Does it make sense to buy long bonds now?

Discussion of the Bond portion of the Permanent Portfolio

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

Post by Tortoise » Fri Sep 11, 2020 1:02 pm

mathjak107 wrote:
Fri Sep 11, 2020 7:31 am
interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500
Can you provide a source for your beta calculation?

I looked it up just now, and according to Yahoo Finance, the betas for SPY and TLT are 1.00 and 3.03, respectively. Doesn't that mean TLT's beta is 3x (not 1/3) that of SPY? (I'll admit I know very little about beta. So just let me know if I misunderstood something.)
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Re: Does it make sense to buy long bonds now?

Post by mathjak107 » Fri Sep 11, 2020 1:25 pm

Tortoise wrote:
Fri Sep 11, 2020 1:02 pm
mathjak107 wrote:
Fri Sep 11, 2020 7:31 am
interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500
Can you provide a source for your beta calculation?

I looked it up just now, and according to Yahoo Finance, the betas for SPY and TLT are 1.00 and 3.03, respectively. Doesn't that mean TLT's beta is 3x (not 1/3) that of SPY? (I'll admit I know very little about beta. So just let me know if I misunderstood something.)
morningstar has all the betas on the various funds.

in the case of this portfolio , it is a portfolio i have used for a long time from the fidelity insight newsletter and they calculate it daily .
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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 1:31 pm

mathjak107 wrote:
Fri Sep 11, 2020 1:25 pm
Tortoise wrote:
Fri Sep 11, 2020 1:02 pm
mathjak107 wrote:
Fri Sep 11, 2020 7:31 am
interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500
Can you provide a source for your beta calculation?

I looked it up just now, and according to Yahoo Finance, the betas for SPY and TLT are 1.00 and 3.03, respectively. Doesn't that mean TLT's beta is 3x (not 1/3) that of SPY? (I'll admit I know very little about beta. So just let me know if I misunderstood something.)
morningstar has all the betas on the various funds.

in the case of this portfolio , it is a portfolio i have used for a long time from the fidelity insight newsletter and they calculate it daily .
i can't disclose the current models but this is an old example ...... so nobody use it as the models are different today ......

i have used them since 1987 and used the growth model for decades in my accumulation stage . in retirement i use the income model ... if we have a nice drop i will put money in the more aggressive models but not at the point we are in now

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

Post by Tortoise » Fri Sep 11, 2020 1:45 pm

mathjak107 wrote:
Fri Sep 11, 2020 1:25 pm
morningstar has all the betas on the various funds.

in the case of this portfolio , it is a portfolio i have used for a long time from the fidelity insight newsletter and they calculate it daily .
It sounds like we're talking about different things here. I'm talking about LTTs (e.g., TLT), but you are talking about some kind of portfolio.

When you said, "interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500", I thought you were saying that LTTs aren't nearly as volatile as stocks (S&P 500) right now. But as I pointed out, the beta of TLT is 3x that of SPY, implying that LTTs are currently much more volatile than stocks.
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Re: Does it make sense to buy long bonds now?

Post by mathjak107 » Fri Sep 11, 2020 2:18 pm

Tortoise wrote:
Fri Sep 11, 2020 1:45 pm
mathjak107 wrote:
Fri Sep 11, 2020 1:25 pm
morningstar has all the betas on the various funds.

in the case of this portfolio , it is a portfolio i have used for a long time from the fidelity insight newsletter and they calculate it daily .
It sounds like we're talking about different things here. I'm talking about LTTs (e.g., TLT), but you are talking about some kind of portfolio.

When you said, "interest rate sensitivity is very low now ... stocks sill in the 25% range. beta runs 1/3 the volatility of the s&p 500", I thought you were saying that LTTs aren't nearly as volatile as stocks (S&P 500) right now. But as I pointed out, the beta of TLT is 3x that of SPY, implying that LTTs are currently much more volatile than stocks.
no , i sold all long term bonds the other day ... instead i am using the insight portfolio and keeping the gold from the pp.... so i own a different bond component and the same 25% in equities and same 25% in gold and 25% in cash proxies .

to much risk in TLT at this stage for my taste
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Re: Does it make sense to buy long bonds now?

Post by johnnywitt » Sat Sep 12, 2020 1:12 pm

Hal wrote:
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 ???
Hal, thanks so much for the Links. I was aware of the Anthony Dedan interview on RV and had watched it when it came out last year, but I was unaware of Edelweiss & Belangp.
So, are you still running a PP for your core portfolio and only running the Belangp Portfolio in your VP?

Again, thanks for the Links.
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Re: Does it make sense to buy long bonds now?

Post by amdda01 » Thu Sep 17, 2020 2:16 pm

no , i sold all long term bonds the other day ... instead i am using the insight portfolio and keeping the gold from the pp.... so i own a different bond component and the same 25% in equities and same 25% in gold and 25% in cash proxies .

to much risk in TLT at this stage for my taste
MJ,

Just curious - What would it take to bring ya back to TLT?
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Re: Does it make sense to buy long bonds now?

Post by mathjak107 » Thu Sep 17, 2020 5:14 pm

at least 2 to 2-1/2% in rates and even then I need to evaluate..it was a 40 year drop to get here ....the return trip back up may not stop for quite a long time .
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Re: Does it make sense to buy long bonds now?

Post by doodle » Tue Oct 13, 2020 9:41 am

mathjak107 wrote:
Thu Sep 17, 2020 5:14 pm
at least 2 to 2-1/2% in rates and even then I need to evaluate..it was a 40 year drop to get here ....the return trip back up may not stop for quite a long time .
I don't see how we get back to higher rates at all considering the amount of debt in system and the way asset prices are tied to low rates. A reversal especially a quick one would be brutal and politically unconscionable. After all, everything is on government life support these days. There is no free market.
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Re: Does it make sense to buy long bonds now?

Post by mathjak107 » Tue Oct 13, 2020 9:44 am

doodle wrote:
Tue Oct 13, 2020 9:41 am
mathjak107 wrote:
Thu Sep 17, 2020 5:14 pm
at least 2 to 2-1/2% in rates and even then I need to evaluate..it was a 40 year drop to get here ....the return trip back up may not stop for quite a long time .
I don't see how we get back to higher rates at all considering the amount of debt in system and the way asset prices are tied to low rates. A reversal especially a quick one would be brutal and politically unconscionable. After all, everything is on government life support these days. There is no free market.
bond investors will want more yield to take the risk with bonds ..at the end of the day it is the worlds bond investors that decide what is proper compensation.

there is little compelling argument when yields are 1.50% going out 30 years and the fed says their target is 2-3% inflation .
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Re: Does it make sense to buy long bonds now?

Post by doodle » Tue Oct 13, 2020 10:00 am

mathjak107 wrote:
Tue Oct 13, 2020 9:44 am
doodle wrote:
Tue Oct 13, 2020 9:41 am
mathjak107 wrote:
Thu Sep 17, 2020 5:14 pm
at least 2 to 2-1/2% in rates and even then I need to evaluate..it was a 40 year drop to get here ....the return trip back up may not stop for quite a long time .
I don't see how we get back to higher rates at all considering the amount of debt in system and the way asset prices are tied to low rates. A reversal especially a quick one would be brutal and politically unconscionable. After all, everything is on government life support these days. There is no free market.
bond investors will want more yield to take the risk with bonds ..at the end of the day it is the worlds bond investors that decide what is proper compensation.

there is little compelling argument when yields are 1.50% going out 30 years and the fed says their target is 2-3% inflation .
Is it? Or does the Fed control rates? There is some debate to how much influence they can exert on long end of curve but the do have the ability theoretically to ensure auctions never fail.

Europe and Japan are negative now. Why not us next?
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Re: Does it make sense to buy long bonds now?

Post by doodle » Tue Oct 13, 2020 10:03 am

To me it seems we are employing this same stupid policy.

https://www.investopedia.com/articles ... japan.asp
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