The Bond Dream Room

Discussion of the Bond portion of the Permanent Portfolio

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dualstow
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Re: The Bond Dream Room

Post by dualstow » Tue Mar 23, 2021 3:02 pm

I was looking up the price of TLT at CNBC and the search also produced a video clip of Dan Nathan recommending buying TLT as his "Last Chance Trade." Now, I don't know how long he meant for traders to hold it, but I noticed the date of the clip was not today but early February. And then I noticed it was 2020. O0
traveling...
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Re: The Bond Dream Room

Post by Kbg » Wed Mar 31, 2021 7:57 am

Not so dreamy these days on the long side. Down over 23%, worst since the 80s.
Last edited by Kbg on Wed Mar 31, 2021 1:22 pm, edited 1 time in total.
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mathjak107
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Re: The Bond Dream Room

Post by mathjak107 » Wed Mar 31, 2021 8:02 am

It is a bond bear market so far ...but it is at a time we still have very very low rates and high stock valuations.

This is unlike the past when bonds were down ...equities were down too so the coming out of a bear market and those juicy early gains had plenty of lift ...that is not the case today with rates still near record lows and stocks still near record highs .

We are pretty much in uncharted waters in modern investing times which are very different than the old days with instant information, more investors, more alternatives for protection in a down market and high frequency trading making up 80% of a days volume .

Any comparison to the 1950’s or 1960 days is silly in my opinion ...nothing can be compared to investing back then .

With average historical rates in the 5% range or so this bear market can take decades if it wants to
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Cortopassi
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Re: The Bond Dream Room

Post by Cortopassi » Wed Mar 31, 2021 8:14 am

mj, couldn't help thinking of a cartoon I used to watch as a kid when reading your response.

Hell, you're making it sound like "throw everything into Bitcoin!" :P

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Re: The Bond Dream Room

Post by mathjak107 » Wed Mar 31, 2021 8:17 am

Boy , if we all only did that we wouldn’t need investing anymore
Last edited by mathjak107 on Wed Mar 31, 2021 9:59 am, edited 1 time in total.
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Kriegsspiel
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Re: The Bond Dream Room

Post by Kriegsspiel » Wed Mar 31, 2021 8:45 am

Shhh, no tears. Only dreams now.
"You haven't, I suppose, ever mixed with politicians at close quarters. They're awful. I think some of these must have been the dregs anyhow, but I've discovered, what previously I didn't believe possible, that politicians behave in private life and say exactly the same things as they do in public. Their stupidity is inhuman.
- John Maynard Keynes
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Re: The Bond Dream Room

Post by Kbg » Wed Mar 31, 2021 1:38 pm

For me I just couldn't do PP orthodoxy anymore when it came to LTTs. My duration is around 6.5 and I debate myself all the time whether or not I'm nuts for going that long at this moment in time.

I'm not a gloom and doomer on interest rates but I don't think it is even debatable, at a minimum, that the PP forward returns are "historical" minus whatever the cap gains returns have been on LTTs isolated from the coupon returns.

My secret hope is that interest rates will exceed my quite low mortgage rate in the not too distant future. That would be cool and simplify things greatly as to optimizing assets/wealth...but with the Fed buying everything in sight, I'm not expecting to be pleasantly surprised any time soon.
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Re: The Bond Dream Room

Post by mathjak107 » Wed Mar 31, 2021 1:48 pm

Even 6.5 years can be to long .

I know my other model I swapped for the pp is up this year .
The most conservative model is 25% equities with the bond side a total bond fund , a high yield fund and a very short term treasury bond fund .....

There is just no bottom in Tlt ...I stopped even trying to add more money to bring it back up ..

I have far more faith in gold
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Re: The Bond Dream Room

Post by Kbg » Wed Mar 31, 2021 2:32 pm

mathjak107 wrote:
Wed Mar 31, 2021 1:48 pm
Even 6.5 years can be to long .

I know my other model I swapped for the pp is up this year .
The most conservative model is 25% equities with the bond side a total bond fund , a high yield fund and a very short term treasury bond fund .....

There is just no bottom in Tlt ...I stopped even trying to add more money to bring it back up ..

I have far more faith in gold
Reading your DT adventures infrequently it seemed you were buying the small dips and selling the small pops...that works until you catch a trend and then it doesn't work so great. TLT is in a definite downward trend. It could turn though, who knows.

If I've mischaracterized, apologies in advance.
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Re: The Bond Dream Room

Post by mathjak107 » Wed Mar 31, 2021 2:35 pm

No , you have it right ..it was easy to trade when it went up as much as down ..you just ride the cycle over and over ...

But once in a trend it is very hard ... Tlt is down almost daily with a few exceptions..been like that since august.

I don’t short stocks but boy what a perfect candidate it was
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Re: The Bond Dream Room

Post by whatchamacallit » Wed Mar 31, 2021 8:55 pm

Looking at yields around the world I don't see the rate going much higher at all.

I actually think 30 year will be at 1.5% in a month.

I think 1 month bill is about to go negative and the market will get spooked.

Am I calculating it right that 30 year at 2.5% going to 1.5% would only be 24% capital gain? Seems like it should be more.

http://www.rrfinance.com/Fixed_Income/F ... .aspx?ID=2
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Re: The Bond Dream Room

Post by Kbg » Thu Apr 01, 2021 9:00 am

whatchamacallit wrote:
Wed Mar 31, 2021 8:55 pm
Looking at yields around the world I don't see the rate going much higher at all.

I actually think 30 year will be at 1.5% in a month.
Hard to say...we are now actually experiencing "real" materials shortages and if the infrastructure bill goes through shortages could get worse which is the main pre-requisite for serious inflation. In truth, I have no clue nor a strong opinion either way...but there are some differences this time around that haven't been in place for at least 20 years. Whether it becomes broad based inflation will be very interesting to see. In the housing sector there is serious inflation across the board in all building materials.

Printing money != inflation

Printing money + scarcity = inflation
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Re: The Bond Dream Room

Post by doodle » Thu Apr 01, 2021 9:33 am

Kbg wrote:
Thu Apr 01, 2021 9:00 am
whatchamacallit wrote:
Wed Mar 31, 2021 8:55 pm
Looking at yields around the world I don't see the rate going much higher at all.

I actually think 30 year will be at 1.5% in a month.
Hard to say...we are now actually experiencing "real" materials shortages and if the infrastructure bill goes through shortages could get worse which is the main pre-requisite for serious inflation. In truth, I have no clue nor a strong opinion either way...but there are some differences this time around that haven't been in place for at least 20 years. Whether it becomes broad based inflation will be very interesting to see. In the housing sector there is serious inflation across the board in all building materials.

Printing money != inflation

Printing money + scarcity = inflation
Inflation requires rising wages at some point. If those don't come in to undergird price increases then everything crashes again. As much as I would like to see the pot distributed more fairly, I don't think that's gonna happen.

We're definitely in some unfamiliar waters at the moment but unless the economy can be in some state other than inflation, deflation, prosperity, or recession I'm not sure what else to do when it comes to holding assets.

As has been said before...this might be the everything bubble..where do you hide from that?
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Re: The Bond Dream Room

Post by Kbg » Thu Apr 01, 2021 12:40 pm

doodle wrote:
Thu Apr 01, 2021 9:33 am
Inflation requires rising wages at some point. If those don't come in to undergird price increases then everything crashes again. As much as I would like to see the pot distributed more fairly, I don't think that's gonna happen.
Happening...https://www.bls.gov/opub/ted/2021/real- ... y-2021.htm

Of note, not nominal, real.

Completely anecdotal, but the $15hr min wage battle is almost silly now except for the smallest of low end businesses. If you aren't small or low end, most are way beyond $15.
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Re: The Bond Dream Room

Post by mathjak107 » Thu Apr 01, 2021 1:57 pm

The problem we saw in nyc is it wasn’t only about the 15 dollar increase in min wage ...it was having long term employees who advanced , worked hard and learned new skills and made it to 15 an hour .

Now the new guy is at 15 and many companies has to raise the other workers too down the line.

Many fast food places now have a staff of 2 at the counter instead of 4 or 5 ...all ordering is via kiosk and all they do is take money .

Many min wage jobs have been totally eliminated....
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Re: The Bond Dream Room

Post by pp4me » Thu Apr 01, 2021 2:40 pm

No idea how minimum wage became part of a discussion about Bonds but for my two cents worth, minimum wage laws are about competition for low paying jobs and most of the laws on the books are intended to favor labor unions by limiting competition. Which is why Democrats overwhelmingly favor them, of course.

As many people before me have said, the real minimum wage is $0 if you don't have the skills to compete for one of the minimum pay jobs.

Here in Florida a $15 minimum wage law was passed by the voters. I didn't vote for it but it must have made a lot of people feel good about themselves. Everybody should make at least $15/hour don't you think?

But why not $20?. That would be even better. Probably wouldn't have passed because most people would have thought that was too much. But $15 was just right.

Can we vote on how much politicians should be paid?
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Re: The Bond Dream Room

Post by sophie » Thu Apr 01, 2021 3:20 pm

I expect that a $15 minimum wage law would result in lots more people being hired for cash under the table. Maybe that's part of the intent, because that's how illegal immigrants can live here without any official presence. And God knows we're now getting a ton more of them.

Good one pp4me. The real minimum wage is indeed $0. $15 will only be if you want to join a union and pay taxes.
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