Gyroscopic Investing

So, how much capital gains losses would you theoretically have after buying a negative yielding 30-years Bund now that its just cleared 1%?

Why pink elephant? I'm too distracted by this that I have to know before I get to the question at hand.

Bloomberg says the 30 year bund is at 1.58%

Is that not right?

dualstow wrote: Why pink elephant? I'm too distracted by this that I have to know before I get to the question at hand.

Good question!

When are you gonna answer in the other thread about the newsletter?  It's twice now you've ducked the issue.

MediumTex wrote: Bloomberg says the 30 year bund is at 1.58%

Is that not right?

Yes, thats right.  How much of a loss was it from the lowest point (I guess 30yr didn't go negative) to 1.58%?  I want an early little taste of the masochism we have coming at us.

EDIT: 30yr yield has skyrocketed from .434% to 1.546%.  -28% loss?

MachineGhost wrote:

dualstow wrote: Why pink elephant? I'm too distracted by this that I have to know before I get to the question at hand.

Good question!

When are you gonna answer in the other thread about the newsletter?  It's twice now you've ducked the issue.

Which thread? All apologies. I read some threads methodically but skip through others. Let me know and I'll answer right away.
Edit: I think you're asking about the stock newsletter. If so, that would be Louis Navellier. 3 of them, actually: emerging growth, blue chip growth, and family trust.

Feel free to PM me if I blow off a question in the future. I never do it on purpose.

MachineGhost wrote: Yes, thats right.  How much of a loss was it from the lowest point (I guess 30yr didn't go negative) to 1.58%?  I want an early little taste of the masochism we have coming at us.

EDIT: 30yr yield has skyrocketed from .434% to 1.546%.  -28% loss?

Well, minus interest payments, US long bonds lost 17.8% of their value from January 30 to June 10. We don't have to look overseas to feel the pain.

Regardless of the loss (which the PP is always experiencing in at least one asset), I would say that going from .5% to 1.5% suggests that people are feeling better about the overall economy, so that's good, right?

MediumTex wrote: Regardless of the loss (which the PP is always experiencing in at least one asset), I would say that going from .5% to 1.5% suggests that people are feeling better about the overall economy, so that's good, right?

Or a loss of confidence in the EU which is bad, right?  Deflation only works up to a point.  Would you buy 30-year Greek bonds now yielding 8.23% per annum? 

A bond incorporates different types of risk. When I see a 30 year german bond yielding 1,5% (or something like that), maybe it has more to do with an expectation of increasing interest rates or inflation then with actual credit risk.

MediumTex wrote: Regardless of the loss (which the PP is always experiencing in at least one asset), I would say that going from .5% to 1.5% suggests that people are feeling better about the overall economy, so that's good, right?

C'mon, MT. We're trying to get bummed out here! I don't actually know if rising rates are good or bad for European bonds holders. I mean, it's definitely bad in the short term if that is all you are holding. But with a balanced approach, if bonds lose half their value (or more) then it probably means cash will yield more and maybe another asset will do well in that environment. Plenty of folks would love to be able to re-load at a later date with higher yielding bonds.

And I'm with Dualstow on this one... why is the elephant pink? Is this a trick pachyderm question? Is the answer "Because there are no pink elephants"?

dualstow wrote: Why pink elephant? I'm too distracted by this that I have to know before I get to the question at hand.

Got you to read the thread now didn't it?

Holding a bond that has gone down in value by 30% and pays no interest has got to be pretty painful.  I must say that if the US 30 year Treasury ever got down to negative yields, I would not be buying them and I'd probably cash out.  The problem is, where would I put the cash?  Bank savings account vs under the mattress would be the only options other than plowing the money into stocks and gold.

As to why the jump in bond yields...don't think it's too complicated really.  It's everyone finally getting around to having faith in the stock market and general economic health, so they expect interest rates to increase in the near future.

MachineGhost wrote:

MediumTex wrote: Bloomberg says the 30 year bund is at 1.58%

Is that not right?

Yes, thats right.  How much of a loss was it from the lowest point (I guess 30yr didn't go negative) to 1.58%?  I want an early little taste of the masochism we have coming at us.

EDIT: 30yr yield has skyrocketed from .434% to 1.546%.  -28% loss?

The PRICE() function in excel gives -21%, which makes sense since a 30 year bond has a duration of around 21 years (bond duration can be used to estimate the percent change in the bond price for each 1% change in yield).

sophie wrote:

dualstow wrote: Why pink elephant? I'm too distracted by this that I have to know before I get to the question at hand.

Got you to read the thread now didn't it?

There are two smart-ass compilations that I wish I had begun assembling a long time ago for posterity.
One is MG's "I tried _x_ but it did _y_ to my body." The other is mixed metaphors. Besides seeing pink elephants / elephant in the room,
off the top of my head, there's:

"painted oneself into a pickle" (Moda) {in a pickle / painted ~ into a corner
"cash in my cold dead hands" (MG) { pry the gun from my cold dead hands / cold hard cash }

but it would be too much work to go through and find them now.
Well, back to the thread at hand.

dualstow wrote:

sophie wrote:

dualstow wrote: Why pink elephant? I'm too distracted by this that I have to know before I get to the question at hand.

Got you to read the thread now didn't it?

There are two smart-ass compilations that I wish I had begun assembling a long time ago for posterity.
One is MG's "I tried _x_ but it did _y_ to my body." The other is mixed metaphors. Besides seeing pink elephants / elephant in the room,
off the top of my head, there's:

"painted oneself into a pickle" (Moda) {in a pickle / painted ~ into a corner
"cash in my cold dead hands" (MG) { pry the gun from my cold dead hands / cold hard cash }

but it would be too much work to go through and find them now.
Well, back to the thread at hand.

Not ready to go back to the thread at hand just yet. It's not in a category of smart-ass but we would also need a Medium Tex Analogy Compendium of quotes that start with "It would be like..."

He really is a master simile crafstman!

sophie wrote: Holding a bond that has gone down in value by 30% and pays no interest has got to be pretty painful.  I must say that if the US 30 year Treasury ever got down to negative yields, I would not be buying them and I'd probably cash out.  The problem is, where would I put the cash?  Bank savings account vs under the mattress would be the only options other than plowing the money into stocks and gold.

This is what I think of as 'Pfanni's Dilemma' from when he was grappling with the European long bond issue a few months ago. The PP strategy of just holding all four assets in equal amounts breaks down for me when long bong rates are super low. At a certain point the risk just outweighs the potential reward and I would say that, yes, holding more cash is the best answer. If there is further deflation, well your cash has gone up in value, just not as dramatically as it would have with bonds. If yields rise quickly to the point where significant inflation takes hold, having that extra cash in, say T-Bills is not so bad either.

dualstow wrote: Which thread? All apologies. I read some threads methodically but skip through others. Let me know and I'll answer right away.
Edit: I think you're asking about the stock newsletter. If so, that would be Louis Navellier. 3 of them, actually: emerging growth, blue chip growth, and family trust.

Cool, thanks!  Navellier is actually one of the better ones, though certainly not tops by all means.  Your client could have done much much worse.

P.S.  There's a cute little pink mouse in the room also...  no one said the PP would offset losses in an asset at the same time.  More than likely you take a hit then have to wait throughout the agonizing recovery.

Yeah, I think Navellier has a pretty good track record, although I noticed I can't always buy at the price he suggests without chasing a stock. For example, for thinly traded stocks, he'll suggest a limit order within 25 cents of the previous day's closing price. It doesn't trigger because the stock shoots up that day, but his newsletter still shows his buy price and the subsequent high gains he brought us. 

MachineGhost wrote:

dualstow wrote: Which thread? All apologies. I read some threads methodically but skip through others. Let me know and I'll answer right away.
Edit: I think you're asking about the stock newsletter. If so, that would be Louis Navellier. 3 of them, actually: emerging growth, blue chip growth, and family trust.

Cool, thanks!  Navellier is actually one of the better ones, though certainly not tops by all means.  Your client could have done much much worse.

P.S.  There's a cute little pink mouse in the room also...  no one said the PP would offset losses in an asset at the same time.  More than likely you take a hit then have to wait throughout the agonizing recovery.

bump for MG

dualstow wrote:

MachineGhost wrote:

dualstow wrote: Which thread? All apologies. I read some threads methodically but skip through others. Let me know and I'll answer right away.
Edit: I think you're asking about the stock newsletter. If so, that would be Louis Navellier. 3 of them, actually: emerging growth, blue chip growth, and family trust.

Cool, thanks!  Navellier is actually one of the better ones, though certainly not tops by all means.  Your client could have done much much worse.

P.S.  There's a cute little pink mouse in the room also...  no one said the PP would offset losses in an asset at the same time.  More than likely you take a hit then have to wait throughout the agonizing recovery.

bump for MG

That is not an endorsement, he's one of "the better ones"... NEAR THE BOTTOM, i.e. he doesn't beat buy and hold. See the stats I posted in the Resort.

Near the bottom. Ok, thank you for that clarification.