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 » Mon Dec 29, 2014 3:20 pm

What's Driving LT Treasuries This Year?
http://www.bogleheads.org/forum/viewtop ... 0&t=154060
hee hee hee  8)
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Re: The Bond Dream Room

Post by Greg » Tue Dec 30, 2014 8:43 am

dualstow wrote: What's Driving LT Treasuries This Year?
http://www.bogleheads.org/forum/viewtop ... 0&t=154060
hee hee hee  8)
aww they are almost there hah. I will admit, it did take me some thinking at one point to understand how the bond yield could affect price so much.
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Re: The Bond Dream Room

Post by moda0306 » Tue Dec 30, 2014 11:08 am

1NV35T0R (Greg) wrote:
dualstow wrote: What's Driving LT Treasuries This Year?
http://www.bogleheads.org/forum/viewtop ... 0&t=154060
hee hee hee  8)
aww they are almost there hah. I will admit, it did take me some thinking at one point to understand how the bond yield could affect price so much.
I had the "LT.bond aha moment" once in college studying how to account for bonds using "General Accounting Principles."

I was immediately interested and a tad taken aback at how bonds worked unintuitively. I found it so much more appealing than the alpha/beta/ratio stock pricing business.... Which seemed a lot more prone to unknown variables.

It wasn't until 2008 hit that I saw how well LTT's did and felt like I'd just discovered a new element.  At that point, all I'd heard about LT bonds was "careful... When rates rise you'll lose your shirt."

Not that bonds are a superior asset class... But its a shame more people don't see them for their diversification benefit.
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dualstow
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Re: The Bond Dream Room

Post by dualstow » Sun Jan 04, 2015 5:41 pm

moda0306 wrote: I had the "LT.bond aha moment" once in college studying how to account for bonds using "General Accounting Principles."
Well you're way ahead of me. I didn't know the investing world existed outside of stocks and lottery tickets when I was in college.
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dualstow
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Re: The Bond Dream Room

Post by dualstow » Mon Jan 05, 2015 11:43 am

Ho hum, another 300-point drop in the Dow and 1+% gain in LT treasuries.
TLT breaching 129...
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Re: The Bond Dream Room

Post by moda0306 » Mon Jan 05, 2015 2:08 pm

dualstow wrote: Ho hum, another 300-point drop in the Dow and 1+% gain in LT treasuries.
TLT breaching 129...
I love when TLT does "its thing." 
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."

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Re: The Bond Dream Room

Post by goodasgold » Mon Jan 05, 2015 2:14 pm

I feel sorry for all those folks, years ago, who stampeded out of bonds because the Wall Street "experts" told them that "bond rates have nowhere to go but up."

Well, they will go up some day, but in the meantime I am harvesting the rewards of St. Harry B's well-known scripture: chapter 4, verse 25, also known as 4X25.

Amen.
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Re: The Bond Dream Room

Post by buddtholomew » Mon Jan 05, 2015 2:53 pm

Nice to see gold stepping up as well. To be honest, I would rather have gold outpace treasuries as yields have no where to go but up  ::)
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Re: The Bond Dream Room

Post by Lang » Mon Jan 05, 2015 2:57 pm

Swiss government bonds also went up significantly today, bringing yields to historic lows.

50 year yield - 0.744%
30 year yield - 0.666%
10 year yield - 0.280%
up to 6 year yields - negative.
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Re: The Bond Dream Room

Post by Reub » Mon Jan 05, 2015 3:52 pm

goodasgold wrote: I feel sorry for all those folks, years ago, who stampeded out of bonds because the Wall Street "experts" told them that "bond rates have nowhere to go but up."

Well, they will go up some day, but in the meantime I am harvesting the rewards of St. Harry B's well-known scripture: chapter 4, verse 25, also known as 4X25.

Amen.

Yes, Amen! Let's also give MediumTex some credit because he has been a huge proponent of long bonds over the past few years as an important part of the overall portfolio. I sure wish him well!
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Re: The Bond Dream Room

Post by Reub » Mon Jan 05, 2015 3:53 pm

What happens when the yield curve flattens like a pancake and possibly inverts? Is it the Big Boom?
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Re: The Bond Dream Room

Post by dualstow » Mon Jan 05, 2015 4:19 pm

Reub wrote: What happens when the yield curve flattens like a pancake
Add chocolate chips and syrup.
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Re: The Bond Dream Room

Post by MachineGhost » Mon Jan 05, 2015 8:59 pm

Reub wrote: What happens when the yield curve flattens like a pancake and possibly inverts? Is it the Big Boom?
Not if the Fed has anything to say about it!
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Re: The Bond Dream Room

Post by Lang » Tue Jan 06, 2015 1:55 am

Reub wrote: What happens when the yield curve flattens like a pancake and possibly inverts? Is it the Big Boom?
New Zealand now has a very, very flat yield curve:

http://www.investing.com/rates-bonds/ne ... ity_to=180

They don't i ssue bonds with maturity greater than 10 years, though.
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Re: The Bond Dream Room

Post by Alanw » Tue Jan 06, 2015 5:29 pm

And we've been told the last several years that interest rates had nowhere to go but up. Are US treasury yields heading toward Germany, Great Britain and Japan type yields?
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Re: The Bond Dream Room

Post by barrett » Tue Jan 06, 2015 9:35 pm

Bond yields going this low has certainly been an education for me. I sold a few when the yield first dipped below 3% and thought I was some kind of market timing genius. So I was a shade underweighted in LTTs the last couple months only to see them recently pull even with my stock and gold holdings.
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Re: The Bond Dream Room

Post by Lang » Wed Jan 07, 2015 3:07 am

Alanw wrote: And we've been told the last several years that interest rates had nowhere to go but up.
Well, they have nowhere to go but up if they are zero, although there are some strange cases of bonds trading at negative yields.

Switzerland has a 12 year bond trading at a yield to maturity of 0.3%. Even if the yield drops to 0%, the capital gain on that bond will be a measly 3%. Is this really worth the downside risk?
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Re: The Bond Dream Room

Post by murphy_p_t » Wed Jan 07, 2015 4:37 am

Alanw wrote: And we've been told the last several years that interest rates had nowhere to go but up. Are US treasury yields heading toward Germany, Great Britain and Japan type yields?
why not?!  dont markets largely move in tandem globally?
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Re: The Bond Dream Room

Post by Alanw » Wed Jan 07, 2015 12:10 pm

murphy_p_t wrote:
Alanw wrote: And we've been told the last several years that interest rates had nowhere to go but up. Are US treasury yields heading toward Germany, Great Britain and Japan type yields?
why not?!  dont markets largely move in tandem globally?
How many forum members at the beginning of 2014 thought long bonds would be the big PP portfolio winner for the year? If the US bond market follows global markets, we may have more upside. Could LTT's be the big winner again in 2015?
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Re: The Bond Dream Room

Post by Reub » Wed Jan 07, 2015 2:17 pm

Our bond yields look high if you're in Europe or even Japan.
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Re: The Bond Dream Room

Post by murphy_p_t » Wed Jan 07, 2015 3:10 pm

"Could LTT's be the big winner again in 2015?"

I wouldn't bet against it...
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Re: The Bond Dream Room

Post by DragonJoey3 » Fri Jan 23, 2015 10:54 am

30 year treasuries at all time low interest rate today.  Happy Friday everyone!
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Re: The Bond Dream Room

Post by barrett » Fri Jan 23, 2015 12:16 pm

Fascinating to see this. I hope bedraggled forgives me for talking him out of loading way up on LTTs when they were at 3%. When I bought LTTs for the first time last year through TD Aneritrade, the guy who was taking me through the steps on their website said, "Er, I wouldn't buy those things if I were you."
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Re: The Bond Dream Room

Post by buddtholomew » Fri Jan 23, 2015 12:44 pm

barrett wrote: Fascinating to see this. I hope bedraggled forgives me for talking him out of loading way up on LTTs when they were at 3%. When I bought LTTs for the first time last year through TD Aneritrade, the guy who was taking me through the steps on their website said, "Er, I wouldn't buy those things if I were you."
barrett, what, if anything, are you doing with your long-term treasury holdings? I have been tempted 6 out of the last 5 trading sessions to sell a portion and harvest some gains. I continue to sit tight as reducing my exposure to less than 25% could strain the performance of the PP if equities and/or gold declines. 30%+ gains are difficult to ignore if you believe in reversion to the mean. Alternatively, we have international investors purchasing our bonds to drive yields lower as US rates are significantly higher than international development countries. The higher dollar is icing on the cake.

SPY 27.10%
GLD 22.49%
TLT 24.50%
CSH 25.90%
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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Re: The Bond Dream Room

Post by dragoncar » Fri Jan 23, 2015 1:02 pm

buddtholomew wrote:
barrett wrote: Fascinating to see this. I hope bedraggled forgives me for talking him out of loading way up on LTTs when they were at 3%. When I bought LTTs for the first time last year through TD Aneritrade, the guy who was taking me through the steps on their website said, "Er, I wouldn't buy those things if I were you."
barrett, what, if anything, are you doing with your long-term treasury holdings? I have been tempted 6 out of the last 5 trading sessions to sell a portion and harvest some gains. I continue to sit tight as reducing my exposure to less than 25% could strain the performance of the PP if equities and/or gold declines. 30%+ gains are difficult to ignore if you believe in reversion to the mean. Alternatively, we have international investors purchasing our bonds to drive yields lower as US rates are significantly higher than international development countries. The higher dollar is icing on the cake.

SPY 27.10%
GLD 22.49%
TLT 24.50%
CSH 25.90%
Dude just leave it alone :-)
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