The Bond Dream Room

Discussion of the Bond portion of the Permanent Portfolio

Moderator: Global Moderator

User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: The Bond Dream Room

Post by ochotona » Wed Mar 27, 2019 6:47 pm

OMG bonds are on fire. I'm looking at the chart for SCHR, which is a 5 year bond ETF. Oversold on a daily and weekly basis, it looks like a bubble to me. I think it's time to take some profits, like tomorrow.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: The Bond Dream Room

Post by pmward » Wed Mar 27, 2019 6:59 pm

I don't think having a few big up days constitutes a bubble. Especially since stocks and gold look like they both want to pull back. Bonds are over bought in the short term, and TLT has a big open gap that is likely to get closed at some point, but that doesn't mean they won't continue up especially in the medium to long term. They just put in a higher low, and a fresh new higher high; the very definition of a brand new up trend. Don't take profits until it breaks trend. At least use a stop loss or a trailing stop if you're wanting to try to actively take some profits early instead of just blindly selling into the start of a fresh new uptrend. Let the winner have a little room to run imo.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: The Bond Dream Room

Post by ochotona » Wed Mar 27, 2019 8:14 pm

pmward wrote:
Wed Mar 27, 2019 6:59 pm
I don't think having a few big up days constitutes a bubble. Especially since stocks and gold look like they both want to pull back. Bonds are over bought in the short term, and TLT has a big open gap that is likely to get closed at some point, but that doesn't mean they won't continue up especially in the medium to long term. They just put in a higher low, and a fresh new higher high; the very definition of a brand new up trend. Don't take profits until it breaks trend. At least use a stop loss or a trailing stop if you're wanting to try to actively take some profits early instead of just blindly selling into the start of a fresh new uptrend. Let the winner have a little room to run imo.
Thanks, I set an alarm to go off when a tight trailing stop is violated. Also have 15 20 30 day moving average alarms. And I put in a price point by hand. I have US Treasuries, so I have to sell them by hand. SCHR is a proxy I am using for the alarms.

Do you think when the bond trend breaks it could also mean the point when stocks start heading higher? Might be nice to sell bonds / buy stocks based on the same signal, when risk-on comes back.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: The Bond Dream Room

Post by pmward » Wed Mar 27, 2019 9:34 pm

ochotona wrote:
Wed Mar 27, 2019 8:14 pm
pmward wrote:
Wed Mar 27, 2019 6:59 pm
I don't think having a few big up days constitutes a bubble. Especially since stocks and gold look like they both want to pull back. Bonds are over bought in the short term, and TLT has a big open gap that is likely to get closed at some point, but that doesn't mean they won't continue up especially in the medium to long term. They just put in a higher low, and a fresh new higher high; the very definition of a brand new up trend. Don't take profits until it breaks trend. At least use a stop loss or a trailing stop if you're wanting to try to actively take some profits early instead of just blindly selling into the start of a fresh new uptrend. Let the winner have a little room to run imo.
Thanks, I set an alarm to go off when a tight trailing stop is violated. Also have 15 20 30 day moving average alarms. And I put in a price point by hand. I have US Treasuries, so I have to sell them by hand. SCHR is a proxy I am using for the alarms.

Do you think when the bond trend breaks it could also mean the point when stocks start heading higher? Might be nice to sell bonds / buy stocks based on the same signal, when risk-on comes back.
These markets are very hard to read right now. Every day is throwing different signals, and the intra-day price swings lately have been very unsure; lots of reversal days. So it's hard to say. The bond market is the only market that is trending right now. I would have a hard time making a large stock purchase right now. Even if we finally break the 2820 resistance level, last January's highs of ~2870, and the all time highs of 2940 are both so close, there's just so much overhead resistance. I have a hard time believing we will break through all of them without some kind of catalyst. But anything could happen and I could be wrong, the markets are rarely, if ever, rational. I also see bearishness being the popular view these days, which is actually leading me to think we might have one more gravity defying blow off top left in the tank. Market tops happen at the point of peak bullishness, and I just don't see that right now. So it has me starting to second guess my own bearishness, at least in the near term.

Now you're seeing how stressful it is to try to market time. This was why I stopped and decided to convert to a buy and hold GB. It's harder to decide to get back in than it is to decide to get out. My life is so much less stressful now. If I feel very strongly about getting out of the market in the future, I'll keep those bets to the 20% small cap allocation (VP) of my GB and keep the 80% that's in my PP in place so I don't shoot myself in the foot if I'm wrong. I think Harry had a lot of wisdom in having a separate PP that is always invested, and a separate VP that you can play, speculate, trend follow, or whatever with.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: The Bond Dream Room

Post by ochotona » Thu Mar 28, 2019 10:34 am

It's the 3-5 year bonds that are on fire now. Glad I looked. I'll keep 0-2 years, keep 6+, and think about selling in the middle.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: The Bond Dream Room

Post by ochotona » Thu Apr 18, 2019 6:39 pm

ochotona wrote:
Thu Mar 28, 2019 10:34 am
It's the 3-5 year bonds that are on fire now. Glad I looked. I'll keep 0-2 years, keep 6+, and think about selling in the middle.
Yesterday the Schwab Bond Lady Kathy Jones recommended 2 yr / 7 yr barbell... sell the 5 yr. Great minds think alike, I guess. I sold SCHR (5), and bought SCHO (2) and IEF (7.5) (now fee-free at Schwab... yahoo!)
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: The Bond Dream Room

Post by ochotona » Fri Apr 26, 2019 8:25 am

Dr. Lacy Hunt has his clients in 20+ year UT Treasuries. He thinks we're going back to 0% interest rates, and low long term rates for a long time. Japan scenario. The title of the podcast is click-bait, as he doesn't think MMT has a significant chance of being adopted.

https://www.macrovoices.com/550-dr-lacy ... nflation-2
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: The Bond Dream Room

Post by ochotona » Tue May 07, 2019 1:09 pm

Gunlach had a good insight, he said the inversion of the yield curve indicates the bond market thinks growth will slower than in the 3 year time window.

Yields for 1 2 3 5 7 10 20 30 year bonds:

2.39 2.31 2.27 2.30 2.40 2.51 2.73 2.91
User avatar
dualstow
Executive Member
Executive Member
Posts: 14184
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The Bond Dream Room

Post by dualstow » Mon May 13, 2019 9:03 am

No talk about China's threat to dump treasuries?
Well, I guess this has been thoroughly explored over the years.

I do wish MediumTex were here.
RIP Marcello Gandini
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: The Bond Dream Room

Post by pmward » Mon May 13, 2019 9:16 am

dualstow wrote:
Mon May 13, 2019 9:03 am
No talk about China's threat to dump treasuries?
Well, I guess this has been thoroughly explored over the years.

I do wish MediumTex were here.
There's a short squeeze going on with dollars internationally right how, which is why the dollar has been shooting up lately. The Eurodollar markets have been really tight, and this is the market where almost all international U.S. dollar currency for trade is acquired. By China selling it actually would be a good thing, as it would add extra supply to balance out the demand and allow the dollar to pull back which would be a very good thing. Funny thing is Trump has been wanting the dollar to drop, so their threat is actually helps Trump's agenda, so it's not much of a threat at all. Also, it could help bond yields to get up off of the ground, another really good thing.
User avatar
dualstow
Executive Member
Executive Member
Posts: 14184
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The Bond Dream Room

Post by dualstow » Mon May 13, 2019 9:37 am

I doubt they'll sell anyway. It's just talk.
RIP Marcello Gandini
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: The Bond Dream Room

Post by pmward » Mon May 13, 2019 11:16 am

Yep, more than likely. Also, one needs to think that if they do sell en masse it would drop the price, which would in turn hurt them as well. I think odds are they just let what they own mature vs selling, and only buy as much as they need for trade. They've been building gold for years now, and my thoughts have always been that the reason was to reduce their USD reserves.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: The Bond Dream Room

Post by pmward » Wed May 15, 2019 9:13 am

We are like .5% away in TLT from setting a higher high. Combined with the higher low we set in the pullback over the last couple of months, that would officially be a confirmed new up trend. Who would have thought a year ago when they were raising rates like crazy that we would be potentially entering a new official uptrend in long treasuries now?
Pet Hog
Executive Member
Executive Member
Posts: 257
Joined: Tue May 28, 2013 4:08 pm

Re: The Bond Dream Room

Post by Pet Hog » Wed May 15, 2019 3:39 pm

pmward wrote:
Wed May 15, 2019 9:13 am
Who would have thought a year ago when they were raising rates like crazy that we would be potentially entering a new official uptrend in long treasuries now?
I think there are many members of this forum who didn't (and still don't) believe "there's nowhere for rates to go but up!"TM I'm happy that I got to add to my STTs at about 2.5%, but my expectation is that they will return to near-zero soon. But I'm happy to be a PP investor and not make predictions.
User avatar
dualstow
Executive Member
Executive Member
Posts: 14184
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The Bond Dream Room

Post by dualstow » Thu May 16, 2019 9:36 am

Very interesting to watch it all play out!
I have no regrets jettisoning my "bad" long-term bonds, but I feel comfortable leaving the rest alone.
RIP Marcello Gandini
User avatar
dualstow
Executive Member
Executive Member
Posts: 14184
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The Bond Dream Room

Post by dualstow » Thu Aug 01, 2019 10:53 am

I now have a little regret. Even the worst of my bonds would probably have a 5% gain by now. At least I put the proceeds into cash and not gold.
RIP Marcello Gandini
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: The Bond Dream Room

Post by pmward » Thu Aug 01, 2019 12:42 pm

Yeah, TLT hit the highest level to day since Oct 2016. Only 6% away from all time highs.
User avatar
Ad Orientem
Executive Member
Executive Member
Posts: 3483
Joined: Sun Aug 14, 2011 2:47 pm
Location: Florida USA
Contact:

Re: The Bond Dream Room

Post by Ad Orientem » Fri Aug 02, 2019 11:17 pm

The yield on the 10 yr T Note is now more or less the same as the yield on the S&P 500. If I were speculating, I'd be looking at dividend paying stocks as a better long term bet than bonds. Maybe VIG.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: The Bond Dream Room

Post by pmward » Sat Aug 03, 2019 8:41 am

Ad Orientem wrote:
Fri Aug 02, 2019 11:17 pm
The yield on the 10 yr T Note is now more or less the same as the yield on the S&P 500. If I were speculating, I'd be looking at dividend paying stocks as a better long term bet than bonds. Maybe VIG.
I have some hesitations on dividend stocks as well. Look at the P/E ratios. They are historically high. They are no longer "value" stocks. There is more risk there than in the past. One needs to keep this in mind. They are getting paid to take risk.
User avatar
dualstow
Executive Member
Executive Member
Posts: 14184
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The Bond Dream Room

Post by dualstow » Sat Aug 03, 2019 2:51 pm

Hmm. I’ve been holding dividend-raising stocks since forever, and while I don’t consider that to be speculation, I have to acknowledge all the news reports of people piling into these stocks for yield, setting them up for a big fall. Maybe it’s time to trim, but I have held them through other crashes.

It’s good to get paid while you wait.
pmward wrote:
Sat Aug 03, 2019 8:41 am
Ad Orientem wrote:
Fri Aug 02, 2019 11:17 pm
The yield on the 10 yr T Note is now more or less the same as the yield on the S&P 500. If I were speculating, I'd be looking at dividend paying stocks as a better long term bet than bonds. Maybe VIG.
I have some hesitations on dividend stocks as well. Look at the P/E ratios. They are historically high. They are no longer "value" stocks. There is more risk there than in the past. One needs to keep this in mind. They are getting paid to take risk.
RIP Marcello Gandini
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: The Bond Dream Room

Post by pmward » Sun Aug 04, 2019 7:26 am

dualstow wrote:
Sat Aug 03, 2019 2:51 pm
Hmm. I’ve been holding dividend-raising stocks since forever, and while I don’t consider that to be speculation, I have to acknowledge all the news reports of people piling into these stocks for yield, setting them up for a big fall. Maybe it’s time to trim, but I have held them through other crashes.

It’s good to get paid while you wait.
I personally wouldn't worry about it if I had already purchased them long ago and had a large profit. I mean, they may be close to paying for themselves by now. However, I wouldn't personally throw fresh cash into these at the moment. Dividend stocks and large cap tech are the two sub-types of stocks that have accounted for most of the gains since 2008. Every time the cycle turns the bear market does hit the winners of the past bull harder than the rest, and the last bull winners rarely are the new bull winners. Just some food for thought.
User avatar
Xan
Administrator
Administrator
Posts: 4385
Joined: Tue Mar 13, 2012 1:51 pm

Re: The Bond Dream Room

Post by Xan » Sun Aug 04, 2019 3:07 pm

Is there really a difference between buying fresh and holding? (I'm assuming transaction fees are negligible.)
User avatar
dualstow
Executive Member
Executive Member
Posts: 14184
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The Bond Dream Room

Post by dualstow » Sun Aug 04, 2019 7:38 pm

Oh yeah, they are up an average of 135% not including the dividend payments. No match for the S&P I’m sure, but the dividends are serving their purpose.
pmward wrote:
Sun Aug 04, 2019 7:26 am
dualstow wrote:
Sat Aug 03, 2019 2:51 pm
Hmm. I’ve been holding dividend-raising stocks since forever, and while I don’t consider that to be speculation, I have to acknowledge all the news reports of people piling into these stocks for yield, setting them up for a big fall. Maybe it’s time to trim, but I have held them through other crashes.

It’s good to get paid while you wait.
I personally wouldn't worry about it if I had already purchased them long ago and had a large profit. I mean, they may be close to paying for themselves by now. However, I wouldn't personally throw fresh cash into these at the moment. Dividend stocks and large cap tech are the two sub-types of stocks that have accounted for most of the gains since 2008. Every time the cycle turns the bear market does hit the winners of the past bull harder than the rest, and the last bull winners rarely are the new bull winners. Just some food for thought.
RIP Marcello Gandini
User avatar
dualstow
Executive Member
Executive Member
Posts: 14184
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The Bond Dream Room

Post by dualstow » Sun Aug 04, 2019 7:44 pm

Xan wrote:
Sun Aug 04, 2019 3:07 pm
Is there really a difference between buying fresh and holding? (I'm assuming transaction fees are negligible.)
The transaction fees are free these days, or $2 if I trade too much, which I don’t. Back when I started, though, they were a bit pricey. Just a few trades a year back then.

As for the first question, which I guess is a response to pmward, I think it’s largely psychological/“mental accounting.”
What is different, though, is the tax bill. To hold on means no taxes (even on the dividends). To sell would be expensive, although I do get rid of one now and then, tax bill be damned. If the dividend stalls, I consider selling, and if the dividend is cut, I always sell.

Though these are in the vp, I pay attention to the stock/bond ratio there, too.
RIP Marcello Gandini
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: The Bond Dream Room

Post by pmward » Mon Aug 05, 2019 9:56 am

Xan wrote:
Sun Aug 04, 2019 3:07 pm
Is there really a difference between buying fresh and holding? (I'm assuming transaction fees are negligible.)
In a dividend ETF yes, simply because it will eventually pay for itself. I mean if you're holding shares that have paid out 80% of their purchase value, not including massive capitol gains over the last decade, who cares if they drop 50 or 60%? Especially since they will keep paying their dividend. One could definitely sell and route the capital to something with more upside / less downside, but generally speaking the people that purchase dividend ETF's tend to do so for a specific reason (the dividend), so I think that selling would not be necessary especially since bond yields are so weak right now (and probably going lower). Fixed income is turning into fixed expense. So there isn't a lot of other options for people that want income right now.
Post Reply