The Bond Dream Room

Discussion of the Bond portion of the Permanent Portfolio

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Kriegsspiel
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Re: The Bond Dream Room

Post by Kriegsspiel » Tue Mar 10, 2020 9:24 am

Kbg wrote:
Tue Mar 10, 2020 8:27 am
I will go a bit against standard theory...in times like these active rebalancing can be quite fruitful assuming you are not in a taxable account and you have on OK system for when to rebalance. Yes this is market timing and you will have to actively follow the markets until things chill. When things chill, then go back to bands or annual or whatever system it is you are using for when to rebalance.

Or just stick with what you do which it totally fine.
FWIW, I just sold some of my most vintage bonds that were not quite at the 20 year mark. No big deal. 8)
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. Who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. . . Nothing is better for a man than to eat and drink and enjoy his work.
- Ecclesiastes
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jhogue
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Re: The Bond Dream Room

Post by jhogue » Tue Mar 10, 2020 9:53 am

Kriegsspiel,

If you don't mind my asking, what did you do with the proceeds? Buy 2050 dated T-bonds?? Buy beaten down stocks???
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Kriegsspiel
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Re: The Bond Dream Room

Post by Kriegsspiel » Tue Mar 10, 2020 11:50 am

jhogue wrote:
Tue Mar 10, 2020 9:53 am
Kriegsspiel,

If you don't mind my asking, what did you do with the proceeds? Buy 2050 dated T-bonds?? Buy beaten down stocks???
It's settling into cash; I'll end up buying stocks with some of it.
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. Who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. . . Nothing is better for a man than to eat and drink and enjoy his work.
- Ecclesiastes
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dualstow
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Re: The Bond Dream Room

Post by dualstow » Tue Mar 10, 2020 3:12 pm

Kriegsspiel wrote:
Tue Mar 10, 2020 9:24 am
FWIW, I just sold some of my most vintage bonds that were not quite at the 20 year mark. No big deal. 8)
I sold 10K worth of notes but they were in the VP and I need the cash. Once again, I don't quite understand why I am entitled to accrued interest but I am happy to receive it.
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jhogue
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Re: The Bond Dream Room

Post by jhogue » Tue Mar 10, 2020 10:29 pm

So, what do we do if real interest rates all along the yield curve turn negative?

1. Use the 35% rebalance band:
-Sell some 30 year T bonds if and when they reach that 35% rebalance band. That should generate a nice pile of cash.

2. Use a low interest rate environment to your financial advantage:
-Now would be a terrific time to refinance or pay off your mortgage, if you have one.
-You might also consider accelerating a new car purchase, if you have been thinking about it. Some of our local auto dealers have recently introduced 72 month auto loans at 0.0% interest.
-Pay off all your credit card balances, if you have any.

3. Don’t accept negative real rates, let alone negative nominal rates.
-Start your own bank run: if rates go negative, close your accounts and demand cash. Make liberal use of your safe deposit box.
-Use the 2% Fidelity Credit Card for all your purchases.
-Buy the lagging asset in the HBPP. This will probably be stocks; maybe some gold.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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dualstow
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Re: The Bond Dream Room

Post by dualstow » Wed Mar 11, 2020 7:21 am

^Seems like good advice all around. ^
I wish there were something left that I wanted to spend money on with that 2% card, other than the usual bills.
Even forever stamps are overstocked in this house.
Two out of three Canadians live within about 60 miles of the American border. — NYT
Lenovo To Sell OEM Ubuntu PCs To the Public (Tom's Hardware)
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Re: The Bond Dream Room

Post by jhogue » Wed Mar 11, 2020 9:16 am

I have also thought of upgrading my iPhone, iPad, and MacBook Air. Obviously not the same as building equity in my house, but I think it goes back to my larger points that 1) financial crises also represent opportunity, and 2) we don't have to accept a negative yield in interest rates on Cash.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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dualstow
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Re: The Bond Dream Room

Post by dualstow » Wed Mar 11, 2020 9:30 am

Funny, I want to do that, too, especially before Apple lowers the trade-in rewards even further.
I hope Foxconn is back to work.
Two out of three Canadians live within about 60 miles of the American border. — NYT
Lenovo To Sell OEM Ubuntu PCs To the Public (Tom's Hardware)
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Kriegsspiel
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Re: The Bond Dream Room

Post by Kriegsspiel » Wed Mar 11, 2020 5:45 pm

What the fuck is this ridiculous bullshit
A Fixed Income order to sell U S TREASURY BOND was
canceled in your Vanguard Brokerage Account due to a change in the bid
price available. If you wish to replace the order, you should call Vanguard
at the number referenced below.
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. Who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. . . Nothing is better for a man than to eat and drink and enjoy his work.
- Ecclesiastes
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Re: The Bond Dream Room

Post by dragoncar » Thu Mar 12, 2020 3:39 am

Refis are so popular, everyone raised their rates this week. Nobody can beat my current rate, which is decent (sub-4) but nothing amazing. I guess there is too much demand, not enough processing staff.

I hope it goes lower over the next months, but if coronavirus has a large impact, the supply side might continue to slide due to office closures and sick workers. Appraisal could tank. W2 income could go boom.
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jhogue
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Re: The Bond Dream Room

Post by jhogue » Thu Mar 12, 2020 8:15 am

Mortgage rates follow moves in the current 10 year Treasury interest rate, which is 0.70%. This is a historic low. Bankrate.com latest national survey 15 year mortgage is 3.1%-3.2% .

My mortgage rate has been 0.00% for the last six years. I paid the balance off when I could not find a breakeven refi deal.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Kriegsspiel
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Re: The Bond Dream Room

Post by Kriegsspiel » Thu Mar 12, 2020 8:20 am

dragoncar wrote:
Thu Mar 12, 2020 3:39 am
Refis are so popular, everyone raised their rates this week. Nobody can beat my current rate, which is decent (sub-4) but nothing amazing. I guess there is too much demand, not enough processing staff.

I hope it goes lower over the next months, but if coronavirus has a large impact, the supply side might continue to slide due to office closures and sick workers. Appraisal could tank. W2 income could go boom.
I saw a story where a mortgage company was posting HIGHER RATES THAN THEY WERE ACTUALLY OFFERING on their website to decrease the amount of calls they were getting from rate-hunters. I just can't even.
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. Who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. . . Nothing is better for a man than to eat and drink and enjoy his work.
- Ecclesiastes
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