What would you do?

[hogwild]

If interest rates were to rise to the levels of the period from Oct '79 thru Oct '85, would you buy bonds?

I noticed that the 10-year treasury averaged* 12.1% yield during that period.  If, knowing what you know now, that happened again, would you increase your allocation of  treasuries?  Maybe lock in the dreaded annuity?

*Simple average of monthly ending yields from Oct '79 thru Oct '85.

 

[Spanky]

If I can predict the future with accuracy (or certainty), I would know exactly what to invest (or not to) now.

 

[brewer12345]

The problem with that period is that inflation was raging pretty hard. I wouldn't be all that eager to buy long dated treasuries unless I was confident inflation was going back down. I'm not all that sure inflation will stay under control now, which is why I think TIPS, etc. are probably a better choice.

 

[cute fuzzy bunny]

I'd buy long bonds. Its a sure bet that every stop would be pulled out to crush inflation. I doubt with what we know now that long term high inflation would be allowed to stand.

Sure worked out for my dad. He's still got a bunch of bonds paying high single digits and retired on that box o' bonds...no worries about the stock market at least. Depression baby.