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Bonds but no Treasuries?
Old 01-05-2009, 08:35 AM   #1
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Bonds but no Treasuries?

My wife caught the "famous" Jim Cramer this morning on the Today Show & he was saying to stay out of Treasuries but buy bonds (didn't say what kind). Then he said if you need the money for retirement take it out of stocks. So I asked my wife the timeline on when you need it & where the heck are we suppose to put it. He didn't answer that question.

So my questions to everyone are:

If I'm trying to have a lazy portfolio following the Fund Advice
Fundadvice Ultimate Buy & Hold - Lazy Portfolios -
then where should I put the allocation to Tips & Treasuries that they suggest?

They suggest 20% Intermediate Term Treasuries
12% Short Term Treasuries
8% Tips

How is everyone here allocating the bond portion of their portfolio?


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Old 01-05-2009, 08:53 AM   #2
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Bonds in 2009: Waiting by the exits - Yahoo! Finance

The above link suggests that the market for treasuries is one that should be avoided in the short run.

I have a substantial laddered portfolio in brokerage CD's. I have some TIPs in my IRA, which were purchased at opportune moments when bond prices were down.

My advisor (hourly paid) doesn't like my approach, and keeps telling me to buy more bonds. I don't see the point. However, I have some cd's maturing in Jan, and it looks like the current market rate for 5 year brokerage cd's is down in the 3.5% range, which is low. Pen Fed is paying 4.5%, but the $250k guarantee limit won't last that long.

Anyway, unless you buy individual treasuries, and hold them to maturity, as interest rates rise, and/or the flight to quality eases, you could have substantial losses in treasury mutual funds. And, in the meantime, you earn nothing because of the low rates.

A better approach is to use a MMFfor your short term stuff, and something like Vanguard Inter bond fund for longer. It is paying about 4.59% with a 5-7 year avg maturity.
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Old 01-05-2009, 10:19 AM   #3
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I don't own any treasuries right now. If I want a short/intermediate term investment paying decent yields and guaranteed by the government, I'd rather buy CDs. Why buy a 5-year treasury yielding 1.7% when you can get a CD yielding 3%+? Both are ultimately backed 100% by the government. As for longer term investments, there is no way I am lending money to the government for 30 years in return for a measly 2.8% a year.

I own a mixture of CDs, GNMAs, corporates, munis and TIPS.
46 years old, single, no kids. Exited the job market in 2010 (age 36). Have lived solely off my investments since 2015 (age 41). No pensions.
Current AA: real estate 64% / equities 10% / fixed income 16% / cash 10%
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Old 01-05-2009, 01:17 PM   #4
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My bond allocation is split between short, int term treasuries and TIPS in equal proportions. I'm not currently buying any as they have done well this past year while my equities took a pounding. All new money is going into equities currently.

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Old 01-06-2009, 07:57 PM   #5
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I don't own any TIPS. I just never looked at them too closely.
My bonds are a combo of
EE (1996-7 vintage),
I (2004-6 vintage), and
munis solely in VNYTX and VWAHX (fund shares are vintage 2003-8).
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Old 01-06-2009, 08:02 PM   #6
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First rule of investing: ignore Jim Cramer or suffer the consequences.

On the subject of bonds, the treasury market is effectively pricing in zero inflation for the next 10 years. How likely do you think that is? Instead, I would buy CDs, TIPS, and investment grade corporates.
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Old 01-06-2009, 08:34 PM   #7
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In the beginning, I watched Kramer as entertainment, but the novelty has worn off.
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Old 01-06-2009, 08:46 PM   #8
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You might investigate a muni ladder.

I like TIPs and iBonds too.
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Old 01-06-2009, 09:45 PM   #9
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Own some I-Bonds (for kids college) and if they don't use them up I like them for our retirement.
I'm trying to buy my way to just individual TIPS as the bond portion of my portfolio.
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Old 01-07-2009, 12:28 AM   #10
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Originally Posted by Maurice View Post
You might investigate a muni ladder.

I like TIPs and iBonds too.
I agree, in NY muni's pay more than treasuries. With the tax break on these, the yield look great.
Our ladder extends to 3 years max, due to inflationary fears.
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Old 01-08-2009, 03:48 PM   #11
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I switched out of Vanguard's Total Bond Market Index (VBMFX) fund today. It had 33% treasuries and 41% government backed mortgages. Moved into the intermediate term corporate bond fund (VFICX).
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