Does it make sense to buy long bonds now?

Discussion of the Bond portion of the Permanent Portfolio

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sfaludi
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Does it make sense to buy long bonds now?

Post by sfaludi » Thu Sep 10, 2020 12:29 pm

The 30 year treasury bond presently yield about 1.5% - which is well below inflation.

The value of these bonds will drop if and when interest rates are allowed to normalize, and rise only if investors accept larger negative effective interest rates,

What is the point if buying these bonds now?

The only good reason I see for holding these bonds now is the tax consequences on unrealized gains.

PS: I have been doing PP for years and +40% on TLT.
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mathjak107
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Re: Does it make sense to buy long bonds now?

Post by mathjak107 » Thu Sep 10, 2020 2:22 pm

I lightened up a lot on them ...I am in the Bridgewater camp here ...they sold off their position in Tlt .....

Rates have a very limited down side and the only power the fed will have is spending to reflate us ...that is not good for long term bonds at all
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Cortopassi
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Re: Does it make sense to buy long bonds now?

Post by Cortopassi » Thu Sep 10, 2020 4:13 pm

sfaludi wrote:
Thu Sep 10, 2020 12:29 pm
The value of these bonds will drop if and when interest rates are allowed to normalize
What is normalized? Hah. The US will blow up if that happens.

I see negative rates more than higher rates in our future.

This says current inflation rate is 1%?

https://www.usinflationcalculator.com/i ... ion-rates/
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mathjak107
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Re: Does it make sense to buy long bonds now?

Post by mathjak107 » Thu Sep 10, 2020 6:23 pm

There likely will be no choice as the govt spends to reinflate us and inflation rises when they can’t lower rates any more .....I think rising inflation is inevitable .....

Just the mere fact that the fed said they will let inflation spike higher sent chills through the long term bond market ...I think Tlt lost 5% since that announcement
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Cortopassi
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Re: Does it make sense to buy long bonds now?

Post by Cortopassi » Thu Sep 10, 2020 7:12 pm

mathjak107 wrote:
Thu Sep 10, 2020 6:23 pm
There likely will be no choice as the govt spends to reinflate us and inflation rises when they can’t lower rates any more .....I think rising inflation is inevitable .....

Just the mere fact that the fed said they will let inflation spike higher sent chills through the long term bond market ...I think Tlt lost 5% since that announcement
He announced that Aug 27th

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Re: Does it make sense to buy long bonds now?

Post by boglerdude » Thu Sep 10, 2020 11:54 pm

What have investors been doing in germany and Japan?
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mathjak107
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Re: Does it make sense to buy long bonds now?

Post by mathjak107 » Fri Sep 11, 2020 5:25 am

tlt is down about 3% the last month and about 9% off its high of 179.70 , so rates have clearly risen .
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europeanwizard
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Re: Does it make sense to buy long bonds now?

Post by europeanwizard » Fri Sep 11, 2020 6:16 am

boglerdude wrote:
Thu Sep 10, 2020 11:54 pm
What have investors been doing in germany
We're confused and don't know what to do:
viewtopic.php?f=3&t=10957
viewtopic.php?t=9082
viewtopic.php?f=1&t=9770&p=172861#p172861

As a European, I'm on the verge of dumping my bonds and thus leaving the Permanent Portfolio. But I don't know what else to do, except stay in cash. And I don't mean cash in the sense of a money market funds, that ship has long since sailed.
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Hal
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Re: Does it make sense to buy long bonds now?

Post by Hal » Fri Sep 11, 2020 7:26 am

europeanwizard wrote:
Fri Sep 11, 2020 6:16 am
boglerdude wrote:
Thu Sep 10, 2020 11:54 pm
What have investors been doing in germany
We're confused and don't know what to do:
viewtopic.php?f=3&t=10957
viewtopic.php?t=9082
viewtopic.php?f=1&t=9770&p=172861#p172861

As a European, I'm on the verge of dumping my bonds and thus leaving the Permanent Portfolio. But I don't know what else to do, except stay in cash. And I don't mean cash in the sense of a money market funds, that ship has long since sailed.
My pennies worth.....

If you are going to leave the PP, then
1. Watch: https://www.youtube.com/watch?v=a4_U6bS-cU4
2. Read: https://edelweissjournal.com
3. Consider a portfolio like this: https://www.youtube.com/watch?v=E0GQ1Gx8YCw

I am actually running a variable portfolio similar to this. So far so good ???
Aussie GoldSmithPP - 25% PMGOLD, 75% VDCO
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mathjak107
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Re: Does it make sense to buy long bonds now?

Post by mathjak107 » Fri Sep 11, 2020 7:31 am

i sold off all of TLT now . kept gold but at a reduced level (250k)

bonds are short term treasuries , a total bond fund , a bit of an actively managed high income fund and an ultra conservative bond fund .

interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500
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Re: Does it make sense to buy long bonds now?

Post by amdda01 » Fri Sep 11, 2020 9:09 am

mathjak107 wrote:
Fri Sep 11, 2020 7:31 am
i sold off all of TLT now . kept gold but at a reduced level (250k)
MJ,
Double-checking - Are you saying you have absolutely no TLT in your portfolio now?
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mathjak107
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Re: Does it make sense to buy long bonds now?

Post by mathjak107 » Fri Sep 11, 2020 12:27 pm

amdda01 wrote:
Fri Sep 11, 2020 9:09 am
mathjak107 wrote:
Fri Sep 11, 2020 7:31 am
i sold off all of TLT now . kept gold but at a reduced level (250k)
MJ,
Double-checking - Are you saying you have absolutely no TLT in your portfolio now?
none as of yesterday ... risks far out weigh any likely gain potential ... i am in the bridgewater camp on this ..they dumped 290 million of tlt .....
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