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Re: Time to buy bond funds or keep waiting?
Old 04-02-2006, 09:28 PM   #21
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Re: Time to buy bond funds or keep waiting?

I don't believe CPI is a true indication of what's happening to the dollar, and I think gold (real estate, commodities, etc.) is a better indicator, albeit not perfect.* Thus, I tend to think bond funds are performing worse than they appear.

Two headwinds ... rising interest rates, dropping dollar value.

Help?* Different perspective?

If someone has an interest in bonds, why wouldn't individual bond issues at least be a better choice?* Honest question ... I am not an experienced bond investor.
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Re: Time to buy bond funds or keep waiting?
Old 04-03-2006, 07:29 AM   #22
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Re: Time to buy bond funds or keep waiting?

Quote:
Originally Posted by Charles

If someone has an interest in bonds, why wouldn't individual bond issues at least be a better choice?* Honest question ... I am not an experienced bond investor.
If you are looking for a low risk proposition to reduce portfolio volatility, it is tough to get enough diversification as a retail investor in bonds. You also have the issue of the bond market being nowhere near as liquid or low cost as the equity market, so as a retail guy you get skinned by the brokers on every trade.

Now, if you are inclined to treat risky individual bonds as just another equity, then you can do some analysis and buy and sell for coupons plus (hopefully) cap gains. But that is a very different game than what most people here want out of bonds.
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Re: Time to buy bond funds or keep waiting?
Old 04-03-2006, 05:40 PM   #23
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Re: Time to buy bond funds or keep waiting?

Quote:
Originally Posted by Charles
I don't believe CPI is a true indication of what's happening to the dollar, and I think gold (real estate, commodities, etc.) is a better indicator, albeit not perfect.*


Why so much concern over the dollar? If you live in the U.S. your cost of living is denominated in dollars. If the dollar falls, so what? Now if you say that you are worried about higher inflation due to a falling dollar, that is a legitimate concern. But CPI indexed bonds are a good hedge against that risk. Commodities might be a good hedge, but they might not be if global economic weakness brought on by a falling dollar reduces demand for commodities. Remember China and India are exporting to the U.S., if we sneeze, they catch bird flu.
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Re: Time to buy bond funds or keep waiting?
Old 04-03-2006, 10:18 PM   #24
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Re: Time to buy bond funds or keep waiting?

Empires rise, and fall.* Just feels like a wise time to put a larger allocation into investments that can do well even if the dollar continues to decline.* My home debt is in dollars, and we create more buying power for retirement if we ignore the concept that
Quote:
If you live in the U.S. your cost of living is denominated in dollars.* If the dollar falls, so what?
So what ... may translate into much higher prices in the U.S.* CPI is running at 3.99% in 1/06 ...* highest since 1991 ... if one has confidence in CPI, and comparability to prior years (if not, perhaps true CPI is really much higher).* Yes, we have concerns about inflation.* The I-Bonds seem to currently have a very small real return.

To each his own.* Perhaps ignorance on my part, but to the extent I want to hold cash, bonds just don't seem a likely better investment than CD's in, say, Pentagon FCU.* I may be overly concerned, but ... I don't see much harm in the hedge.
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Re: Time to buy bond funds or keep waiting?
Old 04-04-2006, 11:58 AM   #25
 
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Re: Time to buy bond funds or keep waiting?

How low can rates go?
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Re: Time to buy bond funds or keep waiting?
Old 04-04-2006, 12:12 PM   #26
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Re: Time to buy bond funds or keep waiting?

Quote:
Originally Posted by TromboneAl
How low can rates go?
Ask the Japanese about that.
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What Bill Gross Says
Old 04-04-2006, 05:17 PM   #27
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What Bill Gross Says

Sounds to me, as I try to parse his turgid prose, that Big Bill is saying- Stay Short.

"We do suggest, however, a strategic boycott of most risk assets based on the reality that an investor is not being paid adequately to hold them, as well as the Greenspan assumption that today’s low risk premiums ultimately lead to future periods that end badly. In turn, we currently suggest a substitution of near cash assets and non-dollar currencies for standard index assets. These out-of-index bets ultimately should produce higher returns with less than expected risk if done in moderate quantities. As with people, bad things can happen to historically good assets if driven to overvaluation. Blindly adhering to an index in order to insure a positive but diminishing relative alpha return is probably not an intelligent response to today’s dilemma. Recognizing and ultimately avoiding the tyranny of an index can in effect produce a higher return with less risk. We hope with your guidance to be able to move in that direction in order to remain the future “Authority on Bonds.”

William H. Gross

http://www.pimco.com/LeftNav/Late+Br...April+2006.htm


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Re: Time to buy bond funds or keep waiting?
Old 04-04-2006, 07:55 PM   #28
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Re: Time to buy bond funds or keep waiting?

I really respect Gross on bonds. But his track record on other asset types is not so impressive. Still like he implies and as I understand Buffett is doing, I have upped my AA % in foreign stocks. Other than that I just DCA into my mostly Lifecycle index funds, I am not worried as I am still in the accumulation phase. And I will be getting a COLAd pension someday.
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Re: What Bill Gross Says
Old 04-04-2006, 08:31 PM   #29
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Re: What Bill Gross Says

Quote:
Originally Posted by HaHa
Recognizing and ultimately avoiding the tyranny of an index can in effect produce a higher return with less risk.
The siren song of market timing beckoning us toward the shoals.
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