TBills as "the best horse at the glue factory?"

Discussion of the Bond portion of the Permanent Portfolio

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Kevin K.
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TBills as "the best horse at the glue factory?"

Post by Kevin K. » Wed Sep 21, 2022 11:12 am

Good post on Tipswatch about how to take advantage of the best short-term Treasury rates since 2007. Still losing ~5% to inflation but considering what's happening to every other asset class they may well be the least worse investment of 2022.

https://tipswatch.com/2022/09/21/short- ... ctive-now/
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Re: TBills as "the best horse at the glue factory?"

Post by vnatale » Wed Sep 21, 2022 11:52 am

Good one! Thanks!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: TBills as "the best horse at the glue factory?"

Post by jhogue » Wed Sep 21, 2022 12:10 pm

Kevin K. wrote:
Wed Sep 21, 2022 11:12 am
Good post on Tipswatch about how to take advantage of the best short-term Treasury rates since 2007. Still losing ~5% to inflation but considering what's happening to every other asset class they may well be the least worse investment of 2022.

https://tipswatch.com/2022/09/21/short- ... ctive-now/
Capital preservation always seems boring --- until it's not.

Then it can seem utterly terrifying.
“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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Re: TBills as "the best horse at the glue factory?"

Post by vnatale » Wed Sep 21, 2022 12:37 pm

jhogue wrote:
Wed Sep 21, 2022 12:10 pm

Kevin K. wrote:
Wed Sep 21, 2022 11:12 am

Good post on Tipswatch about how to take advantage of the best short-term Treasury rates since 2007. Still losing ~5% to inflation but considering what's happening to every other asset class they may well be the least worse investment of 2022.

https://tipswatch.com/2022/09/21/short- ... ctive-now/


Capital preservation always seems boring --- until it's not.

Then it can seem utterly terrifying.


As always underlined by your tagline!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: TBills as "the best horse at the glue factory?"

Post by dualstow » Wed Sep 21, 2022 5:01 pm

My wife is young enough that I will still recommend stocks.
For me, those 4% t-bills look like juicy t-bones.
Let 2022 be the year of— oh screw it. GOLD is on sale
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Re: TBills as "the best horse at the glue factory?"

Post by barrett » Thu Sep 22, 2022 5:08 am

Coincidentally, I set up a four-rung, one-year T-Bone ladder at the beginning of July and will be able to buy some juicy 4%(ish) one-year Bones at the end of September. I did see on Fidelity's site just now that CD yields have caught up to and even passed the Bone yields for some issues. I plan to keep doing this for a while as it seems unlikely the Fed will stop raising rates overnight.

So the big question (as the Meatwatch article alludes to) is when to start unwinding this strategy by either buying longer dated Bones or switching to CDs, or both.

Of course, as rates keep going up, the existing Bones go down in price for a while so one has to just be able to ignore that.
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Re: TBills as "the best horse at the glue factory?"

Post by dualstow » Thu Sep 22, 2022 1:20 pm

barrett wrote:
Thu Sep 22, 2022 5:08 am
Coincidentally, I set up a four-rung, one-year T-Bone ladder at the beginning of July
...

Mmm, T-Bone ladder. 🥩
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Re: TBills as "the best horse at the glue factory?"

Post by seajay » Thu Sep 22, 2022 7:14 pm

dualstow wrote:
Thu Sep 22, 2022 1:20 pm
barrett wrote:
Thu Sep 22, 2022 5:08 am
Coincidentally, I set up a four-rung, one-year T-Bone ladder at the beginning of July
...

Mmm, T-Bone ladder. 🥩
For stability/consistency a four-rung 7 day ladder of T-Bone's, rolling 28 day maturity. Mmm! In contrast steaks in general are far more volatile, sometimes good, sometimes bad. Feed off the steaks when they're good, fallback to feeding off the T-Bones when steaks in general are poor.

Harry Browne liked a Golden Tomahawk - steak coated with 24 carat gold. So good taste in one respect. But he also liked a combination of short and very long maturity T-Bones, however some dislike such extreme long maturities - consider them to be too jerky, and until more recently, considered overpriced given such low rates of interest.
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Re: TBills as "the best horse at the glue factory?"

Post by dualstow » Thu Sep 22, 2022 8:18 pm

This is Grade A, A-1 advice. Very rare these days.
Well done.
Let 2022 be the year of— oh screw it. GOLD is on sale
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Re: TBills as "the best horse at the glue factory?"

Post by barrett » Fri Sep 23, 2022 7:09 am

Excellent seajay! You've given me and dualstow a well-done prime ribbing!

It's very interesting to see how Treasury rates are bouncing all over the place the last 24 hours or so. I say "interesting" because people are always talking about how these thoroughly anticipated rate increases are already "priced in" before the hikes happen. I'm no bond expert but that just doesn't seem to be the case. I mean, the only question going into this week's Fed meeting was whether interest rates would rise 3/4 of a point or a full point, right?

I see that the author of the Tipswatch piece has gotten his wish for a 4% yield on the 5-year. The Fido website shows it at 4.04% at the moment,

I guess the bouncing around is related to what Jerome Powell was saying afterward. I only watched a bit but he was pretty clear that one of the things the Fed is trying to accomplish is to cool off the housing market. That will get a lot of people's attention in a hurry. He also talked about trying to set the US up for another 10-year period of growth.

I'm going T-Bone shopping next Friday.
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Re: TBills as "the best horse at the glue factory?"

Post by dualstow » Fri Sep 23, 2022 12:07 pm

Bought some 3-month T-bills in my Roth IRA today. I'm used to buying 1-YR or longer out. This is the first time the yield on such a short term looked attractive to me.
Still nibbling at stocks in the taxable account.
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Re: TBills as "the best horse at the glue factory?"

Post by Cortopassi » Tue Sep 27, 2022 12:58 pm

Good meat puns/references!

I have bought i-bonds in the past, but just bought my first 13 week t bill at Treasury Direct.

dualstow, what broker and what commissions and are you happy with them? I need to do the same, my IRAs are at Ally, and they charge $1 per bond, $10 minium, which is why I went to Treasury Direct for my first buy, but can't do it for the IRA. Not sure if those commission are industry standard....
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Re: TBills as "the best horse at the glue factory?"

Post by vnatale » Tue Sep 27, 2022 1:04 pm

Cortopassi wrote:
Tue Sep 27, 2022 12:58 pm

Good meat puns/references!

I have bought i-bonds in the past, but just bought my first 13 week t bill at Treasury Direct.

dualstow, what broker and what commissions and are you happy with them? I need to do the same, my IRAs are at Ally, and they charge $1 per bond, $10 minium, which is why I went to Treasury Direct for my first buy, but can't do it for the IRA. Not sure if those commission are industry standard....


I am almost certain that Vanguard does not charge anything. I will soon learn for certain in the next week or two.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: TBills as "the best horse at the glue factory?"

Post by dualstow » Tue Sep 27, 2022 1:30 pm

Cortopassi wrote:
Tue Sep 27, 2022 12:58 pm

dualstow, what broker and what commissions and are you happy with them? I need to do the same, my IRAs are at Ally, and they charge $1 per bond, $10 minium, which is why I went to Treasury Direct for my first buy, but can't do it for the IRA. Not sure if those commission are industry standard....
In this case, Vanguard. I have bought Treasuries at Fidelity, too. On bogleheads there are some grumblings that you don’t get a good deal at Fidelity, but I haven’t noticed. They’re both a lot more pleasant than treasury direct.

In both places, zero commissions paid.

Sophie used to post a lot about the yield choices on the secondary market. I generally buy at auction and take what the river gives me, but if i don’t want to wait for an auction to come up, I’ll just search for the right maturity and pick something.

I cannot see the Vanguard bonds if I use my ipad mini— the page just comes up as a mostly blank screen. I think that’s because they use a third party, and Vanguard’s site is pretty antiquated. But, maybe it’s just not made for small devices that use the web and not an app. No big deal. I get it done on my desktop.

I am unhappy about Vanguard’s recent site changes, but I’m still content with the bond buying process. It’s great not having to use a human broker. And selling is even easier. I use Treasury Direct for savings bonds and of I-Bonds because I have to.
Let 2022 be the year of— oh screw it. GOLD is on sale
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Re: TBills as "the best horse at the glue factory?"

Post by Cortopassi » Tue Sep 27, 2022 1:40 pm

Thanks!

Quick survey:

Ally, Fidelity: $1 per bond commission
Vanguard, Schwab: $0 per bond

Both for both new and secondary issues.
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Re: TBills as "the best horse at the glue factory?"

Post by Cortopassi » Tue Sep 27, 2022 2:55 pm

So I'm trying to decide mentally if that $1 is worth moving my accounts for?

With a face value of $1000 per bill, if I trade $100k of 13 week t-bills, that's $100 commission every 13 weeks.

$100k of 13 week bills will payout (math ok?) about .0313/4*100k = $782.50 in a 3 month period.

And I will lose $100 of that each time? 12.7%? That right now seems nuts, and worthy of changing brokers.
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Re: TBills as "the best horse at the glue factory?"

Post by vnatale » Tue Sep 27, 2022 3:02 pm

Cortopassi wrote:
Tue Sep 27, 2022 2:55 pm

So I'm trying to decide mentally if that $1 is worth moving my accounts for?

With a face value of $1000 per bill, if I trade $100k of 13 week t-bills, that's $100 commission every 13 weeks.

$100k of 13 week bills will payout (math ok?) about .0313/4*100k = $782.50 in a 3 month period.

And I will lose $100 of that each time? 12.7%? That right now seems nuts, and worthy of changing brokers.


My frugal self would definitely do it.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: TBills as "the best horse at the glue factory?"

Post by dualstow » Tue Sep 27, 2022 3:11 pm

Cortopassi wrote: Ally, Fidelity: $1 per bond commission
if you’re just talking t-bills, Fidelity should be free. I think the $1 per bond is for CDs and non-treasury bonds.
https://www.fidelity.com/trading/commis ... rgin-rates
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Re: TBills as "the best horse at the glue factory?"

Post by Cortopassi » Tue Sep 27, 2022 3:31 pm

dualstow wrote:
Tue Sep 27, 2022 3:11 pm
Cortopassi wrote: Ally, Fidelity: $1 per bond commission
if you’re just talking t-bills, Fidelity should be free. I think the $1 per bond is for CDs and non-treasury bonds.
https://www.fidelity.com/trading/commis ... rgin-rates
You are correct, thanks!

Any opinions out there on Fidelity vs. Schwab vs. Vanguard?

Some reading of reviews leads me toward Fidelity....

Much appreciated.
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Re: TBills as "the best horse at the glue factory?"

Post by vnatale » Tue Sep 27, 2022 5:48 pm

Cortopassi wrote:
Tue Sep 27, 2022 3:31 pm

dualstow wrote:
Tue Sep 27, 2022 3:11 pm

Cortopassi wrote:
Ally, Fidelity: $1 per bond commission


if you’re just talking t-bills, Fidelity should be free. I think the $1 per bond is for CDs and non-treasury bonds.
https://www.fidelity.com/trading/commis ... rgin-rates


You are correct, thanks!

Any opinions out there on Fidelity vs. Schwab vs. Vanguard?

Some reading of reviews leads me toward Fidelity....

Much appreciated.


I have been exclusively with Vanguard since the 80s (though there was some Schwab in there also for some years). You'd think I'd be biased towards Vanguard but for not a short time period now I've NOT been impressed with their service.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: TBills as "the best horse at the glue factory?"

Post by Cortopassi » Tue Sep 27, 2022 6:32 pm

I opened accounts at Fidelity and am starting the transfer process. $100 cash bonus for each account, which I won't complain about.

My in-laws use Vanguard and I help them from time to time. There are certain things I immediately did not like. And whenever my mother in law calls, it is a 45 minute+ experience with them.
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Re: TBills as "the best horse at the glue factory?"

Post by vnatale » Tue Sep 27, 2022 6:35 pm

Cortopassi wrote:
Tue Sep 27, 2022 6:32 pm

I opened accounts at Fidelity and am starting the transfer process. $100 cash bonus for each account, which I won't complain about.

My in-laws use Vanguard and I help them from time to time. There are certain things I immediately did not like. And whenever my mother in law calls, it is a 45 minute+ experience with them.


What things do you not like?

They used to have something wherein if you had a certain amount of money with them you got your own dedicated representative. Sometime in the past few years that went by the wayside.

I also think that their wait times have gotten longer? Any other Vanguard people experiencing that?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: TBills as "the best horse at the glue factory?"

Post by Cortopassi » Tue Sep 27, 2022 8:51 pm

vnatale wrote:
Tue Sep 27, 2022 6:35 pm

What things do you not like?
They have a joint account that need beneficiaries assigned, but have some rule or reason against being able to do that, or any kind of transfer on death.

There doesn't seem to be any easy way around it other than making two individual accounts and splitting the money.
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Re: TBills as "the best horse at the glue factory?"

Post by vnatale » Tue Sep 27, 2022 9:09 pm

Cortopassi wrote:
Tue Sep 27, 2022 8:51 pm

vnatale wrote:
Tue Sep 27, 2022 6:35 pm


What things do you not like?



They have a joint account that need beneficiaries assigned, but have some rule or reason against being able to do that, or any kind of transfer on death.

There doesn't seem to be any easy way around it other than making two individual accounts and splitting the money.


I know that Mathjak was quite upset with them regarding what they did with beneficiary assignments.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: TBills as "the best horse at the glue factory?"

Post by dualstow » Tue Sep 27, 2022 9:57 pm

I should split this to a Vanguard thread.

I have an assigned beneficiary. Vanguard made some changes and my listed beneficiary disappeared. I was able to re-add her, but what bothered me was that they didn’t even bother to tell me that they had caused this or that I needed to take action. These things supposedly supersede a will, so a heads up would have been nice.
Let 2022 be the year of— oh screw it. GOLD is on sale
Is Dilbert really being canceled from newspapers?
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