Gyroscopic Investing

Cortopassi wrote:TLT has gotten crushed the past few days. I know that doesn't add anything to the discussion...

dualstow wrote:By the way, Soph, what do you consider to be intermediate? Like 5- and 7-year notes?

sophie wrote:

dualstow wrote:By the way, Soph, what do you consider to be intermediate? Like 5- and 7-year notes?

Greater than 3 years and less than 20?

dualstow wrote:I might put some intermediate notes in my vp.

dualstow wrote:

dualstow wrote:I might put some intermediate notes in my vp.

Sophie, that’s what I’m doing with new cash this month. I’m the last person anyone should copy. I only mention it because I’d feel guilty about vocally supporting long bonds and “secretly” eschewing it.

While I haven’t corrupted my pp, I’ve only added to the cash portion lately, or to the vp.
Intermediate treasury notes and short or intermediate corporate bonds.

ochotona wrote:I see tax loss harvesting in my future...

jhogue wrote:

ochotona wrote:I see tax loss harvesting in my future...

Are you saying you look forward to tax loss harvesting LTTs in a taxable account?

All my LTTs are in tax deferred (76%) or Roth accounts (24%). I have no LTTs in taxable and have been wondering if I should re-think that asset location strategy.

ochotona wrote:So if I tax-loss harvest my Treasuries, do I just buy a different CUSIP, even if the maturity date is only different by 1 month? Is that "different enough" for the IRS? I don't want to be disallowed due to wash sale rules.

The law has clarified which bonds are considered substantially identical. Revenue Ruling 58-211 summarizes these findings. The Treasury Department determined that to be considered substantially identical the bonds must not be substantially different in any material feature. The material features include the issuer, maturity, interest rate and yield, and any early redemption restrictions provisions. Thus, selling a bond from an issuer and buying a new bond from the same issuer is not a wash sale as long as the maturity date on the new bond is significantly different, or the new bond has a significantly different coupon interest rate or early redemption rights.

Determining what magnitude of change is significant is the challenge here. When considering whether bond maturity dates were significantly different, a court ruled that a six-month difference on a maturity of one year is significant, but a six-month difference on a maturity of 20 years is not. In another case, the court ignored the maturity date difference of 2½ years when both bonds were callable beginning on the same date. If concerned about whether the bonds’ material features are significantly different, investors might be wise to replace the bond with a bond from a different issuer. This will keep the transaction from violating the wash-sale rules.

jhogue wrote:This just in. The bond market really is crazy.

See the article in today's Wall Street Journal, "Easy-Money Decade Upends Bond Market."
The accompanying graph shows that the yield on 10 year Portuguese government bonds is now higher than 10 year U.S. Treasurys.

Think about it: Which would you rather own?

jhogue wrote:

jhogue wrote:This just in. The bond market really is crazy.

See the article in today's Wall Street Journal, "Easy-Money Decade Upends Bond Market."
The accompanying graph shows that the yield on 10 year Portuguese government bonds is now higher than 10 year U.S. Treasurys.

Think about it: Which would you rather own?

Oops!

A definite Freudian slip. I meant to write that 10 year Portuguese bonds now have a LOWER yield than 10 year U.S. Treasurys.

ochotona wrote:Play the hippity hop game, or wait in cash. Not very clear