Gyroscopic Investing

Specifically: if I hold onto my long bonds when they only have 20 years left, BUT
+ I put those 20-year instruments in the vp
+ I buy new 30-year bonds for the pp
+ I make sure that there has been no outflow from pp to vp by adding cash and/or stocks, gold, bonds

is that kosher?

Nearly 100 views and no takers?

Confession time: I just made a substantial contribution to my 401(k) last week and I am having a hard time pressing the button on more long bonds. Have to do it, though. Just have to.

Now is a great time to buy.

It's a pullback in the midst of a long term deflationary trend.

Or so my crystal ball says.

FWIW, as long as you are transferring an equal amount of cash from your VP back into the PP and using it to buy LT bonds, this seems okay to me.

In other words, if you transfer $10,000 of LT bonds from your PP to your VP, then you would transfer $10,000 in cash from your VP to your PP and use it to buy LT bonds.  So long as you're doing that, it seems equivalent to me.  (Assuming you're not "transferring" between tax-deferred and non-tax-deferred accounts or any other such funny business.)

Are you trying to avoid realizing some capital gains?

Lone Wolf wrote: FWIW, as long as you are transferring an equal amount of cash from your VP back into the PP and using it to buy LT bonds, this seems okay to me.

In other words, if you transfer $10,000 of LT bonds from your PP to your VP, then you would transfer $10,000 in cash from your VP to your PP and use it to buy LT bonds.  So long as you're doing that, it seems equivalent to me.  (Assuming you're not "transferring" between tax-deferred and non-tax-deferred accounts or any other such funny business.)

Are you trying to avoid realizing some capital gains?

If one holds a deflationista viewpoint... this isn't a half-bad idea for a VP... though i hate the idea of LTT's outside my retirement accounts (though they are ironically one of the most difficult things to get into a fat 401k account).

Thanks guys.

Lone Wolf wrote: Are you trying to avoid realizing some capital gains?

No, my bonds are almost all in my 401(k) so selling is not a problem, taxwise.

moda0306 wrote: If one holds a deflationista viewpoint... this isn't a half-bad idea for a VP... though i hate the idea of LTT's outside my retirement accounts (though they are ironically one of the most difficult things to get into a fat 401k account).

Difficult because of the choices allowed by an employer? In my case, it's not an issue. my 401(k) doesn't have much of anything but directly held LT treasuries (in Fidelity).

MediumTex wrote: Now is a great time to buy.

It's a pullback in the midst of a long term deflationary trend.

Or so my crystal ball says.

My two favorite crystals: Medium Tex's crystal ball and a grain of salt.
Well, I bought more 30-YRs yesterday.

dualstow wrote:

MediumTex wrote: Now is a great time to buy.

It's a pullback in the midst of a long term deflationary trend.

Or so my crystal ball says.

My two favorite crystals: Medium Tex's crystal ball and a grain of salt.
Well, I bought more 30-YRs yesterday.

Congratulations on contributing a substantial amount to your 401k and for buying the 30's.
After reading a number of posts on this forum, specifically relating to LTT's, it seems as though the more skeptical one becomes the better the time to buy.
Just when we think rates can't go any lower...............

dualstow wrote: Specifically: if I hold onto my long bonds when they only have 20 years left, BUT
+ I put those 20-year instruments in the vp
+ I buy new 30-year bonds for the pp
+ I make sure that there has been no outflow from pp to vp by adding cash and/or stocks, gold, bonds

is that kosher?

I do something like this with rebalancing the precious metals allocation of my PP.  When the price of gold gets high enough to rebalance, I "sell" gold to the VP.  I then use the cash that just came into the PP (from the gold "sale") to balance all the assets. 

When I reach the point where I want to make a substantial new investment in my PP, I start by rebalancing it to set a base point.  I then add gold, that I take from the VP (and buy from dealers if necessary), then enough cash to add the other asset classes to the PP.  I rebalance again.

The advantage of doing it like this is I don't have to sell any of my gold on the open market.  It's in physical form (no ETFs), and selling it would introduce all sorts of unnecessary hassles to my PP. 

YMMV.

I understand the part about "selling" the gold, recharacterizing it as vp gold, but where is the new cash coming from since there was no real sale? Do you have cash sitting in your vp in addition to the 25% that's supposed to be in the pp?
---
I'll try to think of it that way, Alan. :-) My perspective is that the bond-fearers are going to be right eventually, which isn't a very healthy perspective.

Dualstow, since I'm still in the accumulation phase, I always have cash coming in, ready to go into either the VP or the PP.  And there is always cash in both the PP and VP.