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TIPS - Anyone else considering dumping these
06-05-2012, 04:31 PM
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#1
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Recycles dryer sheets
Join Date: May 2010
Posts: 95
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TIPS - Anyone else considering dumping these
as they currently have a negative yield?
I'm thinking of dumping my TIPS in my 401K and switching to stocks. Thoughts?
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06-05-2012, 05:01 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Aug 2006
Posts: 2,433
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I dumped mine (too early) a few years ago. I can't see investing in any fixed income vehicle that guarantees a negative real return if held until maturity.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
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06-05-2012, 06:13 PM
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#3
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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I loaded up on TIPS (individual bonds, not a fund) in November 2008 when they were priced for apocalypse. At the time I staggered maturities between 2016 and 2032, priced with "real" yields close to 3%. I sold about half of them last year. I still keep a portion as a part of the defensive "inflation protection" allocation. But I wouldn't buy them at these prices, which I know some would say that means I should sell them all.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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06-05-2012, 06:16 PM
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#4
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Full time employment: Posting here.
Join Date: Oct 2007
Posts: 798
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The Vanguard TIPS fund seems to be doing well for me.
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Mission accomplished - not necessarily ER, but certainly R.
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06-05-2012, 06:40 PM
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#5
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Recycles dryer sheets
Join Date: Dec 2011
Posts: 77
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Yes, dumped mine recently. The two key critiques I have read that were meaningful in making my decision:
>They are like an arsonist selling fire insurance
>They are such recent recent investment vehicles that their performance is untried in all economic situations (inflation, deflation, recession, prosperity)
Asset allocation is the tricky part of investing IMHO...
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06-05-2012, 07:54 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Apr 2008
Posts: 1,251
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Dumped mine a while back too. They worked for awhile but not so much any more.
__________________
"Don't you draw the queen of diamonds, boy, she'll beat you if she's able.
You know the queen of hearts is always your best bet" -- The Eagles, Desperado
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06-06-2012, 04:23 AM
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#7
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Full time employment: Posting here.
Join Date: Nov 2008
Location: Louisville
Posts: 601
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Well, if you believe my Quicken report, my Vanguard TIPS fund is up 12% in the past year. A little over 5% year to date.
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06-06-2012, 06:43 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 1,691
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 Quote:
Originally Posted by Hiredgun
as they currently have a negative yield?
I'm thinking of dumping my TIPS in my 401K and switching to stocks. Thoughts?
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I just bought some in early April, I consider them a shorter term investment, if I was going to invest long term (>10 yrs) I would buy stocks/reits, for anything shorter then I use balance funds or bond funds.
I try not to guess.
TJ
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06-06-2012, 06:50 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 4,337
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I sold mine a couple of years ago when real yields effectively collapsed to around 1% or so. I made a significant capital gain in my IRA on the trade. If someone feels like getting the "true" story, they can search my old posts. I know I made a comment somewhere on the forum when I did it. As it turned out, I sold out way too soon. I sold when I felt the real yields were absudly low. Now they are totally beyond absurd.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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06-06-2012, 07:08 AM
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#10
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gone traveling
Join Date: Sep 2003
Location: DFW
Posts: 7,586
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Dumped my tips etf back in March.
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06-06-2012, 10:16 AM
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#11
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,304
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Dumped what little I had last summer, most of my fixed income allocation was in a TBM equivalent. However, I did not change my AA (the OP appears to be asking a different question), just don't hold TIPS at present. I'm certainly not fundamentally against TIPS, I may devote some fixed income money to a TIPS fund again one day.
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No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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06-06-2012, 10:21 AM
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#12
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
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Well, you all are making me feel better about not having any TIPS. For the past few years I had been waiting for a good time to jump in, because I am a worrier and inflation worries me. But I never did, and do not own any.
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Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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06-06-2012, 10:24 AM
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#13
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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This thread reminded me to get rid of the TIPS that I still owned. Done!
Ha
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"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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06-06-2012, 01:11 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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As always, the question is "Where do you take the money?"
The OP option is stock, which changes the AA. Is anyone selling TIPS and buying some other fixed income asset?
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06-06-2012, 02:36 PM
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#15
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,304
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Quote:
Originally Posted by Independent
As always, the question is "Where do you take the money?"
The OP option is stock, which changes the AA. Is anyone selling TIPS and buying some other fixed income asset?
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For better or for worse, I did. Changing asset allocation only because of what the tea leaves may or may not seem to say isn't consistent with investing as I know it. YMMV
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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06-06-2012, 03:45 PM
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#16
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by Midpack
For better or for worse, I did. Changing asset allocation only because of what the tea leaves may or may not seem to say isn't consistent with investing as I know it. YMMV
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The key word being "only". I did ratchet back from a 70/30 target to 60/40 after the 2008-09 meltdown -- though I waited until late 2010 and into 2011 to do most of the rebalancing to the lower equity stake. Living through that crash suggested to me that 70/30 was a little too "rich" for my blood in the long term. I've found that it's a lot easier to "set and forget" 60/40 than it was with 70/30.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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06-06-2012, 03:55 PM
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#17
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,304
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Quote:
Originally Posted by Midpack
Changing asset allocation only because of what the tea leaves may or may not seem to say isn't consistent with investing as I know it. YMMV
Quote:
Originally Posted by ziggy29
The key word being "only".
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Yep, the underline was definitely intentional...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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06-06-2012, 05:06 PM
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#18
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Recycles dryer sheets
Join Date: Dec 2011
Posts: 77
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Quote:
Originally Posted by Independent
As always, the question is "Where do you take the money?"
The OP option is stock, which changes the AA. Is anyone selling TIPS and buying some other fixed income asset?
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Going into Harry Browne's Permanent Portfolio. Info and Asset Allocation is shown here:
http://crawlingroad.com/blog/harry-b...olio-archives/
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06-06-2012, 06:35 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Jan 2004
Posts: 2,049
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My 3% TIPS will mature this summer. I also have a 4% T-Note maturing. I'll probably re-balance into small caps.
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06-06-2012, 09:19 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Oct 2010
Location: irradiated - too close to the nuclear furnace
Posts: 1,294
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I think buying the Vanguard fund would be like buying most any bond fund, the nav is just way too expensive. I wouldn't buy from Treasury Direct because I'm not sure how to in my roll over IRA or Roth. I've read about TIPS many times and kind of get it but I really don't understand them clearly, I need to talk to someone that can explain as I ask questions. As they say never buy any investment that you do not understand. The trick was to buy the fund years ago and you'd have all the capital appreciation.
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