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6¼ % long bond
Posted: Sat Dec 07, 2013 9:11 am
by dualstow
I was revisiting Harry Browne's radio show archives this morning and selected the 04-11-14.mp3 file at random.
That's November 14, 2004.
At 27:15, Greg from Portland asks, "I know you currently recommend the 6¼% treasury bond of 2030 ... I know a person shouldn't try to time the market, but wouldn't it be advisable to hold off buying the 6¼% bond?"
I'll keep this in mind every time I think about tinkering.
Re: 6¼ % long bond
Posted: Sat Dec 07, 2013 10:05 am
by Ad Orientem
Re: 6¼ % long bond
Posted: Mon Dec 09, 2013 3:03 am
by MediumTex
Interest rates back then were so low, they really had nowhere to go but up.
Everyone thought that was pretty obvious.
Re: 6¼ % long bond
Posted: Mon Dec 09, 2013 11:30 am
by Bean
MediumTex wrote:
Interest rates back then were so low, they really had nowhere to go but up.
Everyone thought that was pretty obvious.
Makes me wonder, is there a scenario where we could have a deflationary long bond? Not just in real terms, but in rate.
Re: 6¼ % long bond
Posted: Mon Dec 09, 2013 11:51 am
by ns2
Bean wrote:
MediumTex wrote:
Interest rates back then were so low, they really had nowhere to go but up.
Everyone thought that was pretty obvious.
Makes me wonder, is there a scenario where we could have a deflationary long bond? Not just in real terms, but in rate.
Yeah, I wonder about that too. You would think that surely there would be a rate that was so low it had nowhere to go but up, but if we're not there yet, who knows?
Re: 6¼ % long bond
Posted: Fri Dec 13, 2013 1:20 am
by MediumTex
ns2 wrote:
Bean wrote:
MediumTex wrote:
Interest rates back then were so low, they really had nowhere to go but up.
Everyone thought that was pretty obvious.
Makes me wonder, is there a scenario where we could have a deflationary long bond? Not just in real terms, but in rate.
Yeah, I wonder about that too. You would think that surely there would be a rate that was so low it had nowhere to go but up, but if we're not there yet, who knows?
Remember that the closer you get to zero, the harder it gets to push rates down further, which is part of the reason that you get such dramatic price moves in long term bonds at very low interest rates. If rates fell from 2.80% to 1.90%, it would generate huge long bond gains. Similarly, a rate move in the other direction will generate large losses.
Just visualize a tennis court turning into a ping pong table. As the court gets smaller, so do the rackets and the balls, but if anything the action gets more intense.
Re: 6¼ % long bond
Posted: Fri Dec 13, 2013 6:46 am
by dragoncar
MediumTex wrote:
ns2 wrote:
Bean wrote:
Makes me wonder, is there a scenario where we could have a deflationary long bond? Not just in real terms, but in rate.
Yeah, I wonder about that too. You would think that surely there would be a rate that was so low it had nowhere to go but up, but if we're not there yet, who knows?
Remember that the closer you get to zero, the harder it gets to push rates down further, which is part of the reason that you get such dramatic price moves in long term bonds at very low interest rates. If rates fell from 2.80% to 1.90%, it would generate huge long bond gains. Similarly, a rate move in the other direction will generate large losses.
Just visualize a tennis court turning into a ping pong table. As the court gets smaller, so do the rackets and the balls, but if anything the action gets more intense.
What is this, a tennis court for ants???
Re: 6¼ % long bond
Posted: Fri Dec 13, 2013 7:33 pm
by Bean
dragoncar wrote:
What is this, a tennis court for ants???
Needs to be at least... three times bigger than this!
Re: 6¼ % long bond
Posted: Mon Dec 16, 2013 1:48 am
by Tortoise
Bean wrote:
dragoncar wrote:
What is this, a tennis court for ants???
Needs to be at least... three times bigger than this!
For those who haven't had the pleasure of seeing Zoolander (start watching at 1:00):
http://www.youtube.com/watch?v=NQ-8IuUkJJc
