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Old 05-16-2008, 09:35 AM   #21
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I find junk and bank loans to be very attractive. Treasuries don't do anything for me.
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Old 05-16-2008, 02:18 PM   #22
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I agree that in a depression long Treasury (not corporate) bonds would be best. What percentage of your portfolio do you have in long term bonds? I've read though haven't seen the data that long bonds have not compensated you for the risk and that intermediate bonds are therefore best. The reason is apparently that long bonds are used by insurance companies to match their obligations' duration so they accept lower yields to do so.

I've chosen to emphasize inflation risk over depression risk in our portfolio. So am using 10yr TIPS and short term bonds as per some suggestions from Larry Swedroe. Currently out of TIPS as they are much lower then the long term average for real rates on intermediate bonds of 2.3%.


I run 2 portfolios , one consists of following the fidelidy insight newsletter which i have been doing for over 20 years.

the other is my bullet proof portfolio which i recently started because of this confusing economic enviornment we are in. i figure if the trend is bad enough ill profit no matter what .

25% TLT LONG TERM TREASURY
25% GLD GOLD
25% VTI MARKET INDEX
25% US TREASURY MONEY MARKET
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Old 05-16-2008, 02:29 PM   #23
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I run 2 portfolios , one consists of following the fidelidy insight newsletter which i have been doing for over 20 years.

the other is my bullet proof portfolio which i recently started because of this confusing economic enviornment we are in. i figure if the trend is bad enough ill profit no matter what .

25% TLT LONG TERM TREASURY
25% GLD GOLD
25% VTI MARKET INDEX
25% US TREASURY MONEY MARKET
Sounds like, whatsisname, Harry Browne has been reanimated. Frankly, I think a broader commodity index would be a better choice than the gold.
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Old 05-16-2008, 02:47 PM   #24
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YEP i loved ole harry ..... always thought the gold was a drag on it though back before gold was on the radar again as an asset class and so i got out of it 20 years ago

i also thought to go with a broad based commodities fund but after listening to harrys old broadcasts he was against it because other commodities respond to other things as well both up and down and not just inflation or dollar issues. . he wanted a pure gold play , sold my GSG which i had quite a while and bought gld
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Old 05-16-2008, 04:35 PM   #25
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Not to pick on CFB , but I'm curious if people also realize that when long term nominal bonds/TIPS fall in value because interest rates rise, the present value of their long term liabilities are also falling. If my TIPS fall by 15-20% at the same time he present value of my future liabilities fall by a similar amount, have I really lost?

Just curious,
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What's that again? If a hillbilly like Ha can't understand it, it may be bogus.

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Old 05-17-2008, 04:51 AM   #26
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Originally Posted by lsbcal View Post
I agree that in a depression long Treasury (not corporate) bonds would be best. What percentage of your portfolio do you have in long term bonds? I've read though haven't seen the data that long bonds have not compensated you for the risk and that intermediate bonds are therefore best. The reason is apparently that long bonds are used by insurance companies to match their obligations' duration so they accept lower yields to do so.

I've chosen to emphasize inflation risk over depression risk in our portfolio. So am using 10yr TIPS and short term bonds as per some suggestions from Larry Swedroe. Currently out of TIPS as they are much lower then the long term average for real rates on intermediate bonds of 2.3%.

intermediate term bonds have done better because we havent had the economic enviornment yet for long term bonds them to have their day in the sun. again we are talking long term bonds for portfolio protection not for income or performance in any other scenerio but deflation/depression
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Old 05-17-2008, 07:40 AM   #27
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What's that again? If a hillbilly like Ha can't understand it, it may be bogus.

ha
It's just something I've been thinking about recently. Say you've got expenses of $3,000/month for the next 20 years, and that they rise with inflation every month/year. You can find the present value of those expenses, and take inflation out of the equation, by discounting them by the real yield on LT TIPS [currently around 2%]. If LT real rates rise, the present value of those expenses falls, as will the value of LT TIPS, notably at the same time. After all, isnt' the current price of TIPS just the present value of all its payments, discounted at the current YTM of the LT TIPS?

- Alec
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Old 05-21-2008, 01:52 PM   #28
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I wonder if $133+ oil and the S&P 500 losing 2.5% in two days will make a difference with bonds? Or does it suck to be invested in just about anything these days?
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Old 05-21-2008, 04:43 PM   #29
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long term bonds have been tracking oil lately. like a buzzard following a sickly animal ... when oil rises TLT has been up most days. i guess the longer term bond market feels somethings got to give and push us over the edge and they seem to be riding back up on oils coat tails....
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Old 05-21-2008, 04:52 PM   #30
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2yr TIPS are implying 2.4% inflation and 10yr TIPS something like 2.5% (up from 2.3% a while ago, if I recall correctly). Here's a good link to the TIPS rates:
Treasury Inflation-Protected Securities (TIPS) - Markets Data Center - WSJ.com
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Old 05-23-2008, 01:39 PM   #31
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There is value in some segments of the credit markets. Not Treasuries or TIPS. Junk and its sub-segment leverage loans are attractive as spreads have widened and very high default rates have been factored into prices. Given the yield curve I think anything but the shortest maturities is dangerous. Examine durations.

I discovered convertibles after an article in the WSJ last week. Fidelity and Vanguard have Convertible funds but they are very different -- the former being more aggressive and having more of a capital gains than yield focus. Convertibles seem to be less risky than equities but more risky than some debt at this juncture.
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