Are most people here sticking with Treasuries?

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Lorddoskias123
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Re: Are most people here sticking with Treasuries?

Post by Lorddoskias123 » Tue Apr 12, 2022 9:15 am

murphy_p_t wrote:
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.
Probabilities are not knowledge. There is a very large difference. Unlikely events can and do occur. If you know what will happen and equally critically when it will happen…you should be in options up to your eyeballs not in a HBPP forum.

I stick to Harry’s rule 4 with my investing despite occasionally gazing into a crystal ball.
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Tue Apr 12, 2022 9:56 am

I have left the permanent portfolio behind in the past year, for the time being. Don't need options, I'm not that greedy.

Precious metals, mining companies, and explorers... That is enough. Options with no expiry date.

Ps. I hope somebody is very successful with their bonds... So that I can unload the remainder of my (6%) allocation.
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Re: Are most people here sticking with Treasuries?

Post by barrett » Tue Apr 12, 2022 11:00 am

murphy_p_t wrote:
Tue Apr 12, 2022 9:56 am
Ps. I hope somebody is very successful with their bonds... So that I can unload the remainder of my (6%) allocation.
I'm curious why you have held onto the 6% position. Any chance of tax-loss harvesting on those? I mean, obviously they would have to be in a taxable account.

Also, are you going with shorter duration treasuries, forgoing bonds altogether or something else?
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Tue Apr 12, 2022 11:20 am

The remaining 6% of my t bonds are in taxable, thankfully. Currently underwater, not horribly, but still underwater.

When t-bonds spiked I think it was January of 2020, I think I sold half of my t-bonds. Have been running them at 15% or so. Maybe 2 months ago, I sold exactly half of what was remaining t bonds... Bought more precious metal and uranium mining. That's doing awesome! (Ccj, sbsw)

Only reason I didn't sell all of them at that time is that I was holding on to a remnant of the pp, in case I'm wrong.

Treasury money market fund is for core cash, along with ibonds.
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Re: Are most people here sticking with Treasuries?

Post by barrett » Tue Apr 12, 2022 11:32 am

murphy_p_t wrote:
Tue Apr 12, 2022 11:20 am
The remaining 6% of my t bonds are in taxable, thankfully. Currently underwater, not horribly, but still underwater.

When t-bonds spiked I think it was January of 2020, I think I sold half of my t-bonds. Have been running them at 15% or so. Maybe 2 months ago, I sold exactly half of what was remaining t bonds... Bought more precious metal and uranium mining. That's doing awesome! (Ccj, sbsw)
Got it. Thanks. The big spike was March of 2020 when stocks were getting beat to hell, but I am guessing that's when you mean. So, overall, you did well with them which is good. And it sounds like you have the option of selling the remaining bonds at a loss if rates continue to rise, taking the capital loss (if applicable), and even buying back in 30 days later. Of course, if bonds spike upwards, you'll be glad to at least have some.
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Tue Apr 12, 2022 11:59 am

Yep... I have had fortunate timing with t-bonds in general.
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Tue Apr 12, 2022 9:09 pm

murphy_p_t wrote:
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.
Thanks for your comments. I see I'm not alone in my thinking. I just see a limited upside on bonds right now, and much higher downside. I sold off the remainder my my TLT today and I did OK with it. I wish I sold at the beginning of the year. It just seems that TLT was near all time highs at the same time stocks were. No longer negatively correlated. In the past decade it did go jump up a bit temporarily while stocks were down, like in April 2020. But I don't really need the counter-balance. In the long run, a 30 treasury paying 2 percent will return 2 percent a year for 30 years, despite the ups and downs in it's price along the way. In the long run it washes out. If interest rates go up to 4 percent and stay there, it will take many years for the principal to return. My understanding is this is true for the bond fund as well. In theory, my stocks would be going up and I would rebalance for the next downturn. It would have been better if the rates were going up slowly (and bond prices fell) during the last 10 years of the stock bull market, but it didn't. The bond prices were propped up by QE.

The only real benefit of a long term treasury is the counter balance, which is at the cost of lower returns. I can get a 2 year or 5 year treasury that pays the same, and doesn't have the duration risk. Of course this is a recent thing since the yield curve inverted. I don't really need a counter balance at the cost of returns, since the spikes in TLT during flights to safety are usually short lived. I would think Harry Browne would eventually change his views as the data changed. Someone mentioned Japan above, but I don't think PP works well in Japan. Poor stock performance and no yields on bonds. The only thing that performed for a Japan PP is gold. I think I will do a 3 way version of PP w/o the bonds, and then add bonds later when yields rise. I'll probably do shorter duration bonds, maybe 10 year max.
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Re: Are most people here sticking with Treasuries?

Post by Dieter » Tue Apr 12, 2022 9:24 pm

I’ll look at things early May, but expect to stick with what LTT I’ve got

Not sure if I’ll have the stomach the rebalance into LTTs if needed though

Things are only going to get more interesting — energy and food supplies , but that’s a topic for a different thread 🙂
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Re: Are most people here sticking with Treasuries?

Post by dockinGA » Wed Apr 13, 2022 5:30 am

kwg2005 wrote:
Tue Apr 12, 2022 9:09 pm
Someone mentioned Japan above, but I don't think PP works well in Japan. Poor stock performance and no yields on bonds. The only thing that performed for a Japan PP is gold.
According to Portfolio Charts, the PP still held up OK in Japan. 30 year returns even starting in 1990 were 2% above inflation. In almost all other 30 year time periods, it was around 4-6%, roughly similar to its American cousin. A little more volatile than a US version, but far from a disaster.
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Re: Are most people here sticking with Treasuries?

Post by GT » Wed Apr 13, 2022 7:23 am

murphy_p_t wrote:
Tue Apr 12, 2022 11:20 am
The remaining 6% of my t bonds are in taxable, thankfully. Currently underwater, not horribly, but still underwater.

When t-bonds spiked I think it was January of 2020, I think I sold half of my t-bonds. Have been running them at 15% or so. Maybe 2 months ago, I sold exactly half of what was remaining t bonds... Bought more precious metal and uranium mining. That's doing awesome! (Ccj, sbsw)

Only reason I didn't sell all of them at that time is that I was holding on to a remnant of the pp, in case I'm wrong.

Treasury money market fund is for core cash, along with ibonds.
Do you have a timing trigger for returning to the PP or long bonds?
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Re: Are most people here sticking with Treasuries?

Post by buddtholomew » Wed Apr 13, 2022 12:56 pm

It appears that there were more investors than panicked old Budd who questioned the validity of the PP moving forward. Where were you when I was being attacked for my perspective? Were you too afraid to voice the same opinion as mine?

Now people are either selling some or all of their LTT’s down 15%+ and locking in losses. Makes me think it’s a reasonable time to start buying.
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Wed Apr 13, 2022 4:26 pm

GT wrote:
Wed Apr 13, 2022 7:23 am
murphy_p_t wrote:
Tue Apr 12, 2022 11:20 am
The remaining 6% of my t bonds are in taxable, thankfully. Currently underwater, not horribly, but still underwater.

When t-bonds spiked I think it was January of 2020, I think I sold half of my t-bonds. Have been running them at 15% or so. Maybe 2 months ago, I sold exactly half of what was remaining t bonds... Bought more precious metal and uranium mining. That's doing awesome! (Ccj, sbsw)

Only reason I didn't sell all of them at that time is that I was holding on to a remnant of the pp, in case I'm wrong.

Treasury money market fund is for core cash, along with ibonds.
Do you have a timing trigger for returning to the PP or long bonds?
No. I'm insanely long and bullish on precious metal (and other natural resource) equities... Which the commencing bull market I expect to last for a few years. Scaled in very heavily over the last 6 to 9 months.

I think it's very likely we are the end of a of a multi-decade treasury bond bull market... See this chart...

https://twitter.com/graddhybpc/status/1 ... JKuBg&s=19

I know the concept of the permanent portfolio is for the chicken money... Money you can't afford to lose... It's just too conservative for me with all the geopolitics and the financial condition/policies of this country. My current thinking is that if I have outside profits in precious metal equities, I will rebalance into PHYS.


Please do not take any of this as financial advice!

The pp may continue to approximate what it has always done (although the risk of underperforming the rate of inflation is outside, in my view.)

If I was going to stick with the pp, I would substitute significant portion of gold for pslv.
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Wed Apr 13, 2022 4:28 pm

buddtholomew wrote:
Wed Apr 13, 2022 12:56 pm
It appears that there were more investors than panicked old Budd who questioned the validity of the PP moving forward. Where were you when I was being attacked for my perspective? Were you too afraid to voice the same opinion as mine?

Now people are either selling some or all of their LTT’s down 15%+ and locking in losses. Makes me think it’s a reasonable time to start buying.
Budd, I wasn't following your stuff all that closely.

In any case, based on the insane inflation rates that are being reported from official channels, the situation has changed substantially, in my view.
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Wed Apr 13, 2022 4:31 pm

Based on the insane inflation rate being reported, it appears to me that it is official US government policy to rapidly destroy the purchasing power of the US dollar.

This makes holding 50% of my portfolio in treasuries (25 tbond, 25 tbill) totally untenable and irresponsible for good stewardship of my funds. My opinion only.


Based on that policy, I have no doubt the federal government will succeed
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Wed Apr 13, 2022 4:42 pm

If there's another Volker who's going to put the interest rates above the rate of inflation, that would be a reason to reevaluate
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Wed Apr 13, 2022 6:46 pm

buddtholomew wrote:
Wed Apr 13, 2022 12:56 pm
It appears that there were more investors than panicked old Budd who questioned the validity of the PP moving forward. Where were you when I was being attacked for my perspective? Were you too afraid to voice the same opinion as mine?

Now people are either selling some or all of their LTT’s down 15%+ and locking in losses. Makes me think it’s a reasonable time to start buying.
I never liked the LTT portion of the HBPP. This is what kept me out of the portfolio for years. But I finally got in about 10 years ago. Here's the thing: yes the LTT will counter balance the fund in a crash, but at what cost? When Harry was alive he was likely getting 6-8 percent on those bonds. So even though the price fluctuated, and probably by a lot, he still got 6-8 percent. If it fell to 5 percent because the bond price spiked and later fell again, he was still getting his initial bond rate. Now we are buying the bonds just for the fluctuation, but only getting 2 percent. Depending on when you bought your long term treasuries, it might even be sub 2. And since they're so long dated, you'll be stuck with that rate for a long time.

I will be interested in LTT if the rates are much higher, say around 6 percent, assuming inflation is no longer 8. I might not go back to anything longer than 10 years. Right now I have quite a bit of cash tied up in I Bonds so I don't see LTT as that useful, except for the negative correlation.
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Wed Apr 13, 2022 6:51 pm

murphy_p_t wrote:
Wed Apr 13, 2022 4:31 pm
Based on the insane inflation rate being reported, it appears to me that it is official US government policy to rapidly destroy the purchasing power of the US dollar.

This makes holding 50% of my portfolio in treasuries (25 tbond, 25 tbill) totally untenable and irresponsible for good stewardship of my funds. My opinion only.


Based on that policy, I have no doubt the federal government will succeed
I am thinking the same thing. Say the tbonds were paying something like 6 percent, and we were getting that over a long period, then OK a couple of years with inflation over that isn't so bad, but getting 2 percent isn't enough. Like I said in earlier post, LTT are a counter weight to equities when equities crash, but at what cost? I have bought a bunch of iBonds last year and this year, so that's where my cash money is going. Since I sold all of my LTT, I'll probably rebalance to 50 percent equities, 25 percent gold and 25 percent cash in the retirement portfolios. Heavy on equities since I have so much cash outside of the retirement accounts including the i Bonds.
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Re: Are most people here sticking with Treasuries?

Post by dockinGA » Wed Apr 13, 2022 8:10 pm

All this negativity makes me think that those of us who are staying the course are about to have our day in the sun.
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Re: Are most people here sticking with Treasuries?

Post by murphy_p_t » Wed Apr 13, 2022 8:25 pm

I do hope there's a day or 2... I like to unload my remaining 30-year t-bonds at even... Approximately TLT equals $140
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Re: Are most people here sticking with Treasuries?

Post by kwg2005 » Sat Apr 16, 2022 5:21 pm

I get bond convexity. If you buy your bonds at 2.5 and the current yields drop to 1.5, your price per bond rises. It helps offset the losses of the other assets. Of course as you get closer to maturity the bond price falls back to face value. In the end, your actual return is what the bond was when you bought it.
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Re: Are most people here sticking with Treasuries?

Post by boglerdude » Sat Apr 16, 2022 5:28 pm

Use EDV
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Re: Are most people here sticking with Treasuries?

Post by mdwilson1991 » Mon Apr 18, 2022 8:55 am

If you sell your LTT because you don't envision a future for them, do you also sell stocks and gold when they are declining and apparently don't have a future?

That behavior has pretty much nothing to do with the whole idea of the PP.

I'm not saying that you are wrong, or that the PP will actually "work" for its intended purpose. How could I know what will actually happen?

But buying and selling various assets based on where you think they are going isn't the point of the "permanent portfolio." So like most of the stuff that gets brought up in this forum, it really belongs in the VP forum.
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Re: Are most people here sticking with Treasuries?

Post by Kevin K. » Mon Apr 18, 2022 9:34 am

Sticking with Treasuries doesn't have to mean sticking with the LTT/MM barbell. Using ITT's (I use VGIT with ~5+ years of duration) instead of the barbell has historically provided essentially identical returns to the barbell with much less volatility. The only problem is you lose the elegance of having 20% in cash. Even die-hard PP'ers have been fine with tweaking things to some extent - e.g. substituting STT's for Browne's prescribed Treasury MM fund to juice yield a bit.

Thanks boglerdude for posting the link to Tyler's excellent article on bond convexity. That's a good reminder. At the same time though I think it's worth bearing in mind that more often than not LTT's have NOT spiked in value when stocks crashed - it's just that they did so spectacularly in 2008 and it was right about then that the PP started to get discussed on online forums.

I agree with those who speculate that Browne would most likely have had no interest in LTT's at anything near today's interest rates, let alone with today's level of inflation. But I also don't know what a viable alternative looks like. The least bad choice at the moment looks to be buying all the iBonds you can and using VTIP (or individual 5 year TIPS bought at auction) for the rest:

https://tipswatch.com/2022/04/18/a-5-ye ... nvestment/
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Re: Are most people here sticking with Treasuries?

Post by dockinGA » Mon Apr 18, 2022 10:13 am

Kevin K. wrote:
Mon Apr 18, 2022 9:34 am
Sticking with Treasuries doesn't have to mean sticking with the LTT/MM barbell. Using ITT's (I use VGIT with ~5+ years of duration) instead of the barbell has historically provided essentially identical returns to the barbell with much less volatility.
I'm not sure I agree with you on the much less volatility part. All the data I've looked at shows that substituting ITT's for the barbell provides very similar return AND very similar overall volatility. ITT's are much less volatile than LTT's for sure, but the substitution's impact on overall portfolio volatility is practically nil based on what I've looked at.
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