Search found 116 matches

by jbaron
Thu Nov 10, 2022 9:16 am
Forum: Personal Investments
Topic: TIPS OID for 2011 through 2023
Replies: 27
Views: 6473

Re: TIPS OID for 2011 through 2022

Thank you for doing this every year!

Jeff
by jbaron
Wed May 17, 2017 7:29 pm
Forum: Investing - Theory, News & General
Topic: TIPS Roll Return .6%?
Replies: 3
Views: 896

Re: TIPS Roll Return .6%?

I calculate this roll return on my own tips investments (I maintain a sort of 7-10 year TIPS ladder that I continually roll into the new 10 year) and currently, my own calculated yield bump from rolling down the yield curve is about 0.5%, so yes, 0.6% sounds reasonable.

BTW, I simplify (or make a lot of assumptions) in calculating this rate. It's not particularly easy to do, and the actual value has varied somewhat, though not a lot, in the three or four years in which I've been doing it.

Jeff
by jbaron
Sat Sep 03, 2016 4:31 pm
Forum: Investing - Theory, News & General
Topic: Social Security Consulting?
Replies: 26
Views: 4222

Re: Social Security Consulting?

We are in somewhat the same boat: retired in our mid 50s, with substantial pre-tax IRA balances to (eventually) convert and decent SS that will kick in at age 70. As our investments are substantially indexed, we are also in the envious position of being able to capitalize on the ACA tax rebates, as I am able to manage our income to below $62K at least every other year. So, I'd say that our situation is comparable to that of the original poster. I have done extensive modeling on our future tax burden, including IRA conversions, ACA rebates, and expected capital gains taxes that we will eventually have to take in order to live off of our investments. If you do not have the ACA subsidy issue, and you intend on spending all of your money rather...
by jbaron
Mon Aug 25, 2014 7:36 pm
Forum: Personal Investments
Topic: Callable municipal bonds
Replies: 6
Views: 851

Re: Callable municipal bonds

Thanks guys. Special thanks to BigJohn for his experience.
by jbaron
Mon Aug 25, 2014 1:01 pm
Forum: Personal Investments
Topic: Callable municipal bonds
Replies: 6
Views: 851

Callable municipal bonds

Greetings all! I have a few municipal bonds in my portfolio. They were all issued before the credit crisis, and were, at the time, of longish term. Beginning in 2016, most of them become callable over the subsequent couple of years. Generally, they have coupons of 4%-5%, so they clearly pay above market. When they become callable, some of them will have only 2 years remaining, some 3 or 4 years remaining, and one long term one, 15 years remaining. They are all from various California issuers, and they are all part of a typical issuance structure, with issues spread amongst a number of yearly maturities, so while my one issue may only have $500,000 of bonds outstanding, there may be $5,000,000 of callable bonds spread amongst 10 different ma...
by jbaron
Sat Apr 19, 2014 11:18 pm
Forum: Investing - Theory, News & General
Topic: Bond mutual fund vs individual bonds
Replies: 35
Views: 8295

Re: Bond mutual fund vs individual bonds

The financial definition of "risk" is the chance that an actual return will be different than an expected return.

If your horizon is exactly ten years, and you purchase a ten year, zero coupon bond (or zero coupon TIPS bond, if you care about inflation) then by definition, your risk is zero, because you know now, at this very minute, when you purchase that bond, what your return will be over the next ten years.

If instead, you keep your money is cash, there is risk because your return may be different than what you might currently expect it to be over the next ten years.
by jbaron
Thu Jan 16, 2014 1:55 pm
Forum: Investing - Theory, News & General
Topic: In retirement, best to have all rIRA or both rIRA and tIRA?
Replies: 13
Views: 2112

Re: In retirement, best to have all rIRA or both rIRA and tI

Estimating taxes in retirement is more difficult than might be anticipated because of (federal only!) taxation of social security benefits. One's income (employment income versus social security income) may very well go down by a good margin, but one's marginal tax rate...? Maybe not so much, especially if two spouses are to receive benefits, or there's some taxable savings that throw off additional income.
by jbaron
Sat Feb 09, 2013 10:20 pm
Forum: Personal Investments
Topic: Best of Bad 401k options
Replies: 3
Views: 1385

Re: Best of Bad 401k options

You have a good stock fund, a good bond fund, and a 3% match. Sounds quite good to me.
by jbaron
Mon Oct 08, 2012 1:09 pm
Forum: Personal Investments
Topic: Anyone else track their overall fees?
Replies: 25
Views: 1839

Re: Anyone else track their overall fees?

Rather than tracking fees as a percentage of assets, it is much more enlightening to track fees as a percentage of expected returns, or, if you are currently withdrawing some "safe" (or other) percentage of your portfolio, as a percentage of those withdrawals. That is when the 0.6% expense for DLS or DGS or other off-the-beaten-path funds really stick out.

Jeff
by jbaron
Fri May 25, 2012 7:42 pm
Forum: Investing - Theory, News & General
Topic: Fidelity Spartan Inflation Protected Bond Index
Replies: 31
Views: 9759

Re: Fidelity Spartan Inflation Protected Bond Index

That TIPS issue is always mispriced - at least compared to where it should be - because it's the last TIPS issue until you get to 2040, and there's relatively little on the near side either. We happen to own quite a bit of it because it's the year in which we expect to purchase an SPIA, but the yield on it is always low and the price is always high.

If one were running a mutual fund that was able to somehow match durations while eliminating that single issue, it would seem that that strategy would juice your yields some.

Jeff
by jbaron
Mon Apr 30, 2012 1:06 pm
Forum: Investing - Theory, News & General
Topic: [Poll] My philosophy on SPIAs
Replies: 65
Views: 5348

Re: [Poll] My philosophy on SPIAs

I think that the annuity decision is inherently quantitative and cannot reasonably be treated by comparing advantages with disadvantages. How much does it cost, and how much can you expect to get back? An SPIA is insurance, just like homeowner's insurance. Most people don't ask how much they "expect to get back" from their homeowner's insurance because the answer is simply not known. The analysis of whether or not to get an SPIA is 100% qualitative, not quantitative, because most people don't know exactly how long they are going to live, and a random variable with only one instance - the age of your death - is not a useful expression of risk that can be mitigated by other means. If you are going to go broke if you are 80 and you ...
by jbaron
Mon Apr 09, 2012 1:03 pm
Forum: Investing - Theory, News & General
Topic: Valuation-based market timing with PE10 can improve returns?
Replies: 696
Views: 140707

Re: Valuation-based market timing with PE10 can improve retu

I could not access the paper either, so not of much use to me.
by jbaron
Tue Apr 03, 2012 11:56 pm
Forum: Investing - Theory, News & General
Topic: Will TIPS really protect you if inflation takes off?
Replies: 62
Views: 9733

Re: Will TIPS really protect you if inflation takes off?

The problem - the big problem - that I have with this discussion is that it proceeds from the premise that the price of the investment is what matters - that is, do TIPS prices track some measure of inflation, or don't they? I do not believe that that question is the correct question to be asking. The correct question doesn't relate to the value of your portfolio, it relates to what your portfolio can do for you, now or when you retire, or for your heirs if you so choose, when you die. If your goal is not the value of your portfolio now but rather the number of vacations that your portfolio will enable you to take in the future, or the number of meals your portfolio will allow you to eat in the future, the value of holding real inflation pr...
by jbaron
Mon Apr 02, 2012 10:28 pm
Forum: Investing - Theory, News & General
Topic: Will TIPS really protect you if inflation takes off?
Replies: 62
Views: 9733

Re: Will TIPS really protect you if inflation takes off?

NERD777 wrote:This is the easiest question ever asked on this forum. NO.

If rampant inflation were to take place one of two things would happen. TIPS would be defaulted upon, and if they weren't you would be paid in worthless currency. People who believe TIPS are the investment to hedge against inflation will be severely disappointed when and if this scenario arises.
You just can't make this stuff up!
by jbaron
Thu Mar 29, 2012 6:27 pm
Forum: Investing - Theory, News & General
Topic: Counting SS in AA
Replies: 11
Views: 1071

Re: Counting SS in AA

The problem is not the usage of Social Security as part of an asset allocation, the problem is planning retirement based on an asset allocation rather than something more concrete. IMHO.
by jbaron
Thu Mar 29, 2012 3:49 pm
Forum: Investing - Theory, News & General
Topic: "How Much Should Retirees Stake in TIPS?"
Replies: 7
Views: 1630

Re: "How Much Should Retirees Stake in TIPS?"

I think that she loses all of her credibility when she states that the "aggressive" portfolio of a new retiree contains (only) 33% fixed income.
by jbaron
Wed Mar 28, 2012 11:05 pm
Forum: Personal Investments
Topic: Stable Value Fund vs. Total Bond Index Fund for 401K
Replies: 27
Views: 3388

Re: Stable Value Fund vs. Total Bond Index Fund for 401K

It is difficult to believe that anyone thinks stable value funds are for real, that they offer a free lunch. My guess would be that they manage risk to achieve a particular return, and that they are stable until they are not. Come on, people!
by jbaron
Tue Mar 13, 2012 6:38 pm
Forum: Investing - Theory, News & General
Topic: Social Security Earnings History
Replies: 4
Views: 908

Social Security Earnings History

Suppose that one stops working at 50, and the Social Security website says that, assuming no future income, he'll have a monthly payment of $2000 when he's 70. In five years, after five years of no income but with 5 years of inflation totalling (say) 15%, will the 70-year payout be $2000, or $2300?

Thanks,

Jeff
by jbaron
Sun Feb 26, 2012 11:07 pm
Forum: Investing - Theory, News & General
Topic: Monthly TIPS update for those interested
Replies: 41
Views: 4648

Re: Monthly TIPS update for those interested

I'm no slouch at the bond market, but I have to say that I couldn't get through the article. Too technical, too much jargon, too many facts, and not easy to follow from A to B. Who understands all of that, other than quants other than me?
by jbaron
Wed Feb 15, 2012 9:53 pm
Forum: Investing - Theory, News & General
Topic: Dividend Taxation Effects on Tax-Efficient Fund Placement
Replies: 62
Views: 4711

Re: Dividend Taxation Effects on Tax-Efficient Fund Placemen

Now once you have determined your annualized effective tax rate for your personal situation, which is no easy task, you determine which asset is more efficient by multiplying the effective annualized tax rate by the estimated annual pre-tax return on the asset. The greater number should go in the tax preferred account. We can quickly rule that strategy out, by using a simple example to show that it is wrong. You have pointed out the historically low interest rates. OK, let's assume interest rates are zero. That means you owe zero tax on bonds. So this would drive you to put equities in tax-deferred (401k or IRA) and bonds in taxable. But if your only decision is where to put equities (since bonds aren't taxed), the decision to put them in ...
by jbaron
Tue Feb 14, 2012 5:57 pm
Forum: Personal Investments
Topic: Talk to me like I'm stupid: REIT's in a taxable
Replies: 16
Views: 3491

Re: Talk to me like I'm stupid: REIT's in a taxable

I have written many posts on this. Something can always be identified as a disadvantage for any tax strategy. I have REITs in both a taxable and tax advantage account and it is no problem. I have written numerous times before that I have both clients and friends who have retired early and are presently living off of REITs dividends (i.e. the actual dividend and capital gains, not return of capital for any technical folks). I also have clients that own substantial real estate that is fully depreciated resulting in considerable taxable income at ordinary income rates. What happens if the REITs are only in tax advantaged, one retires and begins distributions, oh no....the gains will be taxed at ordinary income rates. What this says to me is t...
by jbaron
Mon Feb 13, 2012 5:12 pm
Forum: Investing - Theory, News & General
Topic: 30 year TIPs auction- real yield of 0.8%???
Replies: 52
Views: 5508

Re: 30 year TIPs auction- real yield of 0.8%???

I am also in quite a bit - the rate is what the rate is.

Jeff
by jbaron
Sun Feb 12, 2012 7:14 pm
Forum: Investing - Theory, News & General
Topic: Rates on Annuities
Replies: 70
Views: 15621

Re: Rates on Annuities

The notion of "waiting to purchase" until rates go up is nothing if not market timing. I am (frankly) amazed that people think that there's a free lunch here - that only if the purchaser "waits a while," the deal will be better. For a 70 year old, how long is too long to wait? What if rates continue to go down for the next year rather than up - what then? And what about the fact that if rates do indeed go up, the fixed income portion of the portfolio will be worth correspondingly less, and as a result, you may be able to only puchase 90% of what you were able to purchase today, when rates were lower? We do have large, fixed income allocations, right? All portfolios with fixed income components have benefitted, more or le...
by jbaron
Sat Feb 11, 2012 12:22 pm
Forum: Investing - Theory, News & General
Topic: Rates on Annuities
Replies: 70
Views: 15621

Re: Rates on Annuities

I agree with Dick Purcell on this, that a low interest rate environment is the best time to purchase an SPIA. I also noticed that in Bob90245's original graph, the Y axes do not scale to zero together. I'd also imagine that for different ages (70 instead of 65, for example), the axis mismatch is more pronounced. What this says to me is that the SPIA payout is composed of a part that relates to mortality, and a part that relates to interest rates. As interest rates decrease to zero for example, the percentage of the payout that is based on mortality goes up, while the percentage of the payout that is based on interest rates goes down, making it easier to purchase the mortality part. Our investments already have the "low interest rate&qu...
by jbaron
Sun Feb 05, 2012 3:28 pm
Forum: Investing - Theory, News & General
Topic: What's the Use of Wond'rin'?
Replies: 7
Views: 1405

Re: What's the Use of Wond'rin'?

Very nice.
by jbaron
Fri Feb 03, 2012 11:52 pm
Forum: Personal Investments
Topic: How much did you lose due to rollovers ?
Replies: 35
Views: 3398

Re: How much did you lose due to rollovers ?

I liquidated the stock funds in the old 401k, bought stock in the rollover Ira with cash that was just sitting around, and the had the cash part of our AA (and part of the bond allocation, admittedly) tied up in th check. So we were on target with the stock allocation, but light on the bond allocation.
by jbaron
Thu Jan 26, 2012 1:39 pm
Forum: Personal Investments
Topic: Further Diversification?
Replies: 12
Views: 1137

Re: Further Diversification?

That is a $60,000,000 asset allocation, with $10,000,000 in 50/50 stocks/bonds, $100,000,000 in real estate, and ($50,000,000) in the mortgage Perhaps a more realistic example would be Joe Schmoe, who has $400,000 in 50/50 stocks/bonds and a $300,000 mortgage on a $400,000 home. That would be $200,000 in stocks, $200,000 in bonds, $400,000 in real estate, and ($300,000) in the mortgage, for a total net worth of $500,000. If the stock market were to decline by 50% and home prices fall by 30%, Joes' net worth would be $100,000 in stocks, $200,000 in bonds, $280,000 in real estate, and ($300,000) in the mortgage, for a total net worth of $280,000, or a decline of 48%. That is a lot of decline when Joe was expecting to be more balanced, with on...
by jbaron
Thu Jan 26, 2012 12:20 pm
Forum: Personal Investments
Topic: Further Diversification?
Replies: 12
Views: 1137

Re: Further Diversification?

Unless you believe that the bond portion of your portfolio is going to pay 6.5%, it'd probably be wise to pay down the mortgage on the rental. (Unless you may give it back to the bank, that is.)

And while the mortgage is outstanding, it should be counted as a negative bond in your asset allocation.

Jeff
by jbaron
Sun Jan 15, 2012 1:12 pm
Forum: Investing - Theory, News & General
Topic: why not TIPS??
Replies: 77
Views: 7695

Re: why not TIPS??

There is an inflation premium and a liquidity premium, and they work in opposite directions. If you think that you believe that there's no inflation premium based on the fact that the real TIPS yield is equal to the nominal treasury yield minus your expected rate of inflation, what you really believe is that the inflation premium is equal to the liquidity premium.

Jeff
by jbaron
Fri Jan 06, 2012 12:13 am
Forum: Investing - Theory, News & General
Topic: TIPS Secondary Market Quotes
Replies: 41
Views: 2420

Re: TIPS Secondary Market Quotes

mslaw: Yes, I have bought and sold both TIPS and regular treasuries via Fidelity. I maintain my own limited "ladders" in each. Doc: I really believe that Fidelty DOES not publish <0 rates, versus CAN not publish those rates. This has been explained to me twice; they do not want to be in the position of "offering" bonds at less than zero real yields. By requiring the phone call, they make the case that the investor wanted the bonds. (Witness the muni reset debacle of a few years ago...) ftobin: You are welcome to believe what you want, but I'd posit that it is necessarily improper for you to ascribe "best bets" to others based on only your limited knowledge of their (our) situations. You have no idea what others...
by jbaron
Thu Jan 05, 2012 6:00 pm
Forum: Investing - Theory, News & General
Topic: TIPS Secondary Market Quotes
Replies: 41
Views: 2420

Re: TIPS Secondary Market Quotes

Skill and patience are required here. I have, in the past, generally made a "first go" at an order (again, with Fidelity) about 1/3 of the way from, say, bid to offer, thereby reducing the spread by about 65%. Often, it works, and the order is accepted - sometimes quickly, sometimes after 5 minutes, and occasionally longer. If the order sits out there for too long, I'll try to cancel it, which often works, but sometimes seems to force fulfillment, which is also fine. Since I can't see what's going on in those 5-10 minutes, it's hard to know what to "really" think about it, but at 1/3 of the way in, I'm not too concerned. Cancelling - or attempting to cancel - orders shows that you're not willing to wait around to be span...
by jbaron
Thu Jan 05, 2012 4:03 pm
Forum: Investing - Theory, News & General
Topic: TIPS Secondary Market Quotes
Replies: 41
Views: 2420

Re: TIPS Secondary Market Quotes

4/32 compares well with what I saw at Fidelity, even when the spreads were online, as I was seeing 2-3 times that number. On the long end, the spreads were always higher than at the short end. Yesterday, the spreads on the long TIPS were a full point at Fidelity, twice what you were quoted at Vanguard. That said, I always had luck at Fidelity placing my limit order at 1/4-1/3 of the way in, which effectively halves the spread. Perhaps Fidelity's online quotes are for sheep.

Jeff
by jbaron
Wed Jan 04, 2012 1:42 pm
Forum: Investing - Theory, News & General
Topic: TIPS Secondary Market Quotes
Replies: 41
Views: 2420

Re: TIPS Secondary Market Quotes

I definitely feel your pain. Determining the reasonableness of prices is a big deal now, though in fairness, I have only ever used the quoted prices on Fidelity.com, and not compared them to other sources. (I always assumed that the spreads enforced reasonableness, and in my buying and selling, I've never found the spreads to be skewed one way or another.) When I traded via a human the last time, I did some prep work that involved: Getting the close on the bond from the previous day, and then estimating the change on trade day using either a proxy ETF - either STPZ (1-5 year) or LTPZ (15+ year). (You can also use the day's yield change on the shortest "quoted" issue to check all of this.) From the price change and the duration of ...
by jbaron
Wed Jan 04, 2012 12:33 pm
Forum: Investing - Theory, News & General
Topic: TIPS Secondary Market Quotes
Replies: 41
Views: 2420

Re: TIPS Secondary Market Quotes

I'm not sure that the book is particularly relevant. When I execute a TIPS trade with Fidelity, the entity on the other side of the trade is not someone from the book, it is Fidelity. Bond trading - even government bond trading - does not work like stock trading. There are no middlemen or exchanges in bond trading; you are always dealing with your brokerage on the other side. Sometimes there's a counterparty onthe other side of Fidelity, but I believe that they trade in and out of inventory positions all day long. One possible way to ferret out your answer would be to call your brokerage and ask what the daily trading volume is on a particular issue. If you you don't want to do this with VBS, I may be able to get this information out of Fid...
by jbaron
Wed Jan 04, 2012 12:06 pm
Forum: Investing - Theory, News & General
Topic: Too much ownership of one ETF
Replies: 9
Views: 806

Re: Too much ownership of one ETF

Thanks. Out of curiousity, what do you use to rationalize your exception?
by jbaron
Wed Jan 04, 2012 11:47 am
Forum: Investing - Theory, News & General
Topic: Too much ownership of one ETF
Replies: 9
Views: 806

Too much ownership of one ETF

How much is too much to own of an ETF? For example, if an ETF has a capitalization of about $300 million, and average daily trading volume of about $1 million, is $100K of ownership too much? What factors would you consider before making such a relatively large investment?

Thanks,

Jeff
by jbaron
Wed Jan 04, 2012 11:37 am
Forum: Investing - Theory, News & General
Topic: TIPS Secondary Market Quotes
Replies: 41
Views: 2420

Re: TIPS Secondary Market Quotes

It is not high price volatility - my nightly pricing doesn't show that at all; it shows exactly what I'd expect. It really is the "we don't advertise bonds with negative yields" thing - I've asked (and complained) more than once about this, and my recorded spreads don't show anything out of the ordinary when they are delivered by a human rather than a monitor screen.

Jeff
by jbaron
Tue Jan 03, 2012 6:17 pm
Forum: Investing - Theory, News & General
Topic: TIPS Secondary Market Quotes
Replies: 41
Views: 2420

Re: TIPS Secondary Market Quotes

I do have an old, professional bond background. In general, I use the word "point" to be a unit of price, or spread, and the phrase "basis point" to be a measure of yield. I know that some people use "basis point" to be a measure of price as well, as you do, but I was taught (at good old Salomon Brothers, believe it or not) that a basis point was 1/100 of a point in yield, so that when the "long bond dropped 5 basis points", its yield was what did the dropping, and its price was what did the rising. The advantage of using my nomenclature (assuming that I am remembering it correctly) is that you can roughly compare nearby bonds to each other, and when the "20 year bond drops 5 basis points", ...
by jbaron
Tue Jan 03, 2012 5:30 pm
Forum: Investing - Theory, News & General
Topic: TIPS Secondary Market Quotes
Replies: 41
Views: 2420

Re: TIPS Secondary Market Quotes

Doc wrote:
jbaron wrote: (.. with the 10-year-ish bonds, is about 0.3 or 0.4 points) /quote]

The WSJ spread on the Jan 2021 is 4/32nds. Are you talking yield spread? If it's price spread will you give us the phone number of your broker? :)
I use Fidelity. When I sold some 7 year TIPS back in September, the ASK was 111.4688 and the BID was 111.1563, for a spread of 0.3125, or 5/16. That must have been one of the recent phone orders, because I received the BID price. Perhaps I am missing something, as my 5/16 spread is not as tight as the WSJ 1/8 spread...

Jeff
by jbaron
Tue Jan 03, 2012 5:01 pm
Forum: Investing - Theory, News & General
Topic: TIPS Secondary Market Quotes
Replies: 41
Views: 2420

Re: TIPS Secondary Market Quotes

I occasionally trade TIPS at Fidelity, and I track bid/ask spreads as well as where I place my market orders and the execution that I get. In the 3 or 4 trades that I've had to do so by calling reps, I've not found that the spread is any wider than it's been in the past, which (with the 10-year-ish bonds, is about 0.3 or 0.4 points) but I do feel a bit sheepish gettting the spread and then chopping off 25% of it to place my order. C'est la vie. If I'm in the mood to "haggle" over the spread, I'll do it, but with a $10,000 bond order, 0.3 points is $30, and 1/4 of that is $7.50, so it's barely worth haggling. (And I've always had the commission waved.)

Jeff
by jbaron
Sun Dec 11, 2011 2:31 pm
Forum: Investing - Theory, News & General
Topic: Weimar Inflation Causes.
Replies: 34
Views: 3397

Re: Weimar Inflation Causes.

Printing money for/and war reparations. There is an excellent book on this subject - When Money Dies.

Jeff
by jbaron
Sun Dec 04, 2011 10:11 pm
Forum: Investing - Theory, News & General
Topic: Portfolio Software Recommendation?
Replies: 16
Views: 2204

Re: Portfolio Software Recommendation?

I also use Fund Manager, but it's not really for the feint of heart, especially if you venture past vanilla stocks and ETFs. There is a not insignificant learning curve.
Jeff
by jbaron
Fri Nov 04, 2011 6:34 pm
Forum: Investing - Theory, News & General
Topic: Question for bogleheads with custom portfolio spreadsheets
Replies: 8
Views: 1128

Re: Question for bogleheads with custom portfolio spreadshee

What is the nature of your asset allocation - is it 3 buckets (equity/intl equity/fixed income) or 13 buckets? What is the nature of your security holdings (1 or 2 buckets on average, or 5 or 6 buckets on average)? And, have you farted around with the numbers at all to see what happens if you only assign, say, 1 bucket to each one, assuming that it isn't split between the 3 large buckets above? You might find that buckets #2 thru #5 for each security don't matter much...

Jeff
by jbaron
Wed Nov 02, 2011 5:35 pm
Forum: Personal Investments
Topic: Long-Term Treasuries and IPS
Replies: 21
Views: 2255

Re: Long-Term Treasuries and IPS

OP:
If someone handed you an inheritance invested as per your IPS, would you sell it to cash and then have this same conversation, or would you just keep it? Lots of "already invested" people have the same dilemma (myself very included) but it doesn't seem like there's a real rish to the exits to start over. Interest rates are what interest rates are - if you are happy with your IPS, deal with it and move on!!! :)
Jeff
by jbaron
Wed Nov 02, 2011 4:41 pm
Forum: Investing - Theory, News & General
Topic: Rebalancing with Bonds (but without Bond Funds)
Replies: 11
Views: 1194

Re: Rebalancing with Bonds (but without Bond Funds)

There are many issues with doing this. I'm an engineer, and I maintain 4 small ladders (int tsys, int tips, long term tsys, and long term tips) but it takes a lot of bookkeeping just to know where you are. Among the issues: 1. Bonds are worth what their prices indicate, not $100, so different bonds in the ladder are worth different amounts, and more importantly, you rebalance based on price, not nominal amounts. This can be a bit of a challenge if you have never done this before. 2. There are many "intermediate treasury " bonds, to use one example. I use the "10 year auction bonds" that mature in Feburary and August only, and I sell off of the short end to rebalance. I don't buy these at auction, but wait until 4 months ...
by jbaron
Tue Nov 01, 2011 6:57 pm
Forum: Personal Investments
Topic: Long-Term Treasuries and IPS
Replies: 21
Views: 2255

Re: Long-Term Treasuries and IPS

I have long term treasuries and TIPS (and intermediate ones of each as well) in my IPS, in roughly equal amounts. I maintain rough ladders with 4 or 5 or 6 issues of each (but not every issue of each) and roll them over when new TIPS are issued, or when the various treasury issues are no longer the benchmark. I occasionally tweak the ratio of TIPS to nominals within the two maturity buckets when the spreads narrow or widen, but only for rebalancing purposes.

It is currently true that if you consider rolling down the yield curve, the 10 year issues "pay" as much as the 30 year issues, but I have not made any moves to change my allocations.

Jeff
by jbaron
Wed Oct 19, 2011 6:24 pm
Forum: Investing - Theory, News & General
Topic: Citi pays $285 million to settle securities fraud complaint
Replies: 8
Views: 898

Re: Citi pays $285 million to settle securities fraud compla

For me, the worst part of the entire episode is that Citi did not admit guilt. If constructing and selling securities fraudulently does not make for guilt, then what exactly does make for guilt? And does anyone even care anymore?

Jeff
by jbaron
Tue Oct 04, 2011 7:01 pm
Forum: Personal Investments
Topic: What if Eurozone dissolves?
Replies: 18
Views: 2412

LH wrote: imo you underestimate the potency of the canadian military..... Moose born troops can be fearsome.
Canada will be the 51st state of the union, and to many people's chagrin, Mexico the 52nd! Much smaller borders that way, and the now unemployed US military could go after some Mexican drug lords!
by jbaron
Tue Oct 04, 2011 6:32 pm
Forum: Personal Investments
Topic: What if Eurozone dissolves?
Replies: 18
Views: 2412

When European economic output decreases by 25%, and the world plunges into a recession that rivals that of the 30's, the question of indices will be the least of our worries. At least the US can produce its own food, and is separated from the rest of the world by water!

Jeff