Can’t bring myself to rebalance by buying treasuries

[rllewis]

Seems like Trump was the last chance for the US to cut spending, and it’s NOT happening. So, I am really reluctant to rebalance by buying long term treasuries. Especially at my age, 69. I do remind myself that as much as I don’t trust bonds, they did save me in the 2008 crisis. I remember my brokers were flummoxed that my portfolio increased in value that year.

I just can’t push the button on rebalancing towards treasuries. Am I nuts? Stay the course and trust in the PP? Or is the end near?

A few years ago I met Terry Coxon and asked him if Harry would still be advising the PP. He said just put everything in gold and cash.

[barrett]

Seems like Trump was the last chance for the US to cut spending, and it’s NOT happening. So, I am really reluctant to rebalance by buying long term treasuries. Especially at my age, 69. I do remind myself that as much as I don’t trust bonds, they did save me in the 2008 crisis. I remember my brokers were flummoxed that my portfolio increased in value that year.

I just can’t push the button on rebalancing towards treasuries. Am I nuts? Stay the course and trust in the PP? Or is the end near?

A few years ago I met Terry Coxon and asked him if Harry would still be advising the PP. He said just put everything in gold and cash.

If your brokers were flummoxed then I don't think they understood what bond duration is!

Anyway, I am not the best person to ask but I have come to think of that 2008 example as cherry picking dates. Here is a great site to play around with whatever dates you want to see for the 30-year:

https://fred.stlouisfed.org/series/DGS30

On 11/1/08 the yield was 4.33%. It was 2.69% on 12/31/08 (for a roughly 30% bump in price) and then all the way back up to 4.55% on 6/1/09. This is just looking at rates over time and not counting reinvested coupon payments.

Harry Browne used to say something along the lines that, apart from cash, the different asset classes in the PP could go up 5X in value, but I don't see how that is possible for long-duration bonds unless the starting interest rate is very high.

For the record, I gave up on long bonds about eight years ago and now hold about 35% S&P 500, 15% gold (higher now due to its recent performance) and 50% I-Bonds & US Treasuries.

I totally agree with the first line of your post that Trump is never going to cut spending in any meaningful way. And with his efforts to extend the 2017 TCJA (it seems that it passed in the House yesterday) deficits are only going to continue to go up. Just servicing the existing debt is getting WAY out of hand.

Anyway, a long way to say that I don't think you are nuts. Hope whatever you decide works out well.

[Kevin K.]

Seems like Trump was the last chance for the US to cut spending, and it’s NOT happening. So, I am really reluctant to rebalance by buying long term treasuries. Especially at my age, 69. I do remind myself that as much as I don’t trust bonds, they did save me in the 2008 crisis. I remember my brokers were flummoxed that my portfolio increased in value that year.

I just can’t push the button on rebalancing towards treasuries. Am I nuts? Stay the course and trust in the PP? Or is the end near?

A few years ago I met Terry Coxon and asked him if Harry would still be advising the PP. He said just put everything in gold and cash.

I'm 68 myself and like barrett gave up on LTT's long ago. I agree with you that cutting spending is the last thing that's gonna happen under Trump.

I use a barbell of short-term Treasuries (VGSH) and short-term TIPS in my Golden Butterfly and have no intention of changing. That said, the only long-term bonds I'd consider would be a TIPS ladder. You could lock in a guaranteed, inflation-adjusted 4.6% SWR for the rest of your life in a few keystrokes:

https://www.tipsladder.com/estimate

I'm not comfortable with that option personally and will take my chances with my modified Golden Butterfly. If I were still doing the PP I'd use my current short-term bond barbell, keep the gold for sure (especially given what's going on globally) and (if I could do so without major capital gains consequences) modify the stock from VTI (total U.S.) to VT (global equities, market cap weighted). IMHO all of these moves make sense for a defensive-minded person. IMHO the combination of the tariff idiocy, massive debt increases and foreig policy moves (treating our allies as enemies and our enemies as friends) acts as a major accelerant for the fire that was already burning before Trump took office: China and other countries on the rise, the U.S. and U.S. status and influence in decline.

[flyingpylon]

Is there an age at which any of you would still hold long bonds (i.e. how many years younger would make a difference)? I realize that’s not the only factor here, just curious.

[mathjak107]

once in a while i will use tlt for a quick trade

i don’t trust long bonds as a hold at these rates nor as protection

there are to many reliable ways to get downside protection today thru alternative investments.

i use fidelity conservative bond , fidelity short term bond , fidelity intermediate term bond , none of which have a duration more than 3.6 years in duration.

the last few days i brought down those three in dollars and added vtip and tip .

BUT NO MORE LONG TERM TREASURIES FOR ME AS A PORTFOLIO COMPONENT.

i sold a major portion of my gold yesterday in the run up too. i think the tariff threats have moved gold way to far to fast .

so i will rebuy what i had on the next decent drop of 2 to 5% . even 2% will give me 5k difference

that will let me bank thousands and have my position back