My thoughts are that anybody who discusses inflation risks of bonds
and never even mentions TIPS is dishonest, not to be trusted, and not worth reading.
No, TIPS were not available in the United States until 1998 (European countries introduced inflation-linked bonds much earlier), and they are not the ultimate answer to everything, and yes,
just as with every other investment the income tax is levied on nominal gains and not real gains and therefore,
just as with every other investment an investment that keeps up with inflation before taxes may lose to inflation after taxes, etc. etc.
But they exist, and someone who simply does not mention them at all is either being ignorant, or is grinding an axe and intentionally not mentioning them because they don't want to complicate a simplistic narrative.
Also: "Jeremy Schwartz made a comment about a stat from one of Jeremy Seigel’s books..." I would remind everyone that these two gentlemen coauthored a piece in the Wall Street Journal on August 18th, 2010 in which they said:
Ten years ago we experienced the biggest bubble in U.S. stock market history—the Internet and technology mania that saw high-flying tech stocks selling at an excess of 100 times earnings. The aftermath was predictable: Most of these highfliers declined 80% or more, and the Nasdaq today sells at less than half the peak it reached a decade ago.
A similar bubble is expanding today that may have far more serious consequences for investors. It is in bonds, particularly U.S. Treasury bonds....
The important thing is that they conditioned those consequences on this:
If over the next year, 10-year interest rates, which are now 2.8%, rise to 3.15%, bondholders will suffer a capital loss equal to the current yield. If rates rise to 4% as they did last spring, the capital loss will be more than three times the current yield.
In fact, the ten-year rate
did rise into that territory, actually reaching over 3.7% in February 2011. In, in fact, bond funds lost just about the amount of money you'd expect--a pure Treasury fund -3.78%, Total Bond about -2%, Bill Gross' PIMCO total return -1.4%--and regained it all in less than six months.
So if you can't remember the great bond crash of 2011, it's because it
actually happened and didn't amount to much.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.