Treasurys for Sale

Discussion of the Bond portion of the Permanent Portfolio

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dualstow
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Treasurys for Sale

Post by dualstow » Fri Nov 22, 2019 9:20 am

Auction, Vanguard, Friday, November 22, 2019
treasury auction this morning
treasury auction this morning
Screen Shot 2019-11-22 at 10.18.33 AM.png (92.83 KiB) Viewed 485 times
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mukramesh
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Re: Treasurys for Sale

Post by mukramesh » Fri Nov 22, 2019 12:22 pm

Is there any advantage to buying at auction rather than the secondary market?
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Re: Treasurys for Sale

Post by dualstow » Fri Nov 22, 2019 12:28 pm

mukramesh wrote:
Fri Nov 22, 2019 12:22 pm
Is there any advantage to buying at auction rather than the secondary market?
This has come up once or twice. The first time it ended with someone writing, "I guess some people just like that new bond smell."
The second time, I think someone said there may be a slight bargain in it over time.
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Re: Treasurys for Sale

Post by Tortoise » Mon Nov 25, 2019 1:17 am

The Treasury market is very liquid, so I doubt there’s much of an advantage of auction over secondary market.

If such an advantage existed, it would quickly get arbitraged away by big financial institutions.
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Re: Treasurys for Sale

Post by Kbg » Mon Nov 25, 2019 9:26 am

Main disadvantage...a small spread you will pay both ways and potentially a commission to pay

Main advantage...you can sell them before they mature
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Re: Treasurys for Sale

Post by dualstow » Mon Nov 25, 2019 12:12 pm

Kbg wrote:
Mon Nov 25, 2019 9:26 am
Main disadvantage...a small spread you will pay both ways and potentially a commission to pay

Main advantage...you can sell them before they mature
I don't understand. What treasuries can you not sell before they mature?
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Re: Treasurys for Sale

Post by Kbg » Mon Nov 25, 2019 1:53 pm

Secondary market you can buy and sell at will. So while you can buy on the primary market via your broker or TDirect, you can only sell early via the secondary market with a spread/and maybe a commission before maturity. If you buy on TD you have to wait until maturity or transfer the bills/notes to another account (brokerage) and then sell on the secondary market.
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Re: Treasurys for Sale

Post by dualstow » Mon Nov 25, 2019 3:11 pm

Weird. I've sold at Vanguard a few times for free. If anything the price may be affected by the very small number of notes that I hold (opposite of a volume discount), but no fees. Sold at Fidelity, too.

I hold most to maturity and only plan to sell long bonds early, per Harry's and now Craig's instructions.
So far so good.
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Re: Treasurys for Sale

Post by Kbg » Mon Nov 25, 2019 6:04 pm

I can guarantee you, if you are selling a bond before maturity you are paying a spread even if it is not visible to you. For those with larger accounts, commissions are usually not your largest cost of trade.
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Re: Treasurys for Sale

Post by dualstow » Mon Nov 25, 2019 7:10 pm

Kbg wrote:
Mon Nov 25, 2019 6:04 pm
I can guarantee you, if you are selling a bond before maturity you are paying a spread even if it is not visible to you. For those with larger accounts, commissions are usually not your largest cost of trade.
Why would that be dictated by whether you bought at auction or on the secondary market?
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Re: Treasurys for Sale

Post by Kbg » Mon Nov 25, 2019 9:40 pm

I'll leave the googling/self-education up to you. It's easy enough to find.
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Re: Treasurys for Sale

Post by dualstow » Tue Nov 26, 2019 9:01 am

Kbg wrote:
Mon Nov 25, 2019 9:40 pm
I'll leave the googling/self-education up to you. It's easy enough to find.
Hmm, so far I see this obvious part,
some website wrote:When you sell a bond before maturity, you may get more or less than you paid for it. If interest rates have risen since the bond was purchased, its value will have declined. If rates have declined, the bond’s value will have increased.
but I'll keep digging.

...
I see this - https://investor.vanguard.com/investing ... ary-market
which says there's no bid-ask spread for buying in the primary market (yup)

but nothing about selling a bond before maturity that was bought at auction vs one that was already used when you bought it.

Well, I'm not going to worry about it.
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