I own a lot of TIPS (in an ETF TIP fund). And, I've been sort of taking it for granted they couldn't be badly hurt--like a 20-30% drop in value. Just how wrong am I? What could happen that would cause a major loss to the value of TIPS?
What could happen that would cause a major loss to the value of TIPS?
I recently reduced my TIPS holdings by about 2/3rds.
The edit:
Now, I have no idea how the little blue face showed up. I didn't put it there.
It shows up automatically if you type 3 question marks in a row.
OK, thanks.
By the way, do you have any idea why heeyy_joe sold about 2/3 of his TIPS holdings?
In late 2008/early 2009 people freaked that deflation would set in hard. I bought TIPS that were originally issued as 10 year bonds with 5 years left to go with a 3% real yield to maturity.
Simply put, real yields demanded by new TIPS buyers could rise. At the moment, TIPS offer a negative real yield. That could change.