The Bond Dream Room

[ochotona]

OUCH

[buddtholomew]

So where’s the bottom in TLT and ceiling in yields - 3.25, 3.5, 4% or more?

[eufo]

The technicals don't look good for TLT, but who knows? I'm definitely going to be buying some soon if this continues.

[iwealth]

The technicals don't look good for TLT, but who knows? I'm definitely going to be buying some soon if this continues.

I struggle to find a good investment thesis for bonds right now.

Wages are rising, inflation next? The economy is humming. Earnings are excellent. Tax reform done. Recession isn't on the horizon. Actually, the only thing I can see that would hamper equities short-medium term would be rising interest rates.

Tough to see a rosy scenario for bonds barring a recession. Or some unexpected geopolitical or natural disaster type of shock.

[eufo]

I can't find a good reason to buy anything right now, but if that allocation drops enough... I'll pick more up.

[dualstow]

Good to see iwealth writing again! I think I last saw you write about leaving gold saying you “get stocks”, i.e. understand them and thus presumably were about to put more in them. I’m a bit envious! I’m sticking with the pp, but I would have been fine staying in nearly all stocks in 2010 instead. Where “fine” = glorious.

More on topic: I know the 30-year bonds are held for their volatile price movements, but if the ten-year note yield keeps rising, it’s yield I’ll be thinking about. Tempted to, anyway.

[stuper1]

I think if you backtest the PP using 10-year Treasuries instead of 30-year Treasuries, there is not a whole lot of difference in the results.

[iwealth]

Good to see iwealth writing again! I think I last saw you write about leaving gold saying you “get stocks”, i.e. understand them and thus presumably were about to put more in them. I’m a bit envious! I’m sticking with the pp, but I would have been fine staying in nearly all stocks in 2010 instead. Where “fine” = glorious.

More on topic: I know the 30-year bonds are held for their volatile price movements, but if the ten-year note yield keeps rising, it’s yield I’ll be thinking about. Tempted to, anyway.

Oh I did put more into stocks, but I tried to bottom pick the energy sector and got torched - luckily rode it out and recovered but whoooosh what a ride. On the bright side, it's made me entirely immune to drawdowns.

[dualstow]

I think if you backtest the PP using 10-year Treasuries instead of 30-year Treasuries, there is not a whole lot of difference in the results.

They would only go in the vp. I don't mess with the core.

[ochotona]

The MIDDLE part of the yield curve is taking it in the shorts based on 1-year momentum.

[ochotona]

[eufo]

What is the conclusion of those 2 charts? That although the yield is about to break out to the upside, relative to stocks they are still a good buy?

I'm wondering the same thing.

I feel a great temptation to tweak my holdings, which almost always means... I shouldn't. Lol.

[ochotona]

What is the conclusion of those 2 charts? That although the yield is about to break out to the upside, relative to stocks they are still a good buy?

The author just wanted to tweak people who were going to ditch bonds, I think. The point is that you may be relatively safer in bonds than stocks. So stocks down 80%, bonds down 40%. Win?

These ratio charts are interesting, but they are ratios - they don't say anything about absolute levels. Like the gold-silver ratio. About 80 now. Well, it could revert to 50 if gold went to 850 and silver 17, but I doubt anyone would be celebrating.

[buddtholomew]

At some point a PP investor will have to purchase LTT’s to restore the AA to 4x25 or a variant thereof. I’m interested to know who among us plans to rebalance into LTT’s?

[sophie]

I'll be facing that Rubicon soon. My LTTs have dropped below 20% and cash is above 30% (new contributions).

The increase in interest rates of 30 year bonds the last couple of days has actually made me lean toward buying. So far, I think I'll be rebalancing into gold and bonds as per schedule. But, I will wait to do that until a band has been crossed. We'll see. I may need some encouragement when the time comes!

[buddtholomew]

Just the comfort I needed to follow the plan...soon.
Like Sophie I am slightly under 20% LTT’s but mentally preparing myself to rebalance on or near 15% when the time comes. I may invest more frequent, lower amounts as it requires less gumption than larger sums, less often.

Funny just a blink ago we were wondering whether LTT’s provided enough downside protection. I speculate they now meet that criteria.

[drumminj]

I’m interested to know who among us plans to rebalance into LTT’s?

I just did, to a degree. Felt the itch and was at about 30% stocks so sold 10% of my holdings and rebalanced into LTT, cash, and gold.

I'll admit it hurts to see LTT going down right after the rebalance (feel a bit better with stocks having dropped considerably below my sell point!), but I don't profess to know which way the markets are going to move so being back at ~4x25 is as good as any other bet.

Do I wish I had just gone to cash/let it sit in 13-week treasuries for a while? Sure

[Tortoise]

Lest we forget that LTTs sometimes help to smooth out stock volatility even on a daily basis, here are today's returns:

Market close, 03/27/2018:
S&P 500: -1.73%
TLT: +1.07%

[stuper1]

No, you don't seem to understand. Unless the PP as a whole is in positive territory every day, then it's not working properly as advertised. It's all or nothing. Either LTTs and gold always go up more than stocks go down on each and every day, or else forget about it, I'm going back to bogleheads or active trading.

[Tortoise]

If only the Ratchet Portfolio (only up, never down) actually existed!

[dualstow]

Hey, I like the new avatar, Tortoise.

[Tortoise]

Thanks, dualstow!

By the way, I’ve always wondered — what’s the story behind your handle?

[dualstow]

Well, it was going to be an anagram, then became the initials of the four assets:

d
au for gold
long (bonds)
st for short term (bonds)
ow --> dow (jones)

So convoluted that it took me a while to remember the 'ST' above. I kept thinking "sto..." stocks?
I remember settling on that because I liked the word "dual", referring to "pp+vp" and "stow": stash your assets.
In the end, it looks vaguely like some eastern European surname. (shrug)

[Tyler]

I always pictured this.

[dualstow]

I always pictured this.

https://www.picclickimg.com/00/s/MTAzMV ... ALL-_1.jpg

Actually, you know what? That's it.
Never mind what I wrote above.