Search found 2802 matches

by CULater
Mon May 25, 2020 3:34 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Yet another way to view bonds within a LDI framework is that the consumption (cash flow) goal is akin to a long term bond. The LDI strategy is designed to have the same interest rate sensitivity as the consumption goal. To the extent this is implemented effectively, this assures that the value of th...
by CULater
Mon May 25, 2020 2:46 pm
Forum: Investing - Theory, News & General
Topic: Why bonds may be the only thing propping up the stock market
Replies: 13
Views: 1603

Re: Why bonds may be the only thing propping up the stock market

One of the purposes IMO of FED policy since 2007 is to drive investor dollars from safe assets (bonds) into risk assets (stocks, real estate, venture capital, etc.,) in an attempt to stimulate economic growth, job creation, and support asset prices. Their actions in the GR and the COVID-19 recessio...
by CULater
Mon May 25, 2020 1:28 pm
Forum: Personal Consumer Issues
Topic: If Jeep has such poor reliability, how come they are everywhere?
Replies: 90
Views: 6152

Re: If Jeep has such poor reliability, how come they are everywhere?

The more I think about it, the more I'm coming around to the view that whatever you buy should be regarded as a disposable asset to be traded away sooner rather than later. If you do that before the warranty runs out, the the only downside is the risk of spending too much time in the Service area of...
by CULater
Mon May 25, 2020 1:17 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Bond investment risk has different definitions and depends on investment goals. If the goal is capital preservation, then short duration bonds are less risky than long duration bonds. That's because the market value of short bonds is less affected by changes in interest rates than long bonds. For e...
by CULater
Mon May 25, 2020 11:15 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Bond investment risk has different definitions and depends on investment goals. If the goal is capital preservation, then short duration bonds are less risky than long duration bonds. That's because the market value of short bonds is less affected by changes in interest rates than long bonds. For ex...
by CULater
Sun May 24, 2020 2:30 pm
Forum: Investing - Theory, News & General
Topic: El-Erian comments on the crisis
Replies: 60
Views: 5813

Re: El-Erian comments on the crisis

He did suggest that quality--strong balances sheets with large cash reserves, reliable revenue and profit streams, moats around their business models--offers both downside protection and upside potential in this setting. This is something that most investors knew in the first place, which is why th...
by CULater
Sun May 24, 2020 2:26 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

I've been taking a vacation from this thread for awhile and now that I'm back, I see we're still debating whether "interest rate risk" is absolute or relative. I'm in the camp that interest rate risk is an absolute characteristic of bonds and not contingent on who owns those bonds. Saying that inter...
by CULater
Sun May 24, 2020 1:25 pm
Forum: Investing - Theory, News & General
Topic: El-Erian comments on the crisis
Replies: 60
Views: 5813

Re: El-Erian comments on the crisis

This is a good time to have "won the game", right Dr. Bernstein?
by CULater
Sun May 24, 2020 1:18 pm
Forum: Personal Consumer Issues
Topic: If Jeep has such poor reliability, how come they are everywhere?
Replies: 90
Views: 6152

Re: If Jeep has such poor reliability, how come they are everywhere?

So there's a Jeep cult like there is a Subaru cult?
by CULater
Sun May 24, 2020 10:13 am
Forum: Investing - Theory, News & General
Topic: El-Erian comments on the crisis
Replies: 60
Views: 5813

Re: El-Erian comments on the crisis

"You only get one whack at the cat." I observe lots of traffic at local restaurants, stores, etc. Most people not wearing masks or being careful about distancing. If cases and deaths spike up, will we just keep marching into the abyss, or will things have to shut down again? I guess it depends on ho...
by CULater
Sun May 24, 2020 8:57 am
Forum: Investing - Theory, News & General
Topic: TIAA warns on negative yields on money market funds
Replies: 71
Views: 4693

Re: TIAA warns on negative yields on money market funds

TIAA needs to put a warning on their TIAA Real Estate Account as well. https://www.sec.gov/Archives/edgar/data/946155/000162828020007192/tiaa-realestate03312020x10q.htm See pp. 69-70. John Thanks for the link. Very concerning. I have carried about 30% of my TIAA in the TREA for years but at the beg...
by CULater
Sun May 24, 2020 8:05 am
Forum: Personal Consumer Issues
Topic: If Jeep has such poor reliability, how come they are everywhere?
Replies: 90
Views: 6152

If Jeep has such poor reliability, how come they are everywhere?

It seems that Jeep vehicles are nearly legendary for their poor reliability ratings, and yet I see them everywhere like dandelions. Why are they so popular when they have such a poor reputation? I'm wondering if I should consider buying one. The Grand Cherokee would be my choice. What do Bogleheads ...
by CULater
Sat May 23, 2020 10:23 pm
Forum: Investing - Theory, News & General
Topic: El-Erian comments on the crisis
Replies: 60
Views: 5813

Re: El-Erian comments on the crisis

His "Win-Win" description of the stock market explains to me why the market goes up when there is really bad news and why it goes up when there is some glimmer of hope news. If the news is lousy, that means the Fed will be popping in so that's good for stocks. If the news is hopeful that means we mi...
by CULater
Sat May 23, 2020 9:43 pm
Forum: Investing - Theory, News & General
Topic: TIAA warns on negative yields on money market funds
Replies: 71
Views: 4693

Re: TIAA warns on negative yields on money market funds

Kinda looks like a money market fund to me: The Fund seeks high current income consistent with maintaining liquidity and preserving capital. Generally it seeks to maintain a share value of $1.00 per share. The fund invests at least 99.5% of its total assets in cash, U.S. Government securities and/or...
by CULater
Sat May 23, 2020 7:30 am
Forum: Investing - Theory, News & General
Topic: TIAA warns on negative yields on money market funds
Replies: 71
Views: 4693

Re: TIAA warns on negative yields on money market funds

packer16 wrote:
Fri May 22, 2020 10:28 pm
CULater wrote:
Fri May 22, 2020 9:37 pm
Wonder what Vanguard is going to do? I'm not waiting to find out.
They have stopped new customers from opening new accounts in their treasury MMF.

Packer
I saw that. I wonder if it had anything to do with the fact that they saw negative yields coming.
by CULater
Fri May 22, 2020 9:37 pm
Forum: Investing - Theory, News & General
Topic: TIAA warns on negative yields on money market funds
Replies: 71
Views: 4693

Re: TIAA warns on negative yields on money market funds

Wonder what Vanguard is going to do? I'm not waiting to find out.
by CULater
Fri May 22, 2020 8:46 pm
Forum: Investing - Theory, News & General
Topic: TIAA warns on negative yields on money market funds
Replies: 71
Views: 4693

TIAA warns on negative yields on money market funds

Looks like negative rates may be coming sooner rather than later as giant TIAA warns. TIAA has put a limited, short-term expense waiver in place to help prevent the CREF Money Market Account from having negative yields https://www.tiaa.org/public/land/moneymarketchanges?tc_mcid=em_MMarket_IAS_Assign...
by CULater
Fri May 22, 2020 2:40 pm
Forum: Personal Consumer Issues
Topic: Some possible luxury SUV choices to buy: Opinions?
Replies: 188
Views: 13899

Re: Some possible luxury SUV choices to buy: Opinions?

Are you also having issues with the infotainment system, too? From what I've read, that's where many of the owner complaints stem from. No problems with the infotainment system. Apple car play works flawlessly. I used the radar cruise control on a cross county trip with no issues. The lane keep, bi...
by CULater
Wed May 20, 2020 12:52 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

But that's not a risk-free assumption because LTT have much higher term risk than ITT.... My word, how many times can I repeat that THIS IS WRONG only for you to repeat it again? Long-term bonds do not, for long-term investors , have more interest rate risk than intermediate-term bonds. In fact, th...
by CULater
Tue May 19, 2020 12:31 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Oh, Well. One more time: Long term treasuries have had one advantage over intermediate treasuries over the last many decades. They had higher interest payments and they got a bigger boost from the trend of declining interest rates. If we broke out the partials due to these two factors, you would hav...
by CULater
Tue May 19, 2020 11:09 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

I think you've got to be realistic about what returns to expect. The 20-year treasury now yields 1%. It's unlikely you'll ever make more than 20% off the money invested, and that will only happen if rates don't go up. If you hold that treasury for 20 years you'll make 1%/year in interest = 20%. Or ...
by CULater
Tue May 19, 2020 9:42 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

I think you've got to be realistic about what returns to expect. The 20-year treasury now yields 1%. It's unlikely you'll ever make more than 20% off the money invested, and that will only happen if rates don't go up. If you hold that treasury for 20 years you'll make 1%/year in interest = 20%. Or ...
by CULater
Tue May 19, 2020 9:13 am
Forum: Personal Consumer Issues
Topic: Some possible luxury SUV choices to buy: Opinions?
Replies: 188
Views: 13899

Re: Some possible luxury SUV choices to buy: Opinions?

Couple more to consider that will be coming out late this year or early 2021. Both the Kia Sorento and Jeep Grand Cherokee are coming out as completely new models and they both look great. I'll be waiting to look at these (Oh, I'm waiting anyway...) I hear Honda is releasing a new generation of CRV...
by CULater
Tue May 19, 2020 8:27 am
Forum: Personal Consumer Issues
Topic: Some possible luxury SUV choices to buy: Opinions?
Replies: 188
Views: 13899

Re: Some possible luxury SUV choices to buy: Opinions?

Couple more to consider that will be coming out late this year or early 2021. Both the Kia Sorento and Jeep Grand Cherokee are coming out as completely new models and they both look great. I'll be waiting to look at these (Oh, I'm waiting anyway...)
by CULater
Mon May 18, 2020 5:19 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Term risk is interest rate risk. EE Bonds have no term (interest rate) risk.
by CULater
Mon May 18, 2020 5:10 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Look at it this way. If I can manage to save an extra $500/month, that would be $6,000/year. In order to earn $6,000/year off long term bonds @ 1% I'd need to have $600,000 invested. Or if I could manage to set aside an extra $50/week that would match the interest payments from $260,000 in long ter...
by CULater
Mon May 18, 2020 4:47 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Look at it this way. If I can manage to save an extra $500/month, that would be $6,000/year. In order to earn $6,000/year off long term bonds @ 1% I'd need to have $600,000 invested. Or if I could manage to set aside an extra $50/week that would match the interest payments from $260,000 in long term...
by CULater
Mon May 18, 2020 4:27 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Respectfully, I don't think it's a matter of paranoia as much as it is a matter of mathematics. There's just not much potential returns remaining in long bonds with rates this low but you get the same term risk as always. A). People have been making the same prediction about long term bond rates fo...
by CULater
Mon May 18, 2020 2:36 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

I am not a bond person but i read and learn about them. One thing that i notice is that if i go back a decade ago, there is a lot of so called experts advising staying away from long term bonds (2010) - One can find videos on youtube easily and articles online. And now a decade later we are hearing...
by CULater
Mon May 18, 2020 2:07 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Folks, I am not a bond person but i read and learn about them. One thing that i notice is that if i go back a decade ago, there is a lot of so called experts advising staying away from long term bonds (2010) - One can find videos on youtube easily and articles online. And now a decade later we are ...
by CULater
Mon May 18, 2020 9:02 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

An investor can purchase $10K of Series EE bonds and $10K of I-Bonds annually, for a total of $20K. As discussed the EE Bond pays 3.5% held to maturity in 20 years. Presently, newly purchased I-Bonds have a composite rate of 1.06%, which is equal to the 20-year nominal. But the I-Bond rate will adj...
by CULater
Mon May 18, 2020 8:23 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

So, if you want a long term bond guaranteed by Uncle Sammy you can pick up the re-issued 20-year treasury at auction which should yield 1.05% if you hold it to maturity to avoid interest rate risk. Or you could buy Series EE Savings Bonds, which will pay 3.5% if you hold for 20 years. Although the ...
by CULater
Mon May 18, 2020 7:50 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

So, if you want a long term bond guaranteed by Uncle Sammy you can pick up the re-issued 20-year treasury at auction which should yield 1.05% if you hold it to maturity to avoid interest rate risk. Or you could buy Series EE Savings Bonds, which will pay 3.5% if you hold for 20 years. Although the ...
by CULater
Mon May 18, 2020 7:20 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

You're locking yourself into a 30 year rate with little upside when rates go down. If rates move against you, your coupon provides little protection. What's your plan if rates go up? But, as I said before, I'm not interested in market timing with my portfolio. The role of long-term Treasuries in my...
by CULater
Sun May 17, 2020 8:14 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

So, if you want a long term bond guaranteed by Uncle Sammy you can pick up the re-issued 20-year treasury at auction which should yield 1.05% if you hold it to maturity to avoid interest rate risk. Or you could buy Series EE Savings Bonds, which will pay 3.5% if you hold for 20 years. If you're a tr...
by CULater
Sun May 17, 2020 10:38 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

The "Deflation World" argument for low interest rates would make more sense if the low interest rates weren't being manufactured by the Fed. Where would rates be if the Fed wasn't buying most of the Treasuries being issued? Price discovery in markets has become a quaint memory. How do you know they...
by CULater
Sun May 17, 2020 8:53 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

The "Deflation World" argument for low interest rates would make more sense if the low interest rates weren't being manufactured by the Fed. Where would rates be if the Fed wasn't buying most of the Treasuries being issued? Price discovery in markets has become a quaint memory.
by CULater
Sat May 16, 2020 6:46 pm
Forum: Personal Consumer Issues
Topic: My 2017 CRV is a victim of the dreaded oil gas-dilution issue
Replies: 1169
Views: 185814

Re: My 2017 CRV is a victim of the dreaded oil gas-dilution issue

I have a 2018 CRV and believe my car suffers from this because I smell gas in the cabin when the a/c is pulling in air from outside. As a result of this, i always use recirculate, which works well. Check engine light (and all the others) came on just past 40,000 miles. Took it in to the dealer and ...
by CULater
Sat May 16, 2020 6:44 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

If we are buying long treasuries for their presumed equity diversification benefit with yields this low, we have to ask whether gold would do as well as a diversifier going forward. Gold is the opposite of a long-term US Treasury bond. I know EXACTLY, to the penny, what a nominal US Treasury bond m...
by CULater
Sat May 16, 2020 6:21 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

If we are buying long treasuries for their presumed equity diversification benefit with yields this low, we have to ask whether gold would do as well as a diversifier going forward. Both have acted as diversifiers for equities and long bonds are getting close to being a zero-yield asset like gold. L...
by CULater
Sat May 16, 2020 4:05 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

In 1981 the interest rate on the 20-year treasury was 15.78%. Since 1981, long-term (20-year) treasuries have returned an annualized return of 9.85%, which is just short of what stocks returned over the period (10.47%). So, the annualized constant-maturity 20-year treasury return (as estimated by th...
by CULater
Sat May 16, 2020 2:01 pm
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

There's no compounding involved with regard to the maximum drawdown. That's simply the largest percentage drawdown that has occurred at some point since 1981, and there's only a 1% difference, which is a rounding error. A .06 difference in the Sharpe is noise. So there has been essentially no advan...
by CULater
Sat May 16, 2020 11:56 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

If the goal is to create a "diversified portfolio", there's no question that long-term nominal Treasuries do that better. The idea that short- or intermediate-term bonds are better for stabilizing an equity portfolio during downturns is based on neither theory nor experience. As it turns out, there...
by CULater
Sat May 16, 2020 10:17 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

If the goal is to create a "diversified portfolio", there's no question that long-term nominal Treasuries do that better. The idea that short- or intermediate-term bonds are better for stabilizing an equity portfolio during downturns is based on neither theory nor experience. As it turns out, there...
by CULater
Fri May 15, 2020 11:27 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

vineviz wrote:
Fri May 15, 2020 10:00 am
CULater wrote:
Fri May 15, 2020 9:52 am
Perhaps you aren't the only one with a differing view, who is just as wrong as the others. How do we know?
Because what he wrote in his column was based on a premise that is factually untrue?
can you explain?
by CULater
Fri May 15, 2020 9:52 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Re: Rekenthaler: Long Bonds Are for Fools

Rekenthaler argues that long-term investors should avoid long bonds, because at current low rates the expected return is a non-starter. They are better viewed as short-term trading vehicles by retail investors and not buy-and-hold investments. And we know about active trading. Today’s investors are...
by CULater
Fri May 15, 2020 9:16 am
Forum: Investing - Theory, News & General
Topic: Rekenthaler: Long Bonds Are for Fools
Replies: 328
Views: 16769

Rekenthaler: Long Bonds Are for Fools

Rekenthaler argues that long-term investors should avoid long bonds, because at current low rates the expected return is a non-starter. They are better viewed as short-term trading vehicles by retail investors and not buy-and-hold investments. And we know about active trading. Today’s investors are ...
by CULater
Sat May 09, 2020 11:29 am
Forum: Personal Consumer Issues
Topic: COVID-19 has revealed the stark deficiencies in long-term care facilities regardless of ratings.
Replies: 80
Views: 5321

Re: COVID-19 has revealed the stark deficiencies in long-term care facilities regardless of ratings.

Don't put all the onus on Medicaid. There are facilities that won't accept Medicaid or are very restrictive, in order to have all or most residents with the financial resources to private pay. In my state, Medicaid pays a flat daily rate of about $158. Some of the private pay facilities are charging...
by CULater
Sat May 09, 2020 11:17 am
Forum: Investing - Theory, News & General
Topic: Which portfolio allocation is the right one for you?
Replies: 0
Views: 226

Which portfolio allocation is the right one for you?

All that is known from asset allocation is how risky one's portfolio is. Unfortunately, knowing about risk doesn't tell you much about future returns because future returns over any given time period are unpredictable. A riskier portfolio might or might not have higher returns than one that's much l...
by CULater
Fri May 08, 2020 2:16 pm
Forum: Personal Consumer Issues
Topic: COVID-19 has revealed the stark deficiencies in long-term care facilities regardless of ratings.
Replies: 80
Views: 5321

Re: COVID-19 has revealed the stark deficiencies in long-term care facilities regardless of ratings.

Recent news reports have identified two more nursing homes in the area with COVID-19 outbreaks and several deaths. One was rated 5 stars and the other 4 stars on the Medicare website and both have very good reputations as being among the best nursing homes in the area. But apparently, the ratings a...