Gyroscopic Investing

Hello, This is a first post to one of my favorite forum site.

Fidelity's site: www.fidelity.com/viewpoints/bonds-on-the-horizon,  speaks of the US treasury considering 50 and 100 year T bonds. I was wondering what folks here think and what Mr. Browne thoughts might have been. Also, how would they fit into the PP allocation. Plus, what disadvantages there would be when selling such long term bonds.

Thanks to all for all the pass, great info.

I'd imagine if there was an "infinity bond" that never paid back principal, that would be 25% of the PP in HB's eyes.

moda0306 wrote: I'd imagine if there was an "infinity bond" that never paid back principal, that would be 25% of the PP in HB's eyes.

Hi moda,

When I compare TLT with VTI on etfreplay.com they have very similar volatility (17.6% and 19.9% respectively) when doing the 36 month backtest. Do you think go further out in maturity could throw the PP out of balance?

We might be lucky that 30 year Treasuries offer the right level of movement. Maybe I should just do some tinkering with excel later and find out 

I was always under the impression that LTT's were considered a little too "stable" compared to stocks (and especially gold) in the PP, but you're probably right, that's it's best to try and get the volatilities within earshot of each other... with the exception of cash.

Very interesting! I have toyed with the idea of holding my 30-YR bonds to maturity, while buying fresh ones when necessary for the PP. It might be a little optimistic to think I could do so with those 100-YR instruments, but oh what wonderful volatility.

As I recall, volatility beyond 30 years doesn't increase as much as you would think.

I seem to recall clive posting information about UK 50 year bonds and they didn't have as much volatility as one would have thought.

The idea of a 100 year treasury, though, is sort of tantalizing.

Here is a table of UK gilt yields:

http://www.fixedincomeinvestor.co.uk/x/ ... ?groupid=3

As you can see, a 30 year gilt has a yield of 3.3% and a 47 year gilt has a yield of 3.34% - i.e. not much difference

I agree with Clive that if the US issued a 50 or 100 yr bond, that would say something about their intentions of using inflation in the coming years.

If that were to happen, I might consider scrapping cash all together and do a 33-33-33% SCV, 50-yr T and Gold mix.

There is no point of using cash, if they are going to telegraph stealth inflation any more than has already occurred.

Thanks for your responses. Would 30 year LTTs become intermittent bonds if a longer 50 or 100 year bond existed?

I'm 55. Will they guarantee that I can redeem these bonds at maturity?