Comments on A Slacker's Quest: I'm Going Long TBT

My view (which of course is likely wrong) is that ...

2009-02-24T17:28:00.000-05:00

My view (which of course is likely wrong) is that by shorting US Treasuries I'm playing two possible outcomes at once.

1) If there's inflation, yields should rise (and bond prices should fall). Inflation should come even if the economy is in the tank, because they're printing money like there's no tomorrow. Stocks, in this scenario, might not go up. They didn't in the late 1970s.

2) If there's an economic recovery, stocks will probably go up and Treasuries should fall because people will sell them to buy stocks and because the Fed will want to start raising rates to combat inflation.

There's also the scenario where bonds stay high for a long time, but I'm betting on the first two above.

I agree with you that it's probably not worth doing if your funds are limited. TBT also has a lot of volatility risk, and I'm probably being a little dumb deciding to hold it for the longer term.

Weird. Investing in bonds is better than investing...

2009-02-23T20:12:00.000-05:00

Weird. Investing in bonds is better than investing in the market?

Sorry for the double comments.

Full link didn't work, I'll post them in the blog ...

2009-02-10T14:32:00.000-05:00

Full link didn't work, I'll post them in the blog above.

Hi Holden,

Thanks for the comments. I hope ...

2009-02-10T14:26:00.000-05:00

Hi Holden,

Thanks for the comments. I hope this link works: http://online.wsj.com/mdc/public/npage/2_3050.html?symb=&sid=1226080&page=bond&symbChange=aaaaa~0&time=Custom&freq=1dy&DrawChart.x=63&DrawChart.y=11&startdate=01/01/1975&enddate=01/01/1982&type=64&compidx=SP500~3377&comp=Enter+a+symbol&ma=0&maval=100&lf=1&lf2=4&lf3=1024

It's a chart from the WSJ comparing the 30 year bond yield to the S&P 500 from 1975 to 1982. The bond yield finished the period up 80%, while the S&P was up 20%. The CPI was almost at 15% at the end of the 1970s.

http://online.wsj.com/mdc/public/npage/2_3050.html?symb=&sid=1226080&page=bond&symbChange=aaaaa~0&time=Custom&freq=1dy&DrawChart.x=42&DrawChart.y=9&startdate=01/01/1975&enddate=01/01/1982&type=64&compidx=DJIA~1643&comp=Enter+a+symbol&ma=0&maval=100&lf=1&lf2=4&lf3=1024

The DJIA was actually down 10% during the period.

Your comment reminded me of something else Marc Faber said: he thinks that eventually gold will be worth per ounce as much as or more than the DJIA, but he doesn't know whether it'll be DJIA at 4,000 or over a trillion.

2009-02-09T15:22:00.000-05:00

This comment has been removed by the author.

Nice and informative, just like always. I have not...

2009-02-09T15:21:00.000-05:00

Nice and informative, just like always. I have not done as much research as you, but I fully agree that the bonds are bound to go down. However, I am limited in cash so I will not bet against them. I will wait for about 2 years and then buy some at what I hope to be very reasonable price.

One question that I am wondering about: if we hit a high inflation period, the prices of the stocks should go up, shouldn't they? Do you have any insight into the relationship between inflation and the major indexes?

Comments on A Slacker's Quest: I'm Going Long TBT

My view (which of course is likely wrong) is that ...

Weird. Investing in bonds is better than investing...

Full link didn't work, I'll post them in the blog ...

Hi Holden,Thanks for the comments. I hope ...

Nice and informative, just like always. I have not...

Hi Holden,

Thanks for the comments. I hope ...