TLT - Why Is Income from Govt Obligations so LOW?

Discussion of the Bond portion of the Permanent Portfolio

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shoestring
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by shoestring » Thu Mar 01, 2012 8:25 am

I have to echo that last sentiment.  I have followed this thread with great interest as a TLT holder.  Now I'm suddenly not feeling so smart for holding TLT.

Damn.  I love one stop shopping.  How hard is it to just buy a basket of long treasuries, sit on them, and skim fees off of people like me?  Seems like good pay for little work.

Direct holdings for some portion, and investigation of perhaps VGLT and/or EDV (volatility capture) for the rest, seem to be the recourse at the moment.

I hate when I lose faith in a consumer product.  I wonder if TLT/VGLT are different enough (I think they are but the IRS might not) you could at least do some tax loss harvesting.
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craigr
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by craigr » Thu Mar 01, 2012 11:32 am

WildAboutHarry wrote:
CraigR wrote:Yes the benefit of the fund is you deposit your money and get end of day closing price. No need to worry about bid-ask spreads, commissions, etc. For someone in the Permanent Portfolio there is so little trading that the intra-day pricing of ETFs is not an advantage anyway.
I agree and much prefer funds to ETFs for all of the obvious reasons.

One problem with modern investing in general is there are too many damn choices.  

For example, Vanguard came out with free ETFs in their accounts, so off I went to ETFs.  A short time later -- listen to the paranoia creep in -- they offered many of the same funds as Admiral shares at $10K minimums.  So now I am stuck with ETFs when I really want to be in funds.  And it takes three days to unwind an ETF position to get back into funds at Vanguard.

Go figure.
Of the ETFs, the Vanguard ones are least likely to have problems. IMO. They are just shares of the main fund. So I wouldn't worry about what you have. However I would not put in automatic stop limit orders on them just in case we get Flash Crash 2.0. If there is some kind of serious problem in the market you want to be able to evaluate the situation yourself and not have some automated tools doing things for you.

But with that said, the iShares are pretty decent as well and are getting a good track record. I am not thrilled with what is happening in TLT, but then you look at Vanguard's Treasury funds and they have a decent percent (now around 13%) in mortgages. The number had even been higher in the past. They may also enter into repo agreements that could generate non-treasury income as well at their discretion.

Really the only way to avoid the decisions of bond fund managers is to be your own bond fund manager and just buy the things directly. I wish it weren't the case, but sadly it just is.
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by murphy_p_t » Fri Mar 02, 2012 12:44 am

craigr wrote: However I would not put in automatic stop limit orders on them just in case we get Flash Crash 2.0. If there is some kind of serious problem in the market you want to be able to evaluate the situation yourself and not have some automated tools doing things for you.

if we're doing PP...maybe we should have a buy order for VTI...way under the current trading price?
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by steve » Fri Mar 02, 2012 7:41 am

I personally like ETF's better then funds. When I buy something or sell something I like knowing how much I am buying and how much I am paying. I hardly ever trade and funds would work also but I like interday pricing.
I do not worry about a flash crash. If anything I could use it to my advantage.
With VTI for example the bid -ask spread is very tight and there is no commission if you are a Vanguard client.
The reason I like GTU for part of Gold holding is that it is a fund and trades with interday pricing so it is the best of both worlds.
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by WildAboutHarry » Fri Mar 02, 2012 8:57 am

steve wrote:I personally like ETF's better then funds. When I buy something or sell something I like knowing how much I am buying and how much I am paying. I hardly ever trade and funds would work also but I like interday pricing.
A nice but minor factor in favor of funds is buying fractional shares.  If I have $5,000 I can buy $5,000 worth of a fund.  Can't do that with ETFs.
It is the settled policy of America, that as peace is better than war, war is better than tribute.  The United States, while they wish for war with no nation, will buy peace with none"  James Madison
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by steve » Fri Mar 02, 2012 2:12 pm

WildAboutHarry wrote:
steve wrote:I personally like ETF's better then funds. When I buy something or sell something I like knowing how much I am buying and how much I am paying. I hardly ever trade and funds would work also but I like interday pricing.
A nice but minor factor in favor of funds is buying fractional shares.  If I have $5,000 I can buy $5,000 worth of a fund.  Can't do that with ETFs.
It great that there are both funds and ETFs so everyone can get what they like. For me I like the fact that with the click of refresh all on my spread sheet I can see the value of my holdings anytime. Other information  I like to see is my percent increase or decrease from my last rebalance point, year to date etc. and other usefull information for example if I need to rebalance how much, it also shows me what GTU premium or discount is and I can do it anytime. I feel like I can make better decisions knowing where I stand at all times.
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by AgAuMoney » Fri Mar 02, 2012 5:04 pm

WildAboutHarry wrote:A nice but minor factor in favor of funds is buying fractional shares.  If I have $5,000 I can buy $5,000 worth of a fund.  Can't do that with ETFs.
Yes you can.  Fractional shares in ETFs and stocks and CEFs are entirely up to your broker.

I do fractional shares in ShareBuilder (was ING, now Capital One).
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WildAboutHarry
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by WildAboutHarry » Fri Mar 02, 2012 7:28 pm

AgAuMoney wrote:Yes you can.  Fractional shares in ETFs and stocks and CEFs are entirely up to your broker.
I know you can reinvest dividends into fractional ETF shares, but can you buy them?  i.e., buy an even $100 (or $1,000, or $10,000)?
It is the settled policy of America, that as peace is better than war, war is better than tribute.  The United States, while they wish for war with no nation, will buy peace with none"  James Madison
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by AgAuMoney » Fri Mar 02, 2012 11:18 pm

WildAboutHarry wrote:
AgAuMoney wrote:Yes you can.  Fractional shares in ETFs and stocks and CEFs are entirely up to your broker.
I know you can reinvest dividends into fractional ETF shares, but can you buy them?  i.e., buy an even $100 (or $1,000, or $10,000)?
Yes.  And not just ETFs but regular company shares, partnership shares, most every ticker symbol.  (When sharebuilder first started they had a pretty short list of tickers you could buy, but it is nearly comprehensive now.)
Last edited by AgAuMoney on Fri Mar 02, 2012 11:21 pm, edited 1 time in total.
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WildAboutHarry
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by WildAboutHarry » Sat Mar 03, 2012 8:08 am

AgAuMoney wrote:Yes.  And not just ETFs but regular company shares, partnership shares, most every ticker symbol.  (When sharebuilder first started they had a pretty short list of tickers you could buy, but it is nearly comprehensive now.)
Alas, not at Vanguard.
It is the settled policy of America, that as peace is better than war, war is better than tribute.  The United States, while they wish for war with no nation, will buy peace with none"  James Madison
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by murphy_p_t » Thu Mar 08, 2012 2:39 am

is the concern with TLT also applicable to SHY/SHV?
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WildAboutHarry
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Re: TLT - Why Is Income from Govt Obligations so LOW?

Post by WildAboutHarry » Fri Mar 09, 2012 7:40 am

Yes
It is the settled policy of America, that as peace is better than war, war is better than tribute.  The United States, while they wish for war with no nation, will buy peace with none"  James Madison
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