TLT Performance

Discussion of the Bond portion of the Permanent Portfolio

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buddtholomew
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TLT Performance

Postby buddtholomew » Sat Nov 11, 2017 8:45 am

Yesterday, 11/10 LTT's experienced a 1.5% decline. I am well within tolerance bands (22.5%) so no action was warranted, but fears resurfaced of an oncoming bond collapse (rising rates).

Are other PP investors holding 25% in LTT's?
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eufo
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Re: TLT Performance

Postby eufo » Sat Nov 11, 2017 9:35 am

My desired allocation is 20%. I'm at about 18%. I still feel the pain on days like yesterday, though. If it dips enough, I'll buy some more.

I'm underweight all my assets save cash. Desired allocation is 20%, but I'm at 27%. I'm a little spooked by the markets and I might be losing some value, but I sleep like a damn baby at night.
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sophie
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Re: TLT Performance

Postby sophie » Sat Nov 11, 2017 10:00 am

I think it's just a blip. The rates went from a low of 2.77% earlier in the week to 2.88% yesterday - but realize 30 year yields were over 3% back in the spring. I'm not sure I'd be calling this a "price collapse" quite yet.

https://finance.yahoo.com/news/investor ... 07787.html

Also if it is a panic response not reflecting market fundamentals it'll correct over the next week or two. I'm still waiting for bond prices to really climb to, say, 4-5%, in which case I'll happily rebalance and tax loss harvest while I'm at it. I'm not sure what's preventing that at this point. My guess is that the low yields in Europe due to the low-level depression economy over there are responsible. Any significant discrepancy would be arbitraged away.
buddtholomew
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Re: TLT Performance

Postby buddtholomew » Sat Nov 11, 2017 12:02 pm

Agree, not calling it a collapse, just a shake up.
Remind me the last time we saw stocks fall 1.5% or gold for that matter?
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Re: TLT Performance

Postby Tortoise » Sat Nov 11, 2017 2:57 pm

It’s just market noise. To reassure yourself, look at a graph of the 30-year Treasury yield (^TYX) year-to-date, and over the past 5 years, 10 years, and 30 years. Draw a trend line through it. It’s a steady downhill slope.
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Re: TLT Performance

Postby dualstow » Sat Nov 11, 2017 4:06 pm

buddtholomew wrote:Are other PP investors holding 25% in LTT's?


Yes, at 24% at the moment.

- it's easier when I have a large vp with none of those LTT's. I would love to buy more when yields go up, and your question made me realize that LTT's might be the bottleneck keeping me from turning more of the vp into pp.

- it's also easier having most of my LTT's as directly held individual treasuries. I know, I know, I've heard all the wisdom about how it's just the same as holding a bond fund, and I agree. I hold corporate bond funds and muni bond funds, and I don't worry about them.
I do hold a sliver of EDV. With regard to individual treasuries, I don't.give.a.shit. They're what I want. Not TLT.

Since treasuries will never "go bad", I do like that I can hold them if I need to, even if Blackrock or whoever runs TLT blows up. It's psychological. I could dump them and buy TLT, but it would be like Adrian Monk being given rational advice on how he doesn't *need* to touch every post he walks past. Maybe he could stop himself from doing it, but he'd be miserable.

When the freshest treasuries expire, my body will probably be ready to expire as well.
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jhogue
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Re: TLT Performance

Postby jhogue » Sun Nov 12, 2017 10:25 am

buddtholomew wrote:Yesterday, 11/10 LTT's experienced a 1.5% decline. I am well within tolerance bands (22.5%) so no action was warranted, but fears resurfaced of an oncoming bond collapse (rising rates).

Are other PP investors holding 25% in LTT's?


Currently LTTs are 24.8% of my portfolio.

97% of the position is in individual 30 year Treasurys. 3% is in TLT.

At this time, I am more concerned about potential problems with gold ETFs (like PHYS) than TLT.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Kriegsspiel
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Re: TLT Performance

Postby Kriegsspiel » Sun Nov 12, 2017 12:22 pm

22.21 percent long bonds.

*shrug*
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eufo
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Re: TLT Performance

Postby eufo » Sun Nov 12, 2017 3:31 pm

Tortoise wrote:It’s just market noise. To reassure yourself, look at a graph of the 30-year Treasury yield (^TYX) year-to-date, and over the past 5 years, 10 years, and 30 years. Draw a trend line through it. It’s a steady downhill slope.


As comforting as I wish that were, if you go back further that slope isn't correct anymore. There's a definite peaking of interest rates around 1980 that then trails away into today.

It's an interesting (no pun intended) graph. It follows what you might expect from any bubble. A massive spike up and then an almost equal spike down, followed by a steadily declining value. Did we consider interest rates to be bubbling at the time? I was a mere kid and had no idea about these kinds of things.

I've heard from voices I kind of trust that interest rates won't normalize "because they can't". If this is true then there is no fear in holding long term bonds. But what if we see another spike in rates? Now I want to investigate WHY we saw that spike back in 1980. If anyone here knows off the top of your head, please chime in. :)
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Hal
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Re: TLT Performance

Postby Hal » Mon Nov 13, 2017 3:37 am

eufo wrote:
Tortoise wrote:It’s just market noise. To reassure yourself, look at a graph of the 30-year Treasury yield (^TYX) year-to-date, and over the past 5 years, 10 years, and 30 years. Draw a trend line through it. It’s a steady downhill slope.


As comforting as I wish that were, if you go back further that slope isn't correct anymore. There's a definite peaking of interest rates around 1980 that then trails away into today.

It's an interesting (no pun intended) graph. It follows what you might expect from any bubble. A massive spike up and then an almost equal spike down, followed by a steadily declining value. Did we consider interest rates to be bubbling at the time? I was a mere kid and had no idea about these kinds of things.

I've heard from voices I kind of trust that interest rates won't normalize "because they can't". If this is true then there is no fear in holding long term bonds. But what if we see another spike in rates? Now I want to investigate WHY we saw that spike back in 1980. If anyone here knows off the top of your head, please chime in. :)


From memory, I think it was for the same reason in Australia around that time. It was to stop inflation.
Have a read of this,

http://www.smh.com.au/comment/twentyfiv ... lc9kn.html

Interest rates went up to around 18%, and I had just got a home loan a few years earlier. Great timing. VERY reluctant to get into debt ever again after that experience.....

https://tradingeconomics.com/australia/interest-rate

Edit: Check out the 10 year bond yield in 1982. 16.5 % !
https://tradingeconomics.com/australia/ ... bond-yield
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Cortopassi
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Re: TLT Performance

Postby Cortopassi » Mon Nov 13, 2017 8:15 am

I think there's other things to worry about when you look at something like this, and realize that Italy's long term rate is currently lower than the US! TLT has a long slope still available in falling rates.

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buddtholomew
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Re: TLT Performance

Postby buddtholomew » Wed Nov 15, 2017 12:16 pm

Bastards sold TLT off to re-buy at a lower price. Makes me laugh since I am now up 38% on treasuries...That 1.5% has been erased and then some.
I wish gold would show some fury.

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