Jack Jones wrote: ↑Wed May 08, 2024 6:54 am
What about insurance for a deflation? If bond interest rates drop significantly, LTT could provide an outsized payoff.
William Bernstein makes the case that the odds are far greater for inflation than deflation.
Since 1900 or so, how many years have had inflation / deflation?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
Jack Jones wrote: ↑Wed May 08, 2024 6:54 am
What about insurance for a deflation? If bond interest rates drop significantly, LTT could provide an outsized payoff.
William Bernstein makes the case that the odds are far greater for inflation than deflation.
Since 1900 or so, how many years have had inflation / deflation?
That would be an argument to have greater insurance against inflation than deflation. But to say that it makes no sense to invest in LTT seems undefended still.
Indeed, how many "deflationary depressions" were there in the United States since the end of gold standard? Is this even a real possibility in a fiat-based economy with a central bank that is determined to keep the economy "up" at any cost and that now is quickly traversing the road from quantitative easing through debt monetization to monetary financing?
At this point I believe inflation is not an event to prepare for, it's just a characteristic of a modern economy. When people are pessimistic, it increases prices of gold and other stuff like that. When people are optimistic, it launches corporate white elephants to the stratosphere instead. (This, I think, explains why gold does not always track inflation in the short term). But that torrent of money will not be drying up, and certainly not reverse ever again.
IMHO using LTT's at all in these circumstances makes no sense.
What about insurance for a deflation? If bond interest rates drop significantly, LTT could provide an outsized payoff.
it reminds me of waiting so long for the ship to come in that the pier collapses .
like peter lynch said , Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.”
Jack Jones wrote: ↑Wed May 08, 2024 6:54 am
What about insurance for a deflation? If bond interest rates drop significantly, LTT could provide an outsized payoff.
William Bernstein makes the case that the odds are far greater for inflation than deflation.
Since 1900 or so, how many years have had inflation / deflation?
That would be an argument to have greater insurance against inflation than deflation. But to say that it makes no sense to invest in LTT seems undefended still.
Agree with that. It would say to have some deflation protection?
But isn't it somewhat similar to taking a short on a stock?
Cannot one have unlimited losses on taking a short on a stock? Similarly, when taking a position to protect yourself against deflation but then there is resulting inflation ... will not that magnify the losses from inflation?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
IMHO using LTT's at all in these circumstances makes no sense.
What about insurance for a deflation? If bond interest rates drop significantly, LTT could provide an outsized payoff.
it reminds me of waiting so long for the ship to come in that the pier collapses .
like peter lynch said , Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.”
"it reminds me of waiting so long for the ship to come in that the pier collapses ."
Is that a mathjak original? Loved it!
Overall, excellent pithy message by you.
Similar to all the time we worry about possible negative events that never materialize.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
Shrinking working age populations is new. But Feds power to print has never been higher. You had 10 years to buy the real estate dip. One month to buy the lockdown dip and a few months to sell LTTs. Is the Fed gonna juice the economy for November, or are they gonna hand Trump a high rate dumpster fire?
IMHO using LTT's at all in these circumstances makes no sense.
What about insurance for a deflation? If bond interest rates drop significantly, LTT could provide an outsized payoff.
it reminds me of waiting so long for the ship to come in that the pier collapses .
like peter lynch said , Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.”
Far more money has been lost by consumers paying for life insurance than has been paid out when they die. It’s still a worthwhile product.
You seem to be arguing that insurance is a bad idea. A better argument would be why deflation isn’t worth insuring against, like the case that Vinny and Arthur made.
because there are better ways today to get on deflation in lower risk portfolios with much better risk to reward profiles then the pp has proven to provide. in more modern times.
odds of deflation are also very slight . certainly i would never bet the same money on deflation as i would prosperity
Good time to tax loss harvest the LTT's. Sell those bonds and buy new LTTs with higher coupons. Doing it made me feel a LITTLE better about the losses.
welderwannabe wrote: ↑Thu May 23, 2024 7:25 am
Good time to tax loss harvest the LTT's. Sell those bonds and buy new LTTs with higher coupons. Doing it made me feel a LITTLE better about the losses.