Helicopter Money

Discussion of the Bond portion of the Permanent Portfolio

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MachineGhost
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Helicopter Money

Post by MachineGhost » Wed Oct 19, 2016 2:25 pm

“Pretty much every maturity in the U.S. Treasury bond market has a yield that’s about at or above its 200-day moving average,” Gundlach said. “So it seems to me that something’s going on in the bond market and that’s why I turned negative on most assets during July and frankly that’s been the right position to be in ever since then.”

“I think fiscal stimulus is coming, and it’s fundamentally bond unfriendly,” Gundlach said. “This idea that interest rates are going to stay at zero forever became popular in July, and I know from my years of experience in this business when you hear words like ‘forever’ or phrases like something ‘can never happen,’ like they were saying interest rates could never rise, it means it’s about to happen, and it’s already happening.”

Thinking that interest rates could stay at current levels for another five years is “horrifically wrong” in that interest rates have been “putting in a bottom for some time,” he said. “I think the bond market is saying that we are headed to a fiscal stimulus pivot.”

http://www.marketwatch.com/story/fiscal ... eid=YAHOOB
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Re: Helicopter Money

Post by boglerdude » Wed Oct 19, 2016 8:50 pm

How to profit from rising rates?
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MachineGhost
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Re: Helicopter Money

Post by MachineGhost » Thu Oct 20, 2016 9:27 am

MangoMan wrote:
boglerdude wrote:How to profit from rising rates?
There are plenty of inverse treasury bond funds.

Several respected technicians have shown that trend following doesn't work predictably with treasury bonds, however.
Proof?
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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Re: Helicopter Money

Post by InsuranceGuy » Thu Oct 20, 2016 7:32 pm

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Re: Helicopter Money

Post by MachineGhost » Thu Oct 20, 2016 8:07 pm

InsuranceGuy wrote:I'd be interested as well. My trend-following has me 50% in TLT at this point. We'll see what happens over the next few months but if something doesn't change I will likely be in TLT/GLD and out of stocks completely.
Hah, so was I right or was I right? ;) The problem with trend following is its only about 50% correct and the closer you get to the trend line, the lower the win percentage will go.

I'm going to continue DCAing into gold but T-Bonds are definitely on hold.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

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Re: Helicopter Money

Post by InsuranceGuy » Thu Oct 20, 2016 9:29 pm

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Re: Helicopter Money

Post by MachineGhost » Thu Oct 20, 2016 10:00 pm

InsuranceGuy wrote:I'd have to disagree about the 50% correct and even so the 50% (or more) that it is right the trend continues for a considerable amount of time, so it is not just a % correct discussion but also the duration of the correct predictions.
It might be somewhat higher for four major asset classes since they're so significant but probability and magnitude have an inverse relationship (it has to be that way or there would never be anyone to take the other side of the trade). You must be pretty confident you can emotionally handle the back to back whipsaw losses multiple months in a row?

Are you not keeping any permanent positions at all?
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

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Re: Helicopter Money

Post by InsuranceGuy » Fri Oct 21, 2016 1:19 pm

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Re: Helicopter Money

Post by Kbg » Thu Nov 03, 2016 7:07 pm

They have tracking error, period. It is inherent in the structure of the daily rebalance. However, it is path dependent and therefore unpredictable (unless you can predict the market). I've written quite a bit about the theory and the reality of leveraged ETFs on the 20% Annual VP thread. If you can scale up using futures then you can eliminate it.
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