Gundlach on LTT's today

[ppnewbie]

https://www.youtube.com/watch?v=dKdKK_B4Xns

[perfect_simulation]

I'm down almost 20% on my bond bucket lol

[whatchamacallit]

I did buy some edv today with hopes to sell within a month for profit. Who knows though.

[perfect_simulation]

I did buy some edv today

that's the one! The ER is lower than TLT. But I don't keep a full 25% of EDV, only 18ish% because its like a leveraged TLT

[foglifter]

I did buy some edv today

that's the one! The ER is lower than TLT. But I don't keep a full 25% of EDV, only 18ish% because its like a leveraged TLT

I'm using FBNGX (ER = 0.03%). I know, it's not exactly TLT as the portfolio has a tad of ITTs, however performance and risk are almost identical.

[ppnewbie]

I did buy some edv today

that's the one! The ER is lower than TLT. But I don't keep a full 25% of EDV, only 18ish% because its like a leveraged TLT

I'm using FBNGX (ER = 0.03%). I know, it's not exactly TLT as the portfolio has a tad of ITTs, however performance and risk are almost identical.

I use that as well. Also VGLT is something I am going to look into.

[dockinGA]

I finally made the plunge recently into VGLT fully, with the decline in bond prices that allowed me to sell all my individual bond holdings without incurring a huge taxable event. Expense ratio is a little lower than TLT, but the duration is also a tad bit shorter. Struggled with the decision and finally decided to just pick the one with the lowest expense ratio and be done with it.

[ppnewbie]

I finally made the plunge recently into VGLT fully, with the decline in bond prices that allowed me to sell all my individual bond holdings without incurring a huge taxable event. Expense ratio is a little lower than TLT, but the duration is also a tad bit shorter. Struggled with the decision and finally decided to just pick the one with the lowest expense ratio and be done with it.

Thanks for the info.

[buddtholomew]

Ouch!
Stocks, gold and cash are the order of the day.
It no longer makes sense to me to hold bonds.

[dockinGA]

Ouch!
Stocks, gold and cash are the order of the day.
It no longer makes sense to me to hold bonds.

Wait, I thought gold sucked?

[ppnewbie]

Ouch!
Stocks, gold and cash are the order of the day.
It no longer makes sense to me to hold bonds.

Wait, I thought gold sucked?

I propose Bud shorts TLT.

[ppnewbie]

I heard an interesting take on bond funds vs etf's.

If bond mutual fund holders rush for the exits during a crash, the only way they can move into cash is the underlying bonds have to be sold before the investor can sell. When this rush happens, this means funds have to start dumping their bond holdings along with everyone else. So the fund managers are only able to sell their best bonds first and are left with the sludge.

An ETF functioned differently during the 2020 crash. Investors were able to sell the share independently of the funds speed and ability to sell off the underlying shares. Which resulted in the ETF trading at a discount to its net asset value. Which bought investors into to make money off the mispriced etf. Basically selling slowed to match the etf's ability to sell the bonds at the market price and it allowed investors to sell on demand.

Anyway, I probably messed the explanation up a little bit. Robin Wigglesworth explains it on the RCM Alternatives podcast.

[seajay]

Ouch!
Stocks, gold and cash are the order of the day.
It no longer makes sense to me to hold bonds.

Start of 1980 and the Dow/Gold was down at 1.0 levels, gold was priced at 524/oz, it made no sense to hold gold, and such a prediction was true, by the end of 1999 when the Dow/Gold ratio had risen to around 40 the price of gold had declined to 290/oz. BUT in not holding gold you didn't rebalance to average into gold as the price declined. A PP of $2096 start of 1980 value that held 1 ounce of gold, by the of 1999 was valued at $10,627 and held 9.2 ounces of gold. The PP still provided a 4% real with the worst year seeing a -5% nominal loss. From 2000 and up to 2011 the price of gold increased 6x, such that having seen ounces of gold held increase 9x during the 1980's/1990's that yielded dividends during the 2000's, when stocks were enduring first a dot com bubble burst, then a 2008/9 financial crisis, and then a global pandemic.

The PP is in part a factor of averaging into assets as the price/value declines, which can later pay dividends. Trying to instead time exit and reentry involves having to be right twice and often works out worse than simple averaging. Someone who holds LTT's today as part of their portfolio, and averages in as prices decline, as expected, is inclined to end up holding far more bonds bought at a overall relatively good average price compared to others who try and time sale/repurchase.

The loss/cost of averaging into a asset as prices decline tends to be compensated by the other assets such that the cost is relatively low. The rewards from having averaged into a asset and seen multiple more ounces/shares/bonds being held can be much more substantial/significant. Such conceptual theory works out for real. It's commonly accepted that market timers on average tend to lag simple buy and holders.

[buddtholomew]

I ascribe to buy, hold and rebalance as long as the risk/reward relationship exists for these assets. I no longer see LTT’s as worth holding and understand that I may not benefit from a flight to safety (although LTT’s have gone down steadily with the war, inflation and other headwinds). I initially purchased LTT’s around 92 and sold in the mid 140’s for a healthy return so not in a rush to buy back in and am perfectly ok sitting in cash for that portion of my portfolio. Cash loses to inflation, but LTT’s have lost 10%+ YTD on top of inflation.

My approach is to buy when stocks decline not sit in LTT’s in the hope that they will offset losses accordingly. Not when so much focus is on rising inflation and rates. Sometimes you have to make a decision and stick to it for the cycle. I no longer believe in holding all assets at all times.

[boglerdude]

Matt Levine has written a lot about bond fund liquidity

https://old.reddit.com/r/investing/comm ... d/hlf9mza/

[seajay]

I ascribe to buy, hold and rebalance as long as the risk/reward relationship exists for these assets. I no longer see LTT’s as worth holding and understand that I may not benefit from a flight to safety (although LTT’s have gone down steadily with the war, inflation and other headwinds). I initially purchased LTT’s around 92 and sold in the mid 140’s for a healthy return so not in a rush to buy back in and am perfectly ok sitting in cash for that portion of my portfolio. Cash loses to inflation, but LTT’s have lost 10%+ YTD on top of inflation.

My approach is to buy when stocks decline not sit in LTT’s in the hope that they will offset losses accordingly. Not when so much focus is on rising inflation and rates. Sometimes you have to make a decision and stick to it for the cycle. I no longer believe in holding all assets at all times.

Harry himself said to expect one asset to be performing poorly. Revising to exclude the perceived worst asset at any one time is a reasonable approach where rewards might be enhanced if you get it right (made worse if wrong). One way to manage that might be to leverage the PP to 1.33x, pretend you hold a third more capital than you actually do and still allocate 25% to each of the four assets, but where 25% in one asset is 'virtual' capital. As rebalance events trigger then if that signals to buy more of the virtual asset then buy actual shares. If you hold some virtual and actual shares and a sell/reduce signal occurs then you might sell the actual shares first, or virtual shares, or a combination of both, again according to your timing/perceptions.

That seems easy enough, 1980's and Dow/Gold ratio of 1.0 and gold was indicated as being the asset to hold virtual shares (ounces) of. 1999 stock valuations were very high so virtualize stocks ...etc. Backtests indicate that such a approach can lead to superior reward results. However that additional effort and risk of being wrong might be just another risk factor for those for whom the PP as-is is good enough. For someone looking at a 30 year 4% SWR only modest/small real gains are required in order to fulfil that objective. Leveraging/timing are just additional risk factors that could result in a failure whilst the PP as-is might have been successful. What seems blatantly over/under priced and a dead-cert - often surprises. Many were suggesting LTT's were bad in the years following the 2008/9 financial crisis - but where LTT's yielded some good gains in those years.

Harry's suggestion was to leave the PP as-is, and play out the likes of rotation/timing separately, in a VP.

[ppnewbie]

Can you give an example with numbers using virtual capital please.

[perfect_simulation]

Peter Schiff basically calls any one buying long term bonds a moron: https://www.youtube.com/watch?v=cfdyuSEaSQo


Still buying tho

[buddtholomew]

The PP is truly fantastic in how poorly it performs.
If you try and protect yourself from everything, you protect yourself from nothing.

[ppnewbie]

The PP is truly fantastic in how poorly it performs.
If you try and protect yourself from everything, you protect yourself from nothing.

@Seajay - hoping you let this one go.

[perfect_simulation]

The PP is truly fantastic in how poorly it performs.
If you try and protect yourself from everything, you protect yourself from nothing.

backwards take. PP is offensive on all fronts, not defensive

[buddtholomew]

The PP is truly fantastic in how poorly it performs.
If you try and protect yourself from everything, you protect yourself from nothing.

backwards take. PP is offensive on all fronts, not defensive

Nah, not worth the headache..
Go ahead ppnewbie, you’ll be where I am 10 years from now...nothing but disappointment.