Treasury Bonds, help with basics...

[OldAgePensioner]

wab,
Bern, said that over the long term stocks were the best investment!

Wab, Don Qixote was considered "insane" for his life but died "sane".

Nothing would please me more.

 

[wabmester]

he said that over the long term stocks were the best investment!

And your back-to-work term is long term?

 

[OldAgePensioner]

wab,
you have me flayed to the marrow. I'm the forum idiot.

But, it's nay, never, nay never, no more, will I be the wild rover, nay, never no morel

 

[wabmester]

I'm the forum idiot.

I didn't even realize you were a contender. Congrats!

Anyway, allow me a rant about Bernstein and long-term stock gains. What he doesn't tell you in his book (although he understands this) is that those long-term stock gains are a historical by-product of a young and vigorous nation during a 200-year period of jaw-dropping discoveries and technological inventions, and with a fast-growing population of youngsters willing to work their butts off.

The future may be different. In fact, we know for a fact that the demographics will be different. If you had to boil Bernstein's wisdom down to one sentence it is that stocks grow as the economy grows (less 2% for stock dillution). Your long-term (?) bet on stocks is a long-term bet on economic growth in this country (assuming you're buying domestic stocks).

 

[OldAgePensioner]

WAB,
As a the board's loon, I demand respect! Capice?

 

[cute fuzzy bunny]

Hey - Flip ya for it...

 

[OldAgePensioner]

Just Not,
Board loon? Even or odd?

 

[cute fuzzy bunny]

Even or odd?

Yessssssssssssss!

Ok, If I have to pick one, is there any other choice?

ODD!

 

[OldAgePensioner]

Odd, it is!

I lose. Board loon shall remain my domicile and bunker of resistance against those claiming that ER is simple.

 

[cute fuzzy bunny]

Oh crap, you mean odd loses the right to be board loon?

Crap.

EVEN then! But its odd to be even.

 

[OldAgePensioner]

It seems that math is even odder that ()!

 

[Nords]

Wabmester,
As I return to work, do you feel bonds are required in a portfolio while the individual has no desire for additional income?

For gosh's sake, listen to the man.

Bonds serve to reduce volatility in a portfolio as well as to provide diversification. Oh, yeah, there's income too, but that can be reinvested or used to balance an asset allocation. IMO income is not a primary reason for a bond's existence any more than dividends are a primary reason to buy a stock.

Based on your previous posts, [jack nicholson]you can't handle the volatility.[/jn]

 

[zzyp]

Recent deflation

I believe that the last period of deflation of any note was the Great Depression. Maybe there was a brief period in the late 40s early 50s, when there was a pretty severe recession, but obviously it didn't last long.

Deflation of any note! How about 2009 compared to 2008, at least according to CPI. That is why not SS increase in 2010 because of the CPI decrease which would have resulted in a reduction except the SS rules is that the CPI adjustment to SS is never negative. Some of my inflation protected Series I savings bonds, went from 6% to 0% for 6 months which had a rate of 3% + CPI for each 6 months. Since 6 mo. CPI increase was -5%, that added to 3% was a negative number. However that also was controlled to 0% minimum.

How did it happen? Well 2008 had an energy cost bubble (think gasoline over $4, crude over $100/barrel) that went away in 2009, and there were rent reductions in 2009 according to the Department of Labor. The CPI used is technically CPI-U which is supposedly the cost of a typical urban worker's expenses. If interested, go to the Bureau of Labor Statistics, it is quite technical.

This may not meet the definition "of any note", but according to CPI figures these things happen. Actually, in the 6 month period ending in November 2009 inflation is again positive and my Series I bonds are now, or soon will be positive, and new Series I savings bonds pay more than bank CDs.

-zzyp-

 

[brewer12345]

Deflation of any note! How about 2009 compared to 2008, at least according to CPI. That is why not SS increase in 2010 because of the CPI decrease which would have resulted in a reduction except the SS rules is that the CPI adjustment to SS is never negative. Some of my inflation protected Series I savings bonds, went from 6% to 0% for 6 months which had a rate of 3% + CPI for each 6 months. Since 6 mo. CPI increase was -5%, that added to 3% was a negative number. However that also was controlled to 0% minimum.

How did it happen? Well 2008 had an energy cost bubble (think gasoline over $4, crude over $100/barrel) that went away in 2009, and there were rent reductions in 2009 according to the Department of Labor. The CPI used is technically CPI-U which is supposedly the cost of a typical urban worker's expenses. If interested, go to the Bureau of Labor Statistics, it is quite technical.

This may not meet the definition "of any note", but according to CPI figures these things happen. Actually, in the 6 month period ending in November 2009 inflation is again positive and my Series I bonds are now, or soon will be positive, and new Series I savings bonds pay more than bank CDs.

-zzyp-

You are dredging up a thread from 2005? Sheesh.

In any case, as expected with the treat of deflation the pump was primed with monetary policy and fiscal stimulus so deflation was very brief and is now in the rearview mirror. Meanwhile there were great deals available on TIPS in early 2009. Hope you grabbed some...

 

[HFWR]

You are dredging up a thread from 2005? Sheesh.

In any case, as expected with the treat of deflation the pump was primed with monetary policy and fiscal stimulus so deflation was very brief and is now in the rearview mirror. Meanwhile there were great deals available on TIPS in early 2009. Hope you grabbed some...

TIPs, corporates, and junk were all priced for disaster. Glad I bought some.

Of course, I'm not a DMT...

 

[zzyp]

You are dredging up a thread from 2005? Sheesh.

In any case, as expected with the treat of deflation the pump was primed with monetary policy and fiscal stimulus so deflation was very brief and is now in the rearview mirror. Meanwhile there were great deals available on TIPS in early 2009. Hope you grabbed some...

Sorry about old message, was looking for something else using key word search, ran across your message and though it needed reply, only noticed later the date.

I didn't have funds available then much, and still did not fully understand the longer term advantages of tips. So, I did miss out. I suppose when I was selling i bonds with 1% or less fixed (paying 0%) after May of '09, that I should have bought TIPs instead of CDs.
-zzyp-