EternalVoyage wrote: ↑Wed Apr 20, 2022 11:51 am
Thanks for the replies. I did some back testing and long term treasuries seem to have diminishing returns:
cagr
8.02 last 50 years
9.07 last 40 years
6.65 last 30 years
5.89 last 20 years
3.21 last 10 years
Curious if these returns are adjusted for inflation or not. Obviously inflation was really high 50 years ago and just starting to really come down 40 years ago.
My issue with 30-year bonds is that when the interest rate is already low, they are unable to significantly help a portfolio in a
sustained way. Their ability to smooth out returns in the PP seems to me to come from short bursts of great performance that have coincided with crashing stocks. So in late 2008, LTTs went up about 30% a few weeks after stocks started to crash. But that out performance was short lived. To really take advantage of it, one would have had to have sold LTTs and bought stocks at the correct moment in time. Similarly in March of 2020 when the bottom was falling out of the stock market and before the government provided massive liquidity, there was another dramatic rally in LTTs. Again, a huge plus if one got the timing right of selling their bonds and buying depressed stocks.
There was an accumulating poster on here years ago who didn't hold either cash or LTTs & just went with stocks & gold.
Anyway, I hope you get something figured out that you are content with.