Are most people here sticking with Treasuries?

[mathjak107]

I said bonds went up in value , that is not yield …they went up in value which means the total returns are on the right side for that year.

I bet everyone here understood what that meant

Well except you.

My post made the point that you can’t easily predict what bonds are going to do .

You are just playing your games and beating a dead horse

[dockinGA]

I said bonds went up in value , that is not yield …they went up in value which means the total returns are on the right side for that year.

I bet everyone here understood what that meant

Well except you.

My post made the point that you can’t easily predict what bonds are going to do .

You are just playing your games and beating a dead horse

I suggest you go do some research on bond valuations, and report back on how that is directly linked with yield, and how both things are inter-related but in no way the same thing as total return. In the process, you might, possibly, learn something, and begin to understand that the only reason I am 'beating a dead horse' is because sometimes the 'dead horse' apparently just keeps kicking, and kicking, and kicking, even though they should know by now that they're dead.

Moderators, I'll let this latest exchange be yet another example of why you can't have a reasonable, normal 'argument' with this guy. There's no way to have an intelligent argument with someone who doesn't realize they're wrong, refuses to accept or is incapable of accepting that they're wrong even when the data proves it, and yet continues to post on every discussion as if they know what they're talking about.

[mathjak107]

The chart was quite clear and showed exacly what it was supposed to . But as usual you are back to ball breaking because YOU SAY YOU UNDERSTAND MY TERMS .

TO THAT I SAY BULLSHIT .

case closed .. I thought we coold be civil to each other but no way …

I am done ever replying to anything you ask or post …stay off my posts as well and we will have no problem with each other ..

[dockinGA]

The chart was quite clear and showed exacly what it was supposed to . But as usual you are back to ball breaking because YOU DINDT UNDERSTAND IT FROM WHAT YOU SAY .

case closed .. I thought we coold be civil to each other but no way …

I am done ever replying to anything you ask or post …stay off my posts as well

This is absurd. The original chart wasn't clear at all, just 3 columns of numbers and a garbled explanation that as it turns out wasn't correct. You have just stated that you don't know what bond valuation means. You posted something, in reply to the very first comment I made after the moderators asked us to tone it down, which was in no way related to what I had asked and demonstrated your misunderstanding of the question and inability to properly apply the data that you do have. You can claim that it was relevant to the discussion if you'd like, but it was not. In the process of discussing it, you have dug a hole for yourself, deeper and deeper and deeper, and had not one, but two separate people call you out on what you've posted. You refuse to accept that what you stated wasn't relevant, but it's all been just one more demonstration of you derailing conversations.

Did you go read up on bond valuations? If you did, you will understand my frustrations. I know that you didn't, which is just another source of my frustrations.

I will be happy to stay off your posts when you start posting things that are actually relevant to the conversation, and don't demonstrate your foolishness by arguing on what bond valuations mean and showing that you don't understand one of the most basic financial asset principles there is.

[Smith1776]

lmao

[Jack Jones]

Although most people on the forum now tend to dismiss Budd, either I missed or there never was a great response to his opinion. If we are actually in a multi-year trend of slowly rising interest rates, what will keep the PP or any Risk Parity portfolio from having the losses we have seen this year happening every year until it ends?

The PP is supposed to be for money you can't afford to lose. That was it's mantra. Well this year it has lost -12% and a lot more in real terms. Maybe T Bills or cds are for money you can't afford to lose?

I think if rates continue to rise as part of a multi-year trend, there is absolutely no investment vehicle that will save you this time around. In fact, investments will be the least of your concerns at that point.

Also, I think that the incredible (and inexplicable) growth in asset value in the middle of a global pandemic that (rightly or wrongly) shut down entire economies for months is somewhat distorting everyone's opinion of things. Yes, the PP has lost value, just like everything else, but if you compare it back to pre-pandemic, things aren't terrible, even on an inflation adjusted basis. Things look alot worse right now because we're coming down from mid-pandemic highs that we really had no business ever touching. I urge patience as people evaluate things, even over the next several years. I think we're a long, long way away from the dust settling from the covid shutdowns. What's the end result? I don't know and neither does anyone else. Continued rampant inflation, long-term massive deflation, recessions/depressions, housing collapses, energy shortages, etc. etc. There's no shortage of potential outcomes and no way to know which asset classes will outperform or underperform moving forward.

Great post.

[johnnywitt]

Although most people on the forum now tend to dismiss Budd, either I missed or there never was a great response to his opinion. If we are actually in a multi-year trend of slowly rising interest rates, what will keep the PP or any Risk Parity portfolio from having the losses we have seen this year happening every year until it ends?

The PP is supposed to be for money you can't afford to lose. That was it's mantra. Well this year it has lost -12% and a lot more in real terms. Maybe T Bills or cds are for money you can't afford to lose?

I think if rates continue to rise as part of a multi-year trend, there is absolutely no investment vehicle that will save you this time around. In fact, investments will be the least of your concerns at that point.

Also, I think that the incredible (and inexplicable) growth in asset value in the middle of a global pandemic that (rightly or wrongly) shut down entire economies for months is somewhat distorting everyone's opinion of things. Yes, the PP has lost value, just like everything else, but if you compare it back to pre-pandemic, things aren't terrible, even on an inflation adjusted basis. Things look alot worse right now because we're coming down from mid-pandemic highs that we really had no business ever touching. I urge patience as people evaluate things, even over the next several years. I think we're a long, long way away from the dust settling from the covid shutdowns. What's the end result? I don't know and neither does anyone else. Continued rampant inflation, long-term massive deflation, recessions/depressions, housing collapses, energy shortages, etc. etc. There's no shortage of potential outcomes and no way to know which asset classes will outperform or underperform moving forward.

Great post.

Yeah, I've taken it hard in the Nads on my LTT, but I'm sticking with the OG HBPP for my Core Portfolio. I'm glad I bought Major Integrated Big Oil though and BHP in my VP.
The PP needs to be evaluated at year end and we will see where it is relative to other Portfolios at that time. Going in, you should know that you can be upside down for 3 years based on backtesting over on Tyler's Site. Three years is a long time for the avg. Punter.

[amdda01]

Checking in w/ everyone - How are we feeling w/ TLT tanking big time?

[dualstow]

Checking in w/ everyone - How are we feeling w/ TLT tanking big time?

Feeling old

[dockinGA]

Checking in w/ everyone - How are we feeling w/ TLT tanking big time?

Glad that I also hold a big batch of US dollars, which appears to be the only thing anyone actually wants anymore.

[dualstow]

Glad that I also hold a big batch of US dollars, which appears to be the only thing anyone actually wants anymore.

I’ve never bought UUP - no fancy investments for me — but I admit I search once in a while to see if there’s talk of it.
ADDED: that was just a passing comment on the strength of the dollar and not a recommendation. Definitely not a pp-approved instrument!

[Xan]

Glad that I also hold a big batch of US dollars, which appears to be the only thing anyone actually wants anymore.

I’ve never bought UUP - no fancy investments for me — but I admit I search once in a while to see if there’s talk of it.

I think he's talking about the PP's cash allocation, or something equivalent.

[dualstow]

I think he's talking about the PP's cash allocation, or something equivalent.

Oh yeah, that was a random-looking sidenote. I’ll append that to clarify.

[Hal]

Checking in w/ everyone - How are we feeling w/ TLT tanking big time?

Just a side note on Smithy's GoldSmith Portfolio. Because you don't "see" the swings in the individual asset classes, it "feels" more stable. Just a perception issue, but very real for a nervous investor.

[amdda01]

Will TLT break 100 today?

[amdda01]

TLT 100.95.

Just brutal.

[Smith1776]

Checking in w/ everyone - How are we feeling w/ TLT tanking big time?

Just a side note on Smithy's GoldSmith Portfolio. Because you don't "see" the swings in the individual asset classes, it "feels" more stable. Just a perception issue, but very real for a nervous investor.

Indeed! Definitely one of my favourite features is this "masking" effect. Really helps with behavioural control on the part of the investor!

[jason]

Checking in w/ everyone - How are we feeling w/ TLT tanking big time?

Feeling a bit dumb. This seemed like an obvious scenario many months ago. High inflation, the fed raising rates, Treasuries crashing - what else was going to happen? I was tempted to dump my Treasuries as soon as there was talk of raising rates to control inflation but I held firm and did not make any trades because I don't trust my own predictions - for good reason. But now I feel dumb for walking directly into an obvious trap.

[Smith1776]

Checking in w/ everyone - How are we feeling w/ TLT tanking big time?

Feeling a bit dumb. This seemed like an obvious scenario many months ago. High inflation, the fed raising rates, Treasuries crashing - what else was going to happen? I was tempted to dump my Treasuries as soon as there was talk of raising rates to control inflation but I held firm and did not make any trades because I don't trust my own predictions - for good reason. But now I feel dumb for walking directly into an obvious trap.

Hindsight is always 20/20. Don't despair. Stay the course.

[jason]

Checking in w/ everyone - How are we feeling w/ TLT tanking big time?

Feeling a bit dumb. This seemed like an obvious scenario many months ago. High inflation, the fed raising rates, Treasuries crashing - what else was going to happen? I was tempted to dump my Treasuries as soon as there was talk of raising rates to control inflation but I held firm and did not make any trades because I don't trust my own predictions - for good reason. But now I feel dumb for walking directly into an obvious trap.

Hindsight is always 20/20. Don't despair. Stay the course.

In this case, I felt like the foresight was close to 20/20. I am very stressed. I have little income beyond my investment income. If things don't turn around soon I'm going to have to slash my expenses, possibly sell my house, etc. This is getting ugly.

[dockinGA]

Checking in w/ everyone - How are we feeling w/ TLT tanking big time?

Feeling a bit dumb. This seemed like an obvious scenario many months ago. High inflation, the fed raising rates, Treasuries crashing - what else was going to happen? I was tempted to dump my Treasuries as soon as there was talk of raising rates to control inflation but I held firm and did not make any trades because I don't trust my own predictions - for good reason. But now I feel dumb for walking directly into an obvious trap.

Hindsight is always 20/20. Don't despair. Stay the course.

In this case, I felt like the foresight was close to 20/20. I am very stressed. I have little income beyond my investment income. If things don't turn around soon I'm going to have to slash my expenses, possibly sell my house, etc. This is getting ugly.

Just be patient and let's see where things end up. Things do look ugly, but it looks ugly for everyone, no matter what they're invested in. This could be the end of things like the 4% rule and historic SWR's, but most likely it is not.

Foresight was not 20/20, it just seemed that way at the time. If it was actually that easy to predict, then there would've been no one invested in LTT's, and the rates that the market determined would've been much higher.

Look on the bright side, LTT's are on fire today.

[glennds]

In this case, I felt like the foresight was close to 20/20. I am very stressed. I have little income beyond my investment income. If things don't turn around soon I'm going to have to slash my expenses, possibly sell my house, etc. This is getting ugly.

Just be patient and let's see where things end up. Things do look ugly, but it looks ugly for everyone, no matter what they're invested in. This could be the end of things like the 4% rule and historic SWR's, but most likely it is not.

Foresight was not 20/20, it just seemed that way at the time. If it was actually that easy to predict, then there would've been no one invested in LTT's, and the rates that the market determined would've been much higher.

Look on the bright side, LTT's are on fire today.

Foresight is 20/20 in hindsight. I mean that more sincerely than it probably sounds.

At the moment things are incredibly volatile. Anything could happen really.
For example, it could still turn out that some % of the inflation we are fighting is pandemic related disruption. And if this % self-resolves, there is a possibility of over-correcting into a deflation (rather than stagflation).
A year from now the Fed could be talking about easing to stem deflation.
Or we could be mired in an extended recessionary malaise.
Or there could be a currency crisis due to someone's currency collapsing and kicking off a global contagion.
Or all could be well because the rate hikes will have done their job, inflation subsides and signs of prosperity and growth re-appear. Powell is a hero.

Personally, I'm worried about the stability of the real estate market, both residential and some segments of commercial. Just the inverse relationship between interest rates and cap rates is a lot of value destruction. We have had just way too much price appreciation in residential. Commercial office hasn't yet felt the full effect of WFH and may not until lease terms come due.

Yeah, I'm not wild about Treasuries, and I'm totally disillusioned that gold hasn't done more. But I don't know of a dog with fewer fleas at this point. I rebalance around year end. It'll be interesting to see how things look.

[yankees60]

Foresight is 20/20 in hindsight. I mean that more sincerely than it probably sounds.

At the moment things are incredibly volatile. Anything could happen really.
For example, it could still turn out that some % of the inflation we are fighting is pandemic related disruption. And if this % self-resolves, there is a possibility of over-correcting into a deflation (rather than stagflation).
A year from now the Fed could be talking about easing to stem deflation.
Or we could be mired in an extended recessionary malaise.
Or there could be a currency crisis due to someone's currency collapsing and kicking off a global contagion.
Or all could be well because the rate hikes will have done their job, inflation subsides and signs of prosperity and growth re-appear. Powell is a hero.

Personally, I'm worried about the stability of the real estate market, both residential and some segments of commercial. Just the inverse relationship between interest rates and cap rates is a lot of value destruction. We have had just way too much price appreciation in residential. Commercial office hasn't yet felt the full effect of WFH and may not until lease terms come due.

Yeah, I'm not wild about Treasuries, and I'm totally disillusioned that gold hasn't done more. But I don't know of a dog with fewer fleas at this point. I rebalance around year end. It'll be interesting to see how things look.

Is what I saw correct? That mortgage rates jumped to 7%. One of the fastest climbs on record? That will bring down prices of real estate.

You used the term "value destruction". How about someone trying to buy a house now (as is the person temporarily living with me) after this tremendous run up in prices?

For years and years on end my house could never be worth even $150,000. Then last month on Zillow I saw it was worth $210,000. A 40% increase in value in almost no time at all?

In my case my house value is meaningless as I tell everyone that unless I have to end up in a nursing home I'm dying in this house.

[Kbg]

Feeling a bit dumb. This seemed like an obvious scenario many months ago. High inflation, the fed raising rates, Treasuries crashing - what else was going to happen? I was tempted to dump my Treasuries as soon as there was talk of raising rates to control inflation but I held firm and did not make any trades because I don't trust my own predictions - for good reason. But now I feel dumb for walking directly into an obvious trap.

What was your spend down plan?

It could very well be your portfolio is fine, but your plan was not well conceived. The size of drawdown we are having is well within the norms of what should be "doable" with a good plan.

In sum, your focus may be in the wrong place. If your plan is bad, you need to make those adjustments before tweaking the portfolio...at the end of the day, over a recently long period, say 20 years or more, there is not a whole lot of difference in the performance and risk characteristics of available retail investor portfolios.

[jason]

Feeling a bit dumb. This seemed like an obvious scenario many months ago. High inflation, the fed raising rates, Treasuries crashing - what else was going to happen? I was tempted to dump my Treasuries as soon as there was talk of raising rates to control inflation but I held firm and did not make any trades because I don't trust my own predictions - for good reason. But now I feel dumb for walking directly into an obvious trap.

What was your spend down plan?

It could very well be your portfolio is fine, but your plan was not well conceived. The size of drawdown we are having is well within the norms of what should be "doable" with a good plan.

In sum, your focus may be in the wrong place. If your plan is bad, you need to make those adjustments before tweaking the portfolio...at the end of the day, over a recently long period, say 20 years or more, there is not a whole lot of difference in the performance and risk characteristics of available retail investor portfolios.

My spend down plan was doing a 4% withdrawal rate. Since the worst year the PP ever had was -5%, I was kind of hoping I could count on not experiencing a 20%+ drop by the end of this year. I know the year is not over, but it's getting close. The problem is that over the past 9 years while I was doing the PP, my CAGR was only around 5%. A 60/40 portfolio has been almost double that. So both are experiencing a similar drawdown, but my low PP returns over the past 9 years make this hit really hard to take. If I had been doing 60/40 for the past 9 years, I'd still be pretty happy right now.