When all assets are overvalued

[gayl]

Neither chattering, nor typing, nor dart-throwing, but is now the best time for a long bond fund?

probably not but this is my first venture into bonds. Still it's 30-Day SEC yield 4.41% beats my 12 month CD yielding 2.1%.

Please help me understand why it was a dumb move

 

[hesperus]

Tough? Maybe, but I"m going from very simple logic:

Every one of these chattering monkeys is in the same situation. If any of them actually had any skill, what would they be doing? They would be using their skill to make themselves rich. They would not be typing away on the internet desperately hoping to make a living from advertiser clicks, Amazon sales commissions, or selling training courses. And for sure they would not be publishing the recipe for the secret sauce so that everyone could use it. The surest thing in investing is that any publicly known trick that works will eventually be useless as the hoards try to take advantage of it.

What keeps things going is first that people want to believe in skill and luck. That's why the casinos and lotteries will never go out of business. But second, when something happens there are so many monkeys that one or a few of them will have predicted it. They will then be anointed genius monkeys and sit in that throne until their next few pronouncement turn out to be busts. Since there are always genius monkeys many people always have the hope of finding the genius monkey ahead of time. If they do, it is pure luck, but they will conclude from that luck that they, too, are geniuses.

You could have just called them charlatans and used a lot less words

 

[NW-Bound]

probably not but this is my first venture into bonds. Still it's 30-Day SEC yield 4.41% beats my 12 month CD yielding 2.1...

People are afraid that the low-interest-rate era is ending, and interest rate and inflation will rise.

That bond fund has a duration of 14 years. If interest rate goes up 0.5%, the bond price will drop 7%.

The fund yield is higher than CD to compensate for that risk.

 

[gerntz]

My assets are not overvalued by me. I wouldn't have them if they were. But I much prefer having them to giving them all away.

 

[GravitySucks]

My assets are not overvalued by me. I wouldn't have them if they were. But I much prefer having them to giving them all away.

+1 same arguments from '11 - '17 everything is overpriced and being artificially pumped up by ...( Name your fav conspiracy) .... Would have missed a heck of a run by going to cash.

 

[HFWR]

probably not but this is my first venture into bonds. Still it's 30-Day SEC yield 4.41% beats my 12 month CD yielding 2.1%.



Please help me understand why it was a dumb move

Not “dumb”, and though it’s “dirty market timing”, parking it in a CD for a few more months, while the Fed is busy raising rates, would lessen the likelihood of a drop in price, which, given the duration of a 30-yr (long) bond, could be significant.

I’m a bit over plan on cash right now, and low on bonds, but not drastically enough that I can’t wait for at least a couple more tightenings, i.e. maybe six months.

 

[gcgang]

... I now have got a bond ETF, a bond fund and six CDs

FIVE GOLD(en) ETFs,
Four hi yield funds,
Three T Bills,
Two MLPs,
And a partridge in a pear tree.