switching to GB a while back based on things I learned here and on Tyler's site.
Not thrilled about LT Treasuries, but they are an integral element of system.
In my case, I have all I need so my primary goal is to not do something stupid AND a lower SD is important for distributions.
So I'm staying the course, at least until I am convinced that a different holistic portfolio will work better.

Multiple smart people here have recently commented that the VP portion of the plan can be a good option; leaving "money you can't afford to lose" in PP/GB, while taking a different approach (possibly with no exposure to LT bonds) in the VP. This seems like it could constitute a good middle ground.

Interestingly, as my kids have launched, I have set them up with the 100% stock plan for the early years of their accumulation phase. This was partly because they have such a long time horizon and partly because the PP/GB concept proved to be too intimidating for them.
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Re: Are most people here sticking with Treasuries?

Post by dualstow » Thu Apr 07, 2022 2:52 pm

I'm due to buy new long term bonds now.

Broken record here, but: because my vp is larger, I find it a bit easier to play by the rules (i.e. bands) in the pp. I realize that is 100 miles from being all in. It's like the pp is a pet project. I suppose that's because the "money I can't afford to lose" is small. I’m willing to take more chances with the bulk, buying more stocks and investment grade bonds.

Even so, I'm delaying the long bond purchases a bit more. Why? Because they keep taking about raising raises several more times. I haven't sold the long bonds that still have ~ 20 years on them, so...I'll forgive myself and just allow myself this brief delay. If I miss out, I miss out.
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Thu Apr 07, 2022 3:22 pm

snedgar wrote:
Thu Apr 07, 2022 1:55 pm
I've been all-in for 14 years, switching to GB a while back based on things I learned here and on Tyler's site.
Not thrilled about LT Treasuries, but they are an integral element of system.
In my case, I have all I need so my primary goal is to not do something stupid AND a lower SD is important for distributions.
So I'm staying the course, at least until I am convinced that a different holistic portfolio will work better.

Multiple smart people here have recently commented that the VP portion of the plan can be a good option; leaving "money you can't afford to lose" in PP/GB, while taking a different approach (possibly with no exposure to LT bonds) in the VP. This seems like it could constitute a good middle ground.

Interestingly, as my kids have launched, I have set them up with the 100% stock plan for the early years of their accumulation phase. This was partly because they have such a long time horizon and partly because the PP/GB concept proved to be too intimidating for them.
Your kids are fortunate they have good guidance from you regarding their finances.
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Re: Are most people here sticking with Treasuries?

Post by boglerdude » Thu Apr 07, 2022 7:31 pm

Underweight them a bit if it makes you feel better. Is the future of the US going to be Japan (30 year bouncing around 0) or Venezuela...
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Re: Are most people here sticking with Treasuries?

Post by coasting » Thu Apr 07, 2022 8:24 pm

Are most people here holding steady with the PP? <- Yes, I am holding steady with the PP.
Are a lot of people here who have been doing the PP for a long time getting out of Treasuries? <- No, not getting out. Definitely holding on to LT Treasurys already owned.

With recent drop, LTTs now account for less than 18% of my PP. New funds currently going to cash, but considering add to LTT as they are lagging so much.
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Re: Are most people here sticking with Treasuries?

Post by Vil » Fri Apr 08, 2022 4:08 am

Just bought some today, to cover the losses from YTD when I rebalanced by contributing new/fresh money. If they fall more (as it seems) - will buy again .. And will tell the kids they need to spend less on Chinese toys, as LTTs are falling (thanks for the argument :D )
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Re: Are most people here sticking with Treasuries?

Post by ppnewbie » Sat Apr 09, 2022 12:50 pm

I added to my 30 year treasuries about 2 months ago. I think I’m at about 17ish percent (in a GB). I may add a bit more soon. They do make me very nervous though, with Biden taking every step possible for Countries to distrust the dollar with their reserves.
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Re: Are most people here sticking with Treasuries?

Post by Hal » Sat Apr 09, 2022 3:57 pm

Holding a Global Aggregate Bond fund (Hedged) due to limited choices. Not worried in the slightest.
https://www.vanguard.com.au/adviser/pro ... s/32101/AU

To be honest, feel safer holding Global Bond & Share ETF's than a purely country specific one (even if the country is the US).....
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Sat Apr 09, 2022 5:05 pm

jason wrote:
Thu Apr 07, 2022 1:34 pm
I've been doing the HBPP for almost 9 years and I've done decently well with it. It's been a bit frustrating to see inflation soaring lately and my portfolio basically going nowhere or dropping a bit. And it's been especially frustrating to watch Treasuries drop a lot and it seems the stage is set for them to crash further. But at the same time, I am sticking with the PP, and sticking with Treasuries, because I'm too scared about making market timing decisions. I've made wrong decisions more times than I care to remember. Are most people here holding steady with the PP? Are a lot of people here who have been doing the PP for a long time getting out of Treasuries?
I am seriously considering reducing my percentage of allocation to Long Term Treasuries. I know it's market timing, and I'll probably shoot myself in the foot. However, maybe that's an OK price to pay; a possible performance loss to sleep better at night. I just don't know that Harry Browne could have anticipated QE and 20-30 year treasuries falling below 2 percent, and they have to be going back up. I think the theory is that rates would go up with inflation and the bond prices would fall, but then gold would be our savior which would allow us to rebalance into treasuries at a lower price/higher yield. I have a PP for my Roth and my Rollover IRAS. One of them have a slight exposure to international stocks, so it's already a variant from HBPP. Who knows, maybe there will be another disaster that causes money to pile into treasuries causing the yield to fall and the price jumping. Maybe if I reduce from 25% to 15% in LTT I'll give up those gains, but I think what is more likely is the rates will rise. I can always increase the amount back to 25% later, especially if the rates are better.
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Sat Apr 09, 2022 5:09 pm

ppnewbie wrote:
Sat Apr 09, 2022 12:50 pm
I added to my 30 year treasuries about 2 months ago. I think I’m at about 17ish percent (in a GB). I may add a bit more soon. They do make me very nervous though, with Biden taking every step possible for Countries to distrust the dollar with their reserves.
I am staring to worry about an actual default in the US in the next 10-20 years. I don't think the US government can run crazy deficits forever, and increasing taxes isn't popular. People want all the goodies, but not the taxes to pay for it. There really aren't enough rich people to just tax the rich to pay for everything. Increase in taxes, or decrease in govt spending are both unpopular and both would start a major recession/depression. Until mid 2021, I worked in Aerospace making parts of the F35 and other military planes. It was very much heavily padded work programs. But it employed a lot of people. Military Industrial Complex. At some point that stuff will have to come to an end or the American Empire won't be able to even pay interest on it's debt. It can now at super low rates, but could it at 10% or 20%? I am talking myself into lowering the amount of LTT I hold.
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Re: Are most people here sticking with Treasuries?

Post by Hal » Sat Apr 09, 2022 5:55 pm

kwg2005 wrote:
Sat Apr 09, 2022 5:09 pm
I am staring to worry about an actual default in the US in the next 10-20 years.
https://www.youtube.com/watch?v=6IRtjJc0miE
https://www.youtube.com/channel/UCzu55W ... QIQ/videos
;)
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Re: Are most people here sticking with Treasuries?

Post by boglerdude » Sat Apr 09, 2022 5:56 pm

> default in the US in the next 10-20 years. I don't think the US government can run crazy deficits forever, and increasing taxes isn't popular

Answer to both is inflation. Then subsidize gas and food. If they still riot over housing, climate/covid lockdowns.

But 30 year is at 2.76%. Still some room to zero.
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Sat Apr 09, 2022 6:37 pm

boglerdude wrote:
Sat Apr 09, 2022 5:56 pm
> default in the US in the next 10-20 years. I don't think the US government can run crazy deficits forever, and increasing taxes isn't popular

Answer to both is inflation. Then subsidize gas and food. If they still riot over housing, climate/covid lockdowns.

But 30 year is at 2.76%. Still some room to zero.
Basically I'll be guessing whether LTT rates will go down or up. It's hard to imagine they will go down and stay down. and if they do go to zero, that would definitely be a great time to sell unless you think they could go negative. Maybe a good thought experiment to to think what would happen if 30 year bonds go to 5 percent. Can the government afford to pay that interest rate? They might have to go back to QE which will bring the yields back down. I wish part of the portfolio would jump up to offset the falling bonds.
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Re: Are most people here sticking with Treasuries?

Post by barrett » Sun Apr 10, 2022 6:58 am

kwg2005 wrote:
Sat Apr 09, 2022 6:37 pm
Maybe a good thought experiment to to think what would happen if 30 year bonds go to 5 percent. Can the government afford to pay that interest rate? They might have to go back to QE which will bring the yields back down. I wish part of the portfolio would jump up to offset the falling bonds.
In order for the US government to have a much more difficult time paying interest on their outstanding treasury debt, rates would have to stay high for a number of years, right? Let's just look at the long end of the curve. Say the 30-year spikes to 5% by the end of 2022. Most of the outstanding debt (in the 10 to 30-year range), would have been lent at very low rates, even though it's trading at higher rates on the secondary market. That last part is really only investors making or losing money, not the lender. I mean, sure, it gets more expensive for the government to borrow money when rates are high, but I would think the real issue in the short to mid term is what the average interest rate is on the money that needs to be paid back, i.e., bonds that are maturing.

Might have that totally wrong but that's my understanding.
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Re: Are most people here sticking with Treasuries?

Post by Vil » Sun Apr 10, 2022 12:07 pm

Just read "The psychology of money" by Morgan Housel for second time. One can get fooled by the fact its short and quite easy-going read, though I cannot stop recommending it due to being kind of generous in investing wisdom. "There are few financial variables more correlated to performance than
commitment to a strategy during its lean years
" .. how one can state it any better ? ;)
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Sun Apr 10, 2022 1:18 pm

Vil wrote:
Sun Apr 10, 2022 12:07 pm
Just read "The psychology of money" by Morgan Housel for second time. One can get fooled by the fact its short and quite easy-going read, though I cannot stop recommending it due to being kind of generous in investing wisdom. "There are few financial variables more correlated to performance than
commitment to a strategy during its lean years
" .. how one can state it any better ? ;)
I'll have to check out that book and add it to my stack of books to read. I'm currently reading E. Michael Jones' Barren Metal. I'm 750 pages into the 1450 pages. Quite an interesting book but I wish he condensed it down some. Thanks for the recommendation.
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Sun Apr 10, 2022 1:22 pm

barrett wrote:
Sun Apr 10, 2022 6:58 am
kwg2005 wrote:
Sat Apr 09, 2022 6:37 pm
Maybe a good thought experiment to to think what would happen if 30 year bonds go to 5 percent. Can the government afford to pay that interest rate? They might have to go back to QE which will bring the yields back down. I wish part of the portfolio would jump up to offset the falling bonds.
In order for the US government to have a much more difficult time paying interest on their outstanding treasury debt, rates would have to stay high for a number of years, right? Let's just look at the long end of the curve. Say the 30-year spikes to 5% by the end of 2022. Most of the outstanding debt (in the 10 to 30-year range), would have been lent at very low rates, even though it's trading at higher rates on the secondary market. That last part is really only investors making or losing money, not the lender. I mean, sure, it gets more expensive for the government to borrow money when rates are high, but I would think the real issue in the short to mid term is what the average interest rate is on the money that needs to be paid back, i.e., bonds that are maturing.

Might have that totally wrong but that's my understanding.
I agree with you. Only the newly issued bonds will need to pay the higher yields, so it won't be a sudden whack to the federal government. I have heard, but haven't confirmed that much of the federal debt is on the short end. And of course they could cut spending if they really had to, but unfortunately a lot of the spending that is increasing is on SS and medicare as we have an aging population. They could easily cut military spending, which is astronomical. Hopefully they don't get themselves into any new wars. Another thing to remind ourselves is that as yields rise, and we buy more treasuries, we will have a higher return because of it. If treasuries ever get to 5 or 8 percent, that would be good in the long run. Of course if there is ever a default on bonds that would be terrible, but I would think that the gold would spike under those circumstances.
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Re: Are most people here sticking with Treasuries?

Post by Lorddoskias123 » Sun Apr 10, 2022 10:53 pm

I’m staying the course. I add to the lagged asset every two weeks. Mostly been LTTs right now. No one knows the future. The picture on rates could change very quickly.
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Mon Apr 11, 2022 5:11 pm

Lorddoskias123 wrote:
Sun Apr 10, 2022 10:53 pm
I’m staying the course. I add to the lagged asset every two weeks. Mostly been LTTs right now. No one knows the future. The picture on rates could change very quickly.
Today I sold off some of my LTT position. I will probably regret doing it. I just don't see keep putting good money after bad. I've been pretty loyal to the PP for about 10 years, with the only exception being one of my accounts having a small allocation to international. I would have started the PP more than 10 years ago but for years I didn't do it because I didn't like the LTT portion. But I finally just did it. When there were downfalls in stocks or gold, it never bothered me because I know they will eventually go back up. The thing about bonds is, we had a 40 year bull run. The best case scenario I see is the rates go up until something crashes and they fall again. So basically they go up to say 3 or 4 percent, then a market crash so they fall again to 2 percent or less. If it does that over and over, then it will act as a counter balance to the stock prices, but doesn't actually have much returns. So for the last 10 or so years, 1/2 of the portfolio had almost no return. LTT did go up in value due to the falling interest rates, but it's unlikely they will continue to fall to zero, and they're most likely going up, which will negate all of the gains we saw on the way down. I think that they will go back down once the fed breaks something by increasing rates too much. This is why I didn't sell everything, in case I'm wrong. I just reduced my position. As stated before, the bond market is so manipulated and I don't think Harry Browne anticipated QE and now QT and all of that. I really wish I knew what he would recommend today.
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Re: Are most people here sticking with Treasuries?

Post by dualstow » Mon Apr 11, 2022 5:56 pm

kwg2005 wrote:
Mon Apr 11, 2022 5:11 pm
Today I sold off some of my LTT position. I will probably regret doing it. I just don't see keep putting good money after bad.

Ha, well isn’t that phrase more for poor quality stocks and bonds? Treasurys are still quality even if the real return horizon doesn’t look so good right now.
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Mon Apr 11, 2022 6:02 pm

dualstow wrote:
Mon Apr 11, 2022 5:56 pm
kwg2005 wrote:
Mon Apr 11, 2022 5:11 pm
Today I sold off some of my LTT position. I will probably regret doing it. I just don't see keep putting good money after bad.

Ha, well isn’t that phrase more for poor quality stocks and bonds? Treasurys are still quality even if the real return horizon doesn’t look so good right now.
I am thinking that Treasuries have a guaranteed negative return. Doesn't seem like quality to me. back in the day, when inflation was 3 percent but treasuries paid 6 percent, there was some return. Now they pay less than 3 and inflation is over 8. I realize that they have the counter balance effect. Maybe there will be a market crash and a flight to safety and bond prices will take off, but in the longer term, I think treasury bonds are return free risk, rather than risk free returns.
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Re: Are most people here sticking with Treasuries?

Post by dualstow » Mon Apr 11, 2022 10:42 pm

And yet there have been people buying negative nominal yield bonds in Europe instead of junk.
Quality is not yield or duration or a higher price than last year.
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Re: Are most people here sticking with Treasuries?

Post by Lorddoskias123 » Tue Apr 12, 2022 7:57 am

kwg2005 wrote:
Mon Apr 11, 2022 5:11 pm
As stated before, the bond market is so manipulated and I don't think Harry Browne anticipated QE and now QT and all of that. I really wish I knew what he would recommend today.
Some elements of QE had been tried before in the 1930’s so as a student of market history he was possibly aware of it. Not to mention Japan implemented QE in 2001 well before Harry died. I’d be very surprised if he wasn’t aware of their efforts.
https://en.wikipedia.org/wiki/Quantita ... Precedents

Regardless of specific knowledge of QE, I feel that Harry was certainly aware that the FED had significant influence over bond yields. As well as the fact that those yields, and rates generally, could go up as well as down. I’m comfortable staying the course, despite feeling that we may be entering a “tight money” economic period where the big three assets may decline. No one knows the future. To each their own.
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Tue Apr 12, 2022 8:28 am

Although we may not know the future with certainty, the evidence is coming into sharper focus of where we are headed. Consider the following data points...

Upside breakout of 40-year declining US tbond rate trend line

Us response to Ukrainian situation... Pushing more conflict rather than looking for peace

US financial debt position... Unsustainable

Russian ruble on quasi gold standard

Breakdown of petrodollar system, which has propped up dollar reserve status since the 1970s.

US declaration that foreign national reserves can be seized at will... Why would creditor Nations continue to maintain holdings of us dollars?


All these point definitively to a significant devaluation of the US dollar. Saying the future is unknowable is like seeing a boulder tottering overhead and saying that you don't know with certainty that it is going to fall on your head. Maybe it will continue to Totter for the next 15 years.
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