I'm confused about your answers. You give a date when interest rates are going to stop falling, and then you say that there is no reason that they can't go lower. So, which is it?tarentola wrote:Stuperstuper1 wrote:How long have we been hearing that? It sounds like your crystal ball is a lot clearer than mine. Could you please give us a date fixed?tarentola wrote: Interest rates are probably going to rise soon, or at least stop falling.
Have you seen where long-bond yields are at in other countries? Is there some reason that US yields couldn't go that low?
I could be branded a heretic for questioning the value of long-term bonds in a PP, but I don't want to be a market- or interest-rate timing heretic.
To answer your questions: 1. Years. 2. 14 December 2016 ie tomorrow at the Fed meeting (probably - we will soon find out). 3. Yes, I live in one of them. 4. No.
Here's the thing. One of the fundamental principles of the PP is that it is agnostic about the future. We really don't know what's going to happen in the future. The way I see it, yields could go up, or they could go down. They still have room to go down. Therefore, I continue to hold LTTs. Of course, you can do whatever you want with your money, but if you are going to replace LTTs with ITTs, then don't be surprised if you don't have much protection should a deflationary period arise. Another thing about the PP is that it is meant to be a set-it-and-forget-it portfolio, where you can set it up and go do other things for years at a time and not worry that it will be a mess when you get back to it. People who want to monitor and tinker more have more options.