2010-12-08 - Bonds for the Permanent Portfolio

[craigr]

Podcast for December 8th, 2010

Topics

What bonds to buy for the Permanent Portfolio.

Why only own 100% US Treasury Bonds?

Why to avoid municipal, corporate, junk and government agency bonds.

Problems with actively managed bond funds.

Individual bonds vs. bond funds.

Performance of bonds in 2008's market crash.

How to buy bonds.

Recommended bond funds if you can’t buy individual bonds.

Dangers of reaching for yield.

Are bonds too expensive today?


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[dualstow]

Very informative podcast. I did not know that VUSTX was not a wise choice. I currently hold both 30-Year Treasuries (directly) and VUSTX, but not so much of the latter. I will probably only buy direct or TLT from on.

[dualstow]

If you don't mind a little nitpicking
- You shouldn't say "down minus ten percent." Just down ten percent.
- And, pundits, not pundints.

Again, the podcast was very informative. I really enjoyed it.

[craigr]

Very informative podcast. I did not know that VUSTX was not a wise choice. I currently hold both 30-Year Treasuries (directly) and VUSTX, but not so much of the latter. I will probably only buy direct or TLT from on.

It's Ok. Just not as good as other options if you have them. I wish they wouldn't do the 80/20 thing with their Treasury funds. I see no point in this activity.

[craigr]

If you don't mind a little nitpicking
- You shouldn't say "down minus ten percent." Just down ten percent.

Ah yes. Just trying to get the point across about how badly these other options had done.

- And, pundits, not pundints.

I'll have to listen to how I'm pronouncing that word. I didn't know it was coming off that way.

[dualstow]

I'll have to listen to how I'm pronouncing that word. I didn't know it was coming off that way.

Maybe it's just the mic. You still don't sound nasal, like I do.

[Lone Wolf]

Very much enjoyed the bond overview \ review.  I think you especially dismantled the idea of junk bonds (pardon me, high-yield bonds) as a good portfolio diversifier, a concept that has always struck me as a bad idea.

The GNMA coverage was also good for breaking down why even a "full faith and credit" instrument may not fit properly into a Permanent Portfolio due to its characteristics.  I remember finding it enlightening when Browne covered these points in "Why the Best-Laid Investment Plans Usually Go Wrong".