If interest rates would ever reach double digits again

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Jim180
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If interest rates would ever reach double digits again

Post by Jim180 » Thu Jul 17, 2014 11:17 am

I was interested what others would do with their investments if interest rates would ever reach double digits again like in the late 1970's and early 1980's. It would seem to me that a person could sell all stock market positions and simply buy 30 year Treasury Bonds since the interest rate in that scenario would be equal to or higher than the historical return of the stock market. You could then get a high rate of return for the next 30 years without having to deal with the volatility of the stock market. Am I correct with my thinking or is there something I'm overlooking?

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Chan_va
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Re: If interest rates would ever reach double digits again

Post by Chan_va » Thu Jul 17, 2014 11:21 am

Yes - you are overlooking inflation. If interest rates were to reach double digits, it's very likely that inflation will be up there too. So, your real return in bonds will be roughly the same as in a low interest rate environment.
Last edited by Chan_va on Thu Jul 17, 2014 11:24 am, edited 1 time in total.

countdown
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Re: If interest rates would ever reach double digits again

Post by countdown » Thu Jul 17, 2014 11:23 am

Yes, inflation.
However, if many of your costs are fixed or extinguished (mortgage, etc.), it would sure seem that there may be an advantage to heavy T-Bonds in that scenario. :?:

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Re: If interest rates would ever reach double digits again

Post by sport » Thu Jul 17, 2014 11:25 am

When interest rates were that high, stock prices were very low. Thus, it was not a good time to sell stocks. In addition, the gains in stocks since that time have been higher (I believe) than if the money was invested in bonds.
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Re: If interest rates would ever reach double digits again

Post by ResearchMed » Thu Jul 17, 2014 11:28 am

Also, at what point in time, at precisely what interest rate, could you be certain that interest rates - and inflation - wouldn't rise even more?

Those high money market rates back in the early 80's were great, yes.
Except that a mortgage then was 17.5%.
To refi about a year later to 13.5% felt great.
And then again soon, to about 11+%.
Refi fees were recovered really fast.

But the interest rates could have kept going up instead.
That's how it would have "looked" when it was 11% or 13.5% on the way "up".

RM

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Re: If interest rates would ever reach double digits again

Post by freddie » Thu Jul 17, 2014 11:35 am

Chan_va wrote:Yes - you are overlooking inflation. If interest rates were to reach double digits, it's very likely that inflation will be up there too. So, your real return in bonds will be roughly the same as in a low interest rate environment.
It is basically a bet that inflation will be tamed. You might have 10% inflation but if 5 years after you buy the bond it is down a 4%, you win big. If inflation goes to 15% on the other hand, you are not very happy with bonds paying 12%.

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Hub
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Re: If interest rates would ever reach double digits again

Post by Hub » Thu Jul 17, 2014 1:15 pm

May be inclined to put my bond allocation in TIPS. And then some.

Rodc
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Re: If interest rates would ever reach double digits again

Post by Rodc » Thu Jul 17, 2014 1:36 pm

If interest is 15% and you buy some long bonds to lock in that wonderful rate, what is to stop the interest rate of rising to 20% and you get killed?
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: If interest rates would ever reach double digits again

Post by Jim180 » Thu Jul 17, 2014 1:44 pm

Rodc wrote:If interest is 15% and you buy some long bonds to lock in that wonderful rate, what is to stop the interest rate of rising to 20% and you get killed?

If I hold the long bond to maturity I should not get killed, right? My thinking was that even if inflation is high at purchase as some suggest it certainly wouldn't stay high for anything close to 30 years. I also feel if I get say 12% in interest and it rises to 15% I won't feel too sad since 12% would still be above the long-term historical return of the stock market.

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Re: If interest rates would ever reach double digits again

Post by tphp99 » Thu Jul 17, 2014 1:56 pm

Rodc wrote:If interest is 15% and you buy some long bonds to lock in that wonderful rate, what is to stop the interest rate of rising to 20% and you get killed?
This could happen - but a lot of other "bad" things will also be happening in that kind of situation.

I wish I had money back when interest rate was double digit and the courage to load up on long term bond. Ahh what if...

Don't we believe/hope for reversion to the mean?

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Re: If interest rates would ever reach double digits again

Post by Abe » Thu Jul 17, 2014 2:11 pm

I knew someone who told me they bought 30 year treasury bonds yielding around 16% in the late 70's or early 80's. I'm not sure about the exact rate, but it was somewhere in that neighborhood.
Slow and steady wins the race.

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Re: If interest rates would ever reach double digits again

Post by ralph124cf » Thu Jul 17, 2014 2:37 pm

Abe wrote:I knew someone who told me they bought 30 year treasury bonds yielding around 16% in the late 70's or early 80's. I'm not sure about the exact rate, but it was somewhere in that neighborhood.
In the late 70s and early 80s the yield curve was inverted. Short term interest rates were very high, long term rates quite a bit lower because a lot of people wanted to lock in those historically high rates.

Ralph

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Re: If interest rates would ever reach double digits again

Post by Rodc » Thu Jul 17, 2014 2:43 pm

Jim180 wrote:
Rodc wrote:If interest is 15% and you buy some long bonds to lock in that wonderful rate, what is to stop the interest rate of rising to 20% and you get killed?

If I hold the long bond to maturity I should not get killed, right? My thinking was that even if inflation is high at purchase as some suggest it certainly wouldn't stay high for anything close to 30 years. I also feel if I get say 12% in interest and it rises to 15% I won't feel too sad since 12% would still be above the long-term historical return of the stock market.
Things certainly worked out that way in the 1980s or so (I forget the dates). In that case the issue would be what if we had true runaway inflation. Didn't happen, but you'd have to judge the likelihood in a future case.

I'd be more excited to see really high rates on TIPS than nominals.

Hindsight is wonderful, I just think foresight is more difficult and the likelihood of an exact repeat is somewhat low so not sure how valuable this example is in making plans or thinking about scenario.

I also don't think the 1980s case was risk free, just happened that risk did not show up.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: If interest rates would ever reach double digits again

Post by freddie » Thu Jul 17, 2014 4:07 pm

Rodc wrote:
Jim180 wrote:
Rodc wrote:If interest is 15% and you buy some long bonds to lock in that wonderful rate, what is to stop the interest rate of rising to 20% and you get killed?

If I hold the long bond to maturity I should not get killed, right? My thinking was that even if inflation is high at purchase as some suggest it certainly wouldn't stay high for anything close to 30 years. I also feel if I get say 12% in interest and it rises to 15% I won't feel too sad since 12% would still be above the long-term historical return of the stock market.
Things certainly worked out that way in the 1980s or so (I forget the dates). In that case the issue would be what if we had true runaway inflation. Didn't happen, but you'd have to judge the likelihood in a future case.

I'd be more excited to see really high rates on TIPS than nominals.

Hindsight is wonderful, I just think foresight is more difficult and the likelihood of an exact repeat is somewhat low so not sure how valuable this example is in making plans or thinking about scenario.

I also don't think the 1980s case was risk free, just happened that risk did not show up.
Wouldn't high tips rates mean the USA is a credit risk ala emerging bonds on they late 90.

TIPS protect against unexpected inflation. If you have that inflation., regular bonds might be a better bet

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Re: If interest rates would ever reach double digits again

Post by HenryPorter » Thu Jul 17, 2014 4:14 pm

----------------------
Last edited by HenryPorter on Tue Jul 22, 2014 11:11 pm, edited 1 time in total.

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Re: If interest rates would ever reach double digits again

Post by HenryPorter » Thu Jul 17, 2014 4:20 pm

Abe wrote:I knew someone who told me they bought 30 year treasury bonds yielding around 16% in the late 70's or early 80's. I'm not sure about the exact rate, but it was somewhere in that neighborhood.
I will try to skirt politics here, but much ballyhoo is made about national debt and any increase in interest rates will compound the debt to disaster levels. Wouldn't it just be all the newly borrowed money that carries the higher rates? Not the residual 17+ trillion dollars already bonded and sold into the secondary market? Or does the governemnt constantly call older bonds nowadays or something ( -ie- all the long-term bonds issued past 1984?)

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Re: If interest rates would ever reach double digits again

Post by Bungo » Thu Jul 17, 2014 4:34 pm

I would look more closely at whether to move some of my bond allocation into TIPS, but I don't think I would change anything else in terms of investments. I would certainly reconsider any plans to expedite repayment of my 3.5% mortgage. Also, high interest rates would probably crush housing values, especially in inflated markets such as California, so my plans to sell the house and use the ill-gotten gains to retire out of state might also need revamping. :)

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Re: If interest rates would ever reach double digits again

Post by Sbashore » Thu Jul 17, 2014 5:54 pm

I would maintain my present AA and enjoy the steadily increasing dividends on my bond holdings. My portfolio's overall bond duration is a little over two years, so I'd recover from the rising rates pretty quickly.
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Re: If interest rates would ever reach double digits again

Post by Rodc » Fri Jul 18, 2014 7:13 am

freddie wrote:
Rodc wrote:
Jim180 wrote:
Rodc wrote:If interest is 15% and you buy some long bonds to lock in that wonderful rate, what is to stop the interest rate of rising to 20% and you get killed?

If I hold the long bond to maturity I should not get killed, right? My thinking was that even if inflation is high at purchase as some suggest it certainly wouldn't stay high for anything close to 30 years. I also feel if I get say 12% in interest and it rises to 15% I won't feel too sad since 12% would still be above the long-term historical return of the stock market.
Things certainly worked out that way in the 1980s or so (I forget the dates). In that case the issue would be what if we had true runaway inflation. Didn't happen, but you'd have to judge the likelihood in a future case.

I'd be more excited to see really high rates on TIPS than nominals.

Hindsight is wonderful, I just think foresight is more difficult and the likelihood of an exact repeat is somewhat low so not sure how valuable this example is in making plans or thinking about scenario.

I also don't think the 1980s case was risk free, just happened that risk did not show up.
Wouldn't high tips rates mean the USA is a credit risk ala emerging bonds on they late 90.

TIPS protect against unexpected inflation. If you have that inflation., regular bonds might be a better bet
Personally, while I suppose US could default I don't think I'd lump US with emerging markets, even in the case of high real rates (I'm not talking double digits, that is too unlikely for real rates IMHO)

Personally I'd prefer the higher likelihood of tips matching inflation to the possibility that nominal might beat inflation if the scenario played out in my hypothetical. Of course I don't know the future so in real life I hold both.
Last edited by Rodc on Fri Jul 18, 2014 8:05 am, edited 1 time in total.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: If interest rates would ever reach double digits again

Post by AviN » Fri Jul 18, 2014 7:34 am

HenryPorter wrote: I will try to skirt politics here, but much ballyhoo is made about national debt and any increase in interest rates will compound the debt to disaster levels. Wouldn't it just be all the newly borrowed money that carries the higher rates? Not the residual 17+ trillion dollars already bonded and sold into the secondary market? Or does the governemnt constantly call older bonds nowadays or something ( -ie- all the long-term bonds issued past 1984?)
The federal government only owes about $12.5 trillion to outside parties ("debt held by the public"). The remaining $5 trillion is owed to itself ("intragovernmental debt," mostly the social security trust fund) and has no direct economic effect:

http://www.treasurydirect.gov/govt/char ... govpub.htm

High interest rates would not affect long term nominal debt that is locked in at low interest rates. Short term debt, and eventually intermediate term debt, however, is likely to require a rollover during the high inflation period. I don't think this would be such a disaster though. A period of high inflation may be a good time for government to pay down debt. High inflation is typically caused by high aggregate demand in the economy, and one way to decrease aggregate demand is for government to increase taxes without increasing spending.

(At least from an economic perspective. The politics of raising taxes, especially in an economic crisis, is tough.)

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Re: If interest rates would ever reach double digits again

Post by dickenjb » Fri Jul 18, 2014 7:42 am

ralph124cf wrote:
Abe wrote:I knew someone who told me they bought 30 year treasury bonds yielding around 16% in the late 70's or early 80's. I'm not sure about the exact rate, but it was somewhere in that neighborhood.
In the late 70s and early 80s the yield curve was inverted. Short term interest rates were very high, long term rates quite a bit lower because a lot of people wanted to lock in those historically high rates.

Ralph
This. I graduated with my PhD in 1981 and started my first job and had money to invest.

Yes you could buy a 30 year T bond yielding 15%, but Vanguard Prime MMF was yielding 18%. Seemed like a no brainer to stay short.

So the mentality was, nobody knows when the crazy inflation is going to stop, everyone was getting the "safe" 18% in 6 month CD's and MMF.

Bondholders had gotten killed over the previous decade and no one wanted bonds. Of course, 20/20 hindsight, we should have all loaded up on 30 year zero coupon bonds.

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Re: If interest rates would ever reach double digits again

Post by steadyeddy » Fri Jul 18, 2014 7:53 am

Isn't this like saying if stocks ever got low again, like I'm March if 2009, you would load up?

Hindsight is 20/20, and nobody had a cash pile left to invest after the decline leading up to March of 2009. I assume both these things will be true again if we hit double-digit interest rates.

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Re: If interest rates would ever reach double digits again

Post by dickenjb » Fri Jul 18, 2014 8:01 am

From the NYT:
The term “certificate of confiscation” was coined in the late 1970s, when inflation was rising. “If you took the coupon payment, adjusted for inflation and taxes, you had a negative real return,” said Leon Cooperman, who may have been the first to use the term. Mr. Cooperman now runs Omega Advisors, a hedge fund manager, but then was a strategist for Goldman Sachs.

By the time the concept became popular, around 1980, Treasury bonds had nominal yields of more than 10 percent and were despised. (To his credit, by then Mr. Cooperman was suggesting such bonds could be good investments.)
Believe me, no one in 1980 or 1981 was buying bonds after a 20 year bear market in bonds and inflation that looked like it would never end. The few contrarians who did enjoyed great risk adjusted returns, but the CW was only an idiot would buy bonds. You could earn a tax free yield of 10% by filling your basement with toilet paper and canned goods.

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Re: If interest rates would ever reach double digits again

Post by Rodc » Fri Jul 18, 2014 8:08 am

Appreciate the history lessons and context.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: If interest rates would ever reach double digits again

Post by Chan_va » Fri Jul 18, 2014 9:09 am

Btw, it will be interesting to see how TIPS behave the next time high inflation rolls around. The first inflation protected security was issued by Great Britain in 1981 I believe, so we don't really have data points on how they will behave. I have a theory that their market behavior will be so different in terms of co-relations that we will need to consider them as a completely separate asset class from nominal bonds.

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Re: If interest rates would ever reach double digits again

Post by Boglegrappler » Fri Jul 18, 2014 9:22 am

Wouldn't it just be all the newly borrowed money that carries the higher rates? Not the residual 17+ trillion dollars already bonded and sold into the secondary market? Or does the governemnt constantly call older bonds nowadays or something ( -ie- all the long-term bonds issued past 1984?)
From a borrowers perspective, you are right, and the "debt service" payments that comprise the interest portion are locked in. That's why, if you expect a ton of inflation and rates are low, you want to borrow a bunch of money for as long a term as possible. **

But from the bondholder's perspective, the price of his bond in the market gets savaged as it adjusts to reflect the current market rate.
http://finance.yahoo.com/echarts?s=%5ETYX+Interactive


** I haven't looked at this recently, but the history in recent years has been that the feds haven't done what makes sense to do long term, and are "saving money" by moving borrowing more towards the short end of the curve. It helps with current deficits, and might work out ok depending on what happens......but if you get back into a long-term high inflation environment, you'll have to "roll" all that short-term paper at much higher rates.

EDIT: Well, I take back what I said just above. It looks like someone has more sense that I'd have imagined.

http://www.treasury.gov/connect/blog/Pa ... ties-.aspx
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Re: If interest rates would ever reach double digits again

Post by nisiprius » Fri Jul 18, 2014 9:23 am

Quite apart from the inflation issue--I once owned a CD paying 13%, but inflation was 10% that year, so big financial deal...

It's easy to see amazing opportunities in hindsight, and tell yourself to be alert for the next one and resolve to grab it when it occurs. I think that's a mistake. In particular, I think it's a terrible mistake to prime yourself for precipitous action. Getting caught up in a rush not to miss out on "opportunities" seems to be a way people really do make serious screw-ups. I'm just starting to read David Denby's American Sucker--thanks to whomever mentioned in the books thread. His mental state was that the dot-com boom was his once-in-a-lifetime opportunity to get rich, and that if he slowed down to think about anything, he was going to miss out.

Patterns don't repeat accurately. I am certain that most of them don't even exist and are manufactured by our brain:
Image
And they look very different from a distance (ten years or half a mile) than they do when you're in the middle of them. (I couldn't find an actual picture but I'll bet that rock formation doesn't look like anything when you're standing right under it. Most famous eerie rock shapes need to be viewed from one selected vantage point).

And that doesn't even include those you don't see until someone points out the resemblance. What is this supposed to be?
Image
For answer, drag your mouse between the two lines:
|A lion's head, giving its name to the town of that name in Ontario|
Nope, I don't see it, either.

In financial data, new pattern can start the same way the old one did but end differently, with disastrous results if you take it too seriously and go all in.

The new pattern can roughly resemble the old one from start to finish, yet when you're in the middle of the start, you see the differences rather than the resemblances and you can miss the "opportunity" again.

Almost every dramatic-in-hindsight financial phenomenon has taken me by surprise and I expect they always will.
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Re: If interest rates would ever reach double digits again

Post by LongerPrimer » Fri Jul 18, 2014 10:28 am

If I remember, we bought MM, which was even better than long CD's. Short CD's was OK but it was a hassle in keep track of the renewing paper, although I seem to remember we got a toaster and some other "gift" for "buying" a CD.

Article in Wed WSJ, where one of the FedResv governors said that most of the governors want to raise interest rates to keep anticipated inflation down. :annoyed

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Re: If interest rates would ever reach double digits again

Post by bhsince87 » Fri Jul 18, 2014 10:44 am

I remember an investment book I read back in the early 80's. Tried to find it on my bookshelf last night, but didn't have any luck.

But I'm pretty sure I remember the author's conclusion. 12% was the magic number.

If/when bonds hit 12%, then your best bet was 40/60 bonds/equities. Otherwise, stick with 60/40 equities/bonds.

In other words, don't do anything stupid. Which is probably still pretty sound advice.....

I personally hope we never have that "opportunity" again!
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Re: If interest rates would ever reach double digits again

Post by freddie » Fri Jul 18, 2014 12:42 pm

Rodc wrote:
freddie wrote:
Wouldn't high tips rates mean the USA is a credit risk ala emerging bonds on they late 90.

TIPS protect against unexpected inflation. If you have that inflation., regular bonds might be a better bet
Personally, while I suppose US could default I don't think I'd lump US with emerging markets, even in the case of high real rates (I'm not talking double digits, that is too unlikely for real rates IMHO)

Personally I'd prefer the higher likelihood of tips matching inflation to the possibility that nominal might beat inflation if the scenario played out in my hypothetical. Of course I don't know the future so in real life I hold both.
What do you think would cause the US to have lets say 8% real interest rates other than credit risk? Did they even get that high during the Volcker spike? It seems likely that the reason the US bonds are yielding 10% is something like 3% real and 7% inflation more than 7% real and 3% inflation. In the first case you can make money by buying a nominal and hoping the fed reals in inflation. In the second, you buy a tip and don't worry about inflation. We have had the first case more or less. I don't think they second one has every happened.

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Re: If interest rates would ever reach double digits again

Post by HenryPorter » Fri Jul 18, 2014 10:33 pm

dickenjb wrote: This. I graduated with my PhD in 1981 and started my first job and had money to invest.

Yes you could buy a 30 year T bond yielding 15%, but Vanguard Prime MMF was yielding 18%. Seemed like a no brainer to stay short.
Holy smokes.

Would that 15% been compounded in the bonds or just simple interest? You know what I am thinking. It has to be simple interest I gather, so a 15% bond would pay out 450%, not including the principal. The stock market has grown, what, an easily 10x since 1981? Probably more if stock growth rates were greater than 8%.

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Re: If interest rates would ever reach double digits again

Post by White Coat Investor » Fri Jul 18, 2014 10:40 pm

The really crummy thing about being in a high interest rate/high inflation environment is that you pay taxes on the nominal gains. Better to make 6% with 3% inflation than 15% with 12% inflation. If your tax rate is 33%, you're making 1% real in a low interest rate environment but -2% real in a high interest rate environment.
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Re: If interest rates would ever reach double digits again

Post by freddie » Fri Jul 18, 2014 10:56 pm

HenryPorter wrote:
dickenjb wrote: This. I graduated with my PhD in 1981 and started my first job and had money to invest.

Yes you could buy a 30 year T bond yielding 15%, but Vanguard Prime MMF was yielding 18%. Seemed like a no brainer to stay short.
Holy smokes.

Would that 15% been compounded in the bonds or just simple interest? You know what I am thinking. It has to be simple interest I gather, so a 15% bond would pay out 450%, not including the principal. The stock market has grown, what, an easily 10x since 1981? Probably more if stock growth rates were greater than 8%.
Your ignoring the fact that you get paid along the way. Reinvest that money and you do very well. If you would have invested for 30 years in long bonds starting in late 1981, your return would have beaten stocks by .7%/yr and your worst year would have been about -12%. Stop the clock at the end of 2008 and you look even better.

It is easy to look back and say those bonds were a great deal. It is much harder when you don't know if bonds are stoping at 15% or on the way to 20%.

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Re: If interest rates would ever reach double digits again

Post by HenryPorter » Fri Jul 18, 2014 11:17 pm

freddie wrote:
Your ignoring the fact that you get paid along the way. Reinvest that money and you do very well. If you would have invested for 30 years in long bonds starting in late 1981, your return would have beaten stocks by .7%/yr and your worst year would have been about -12%. Stop the clock at the end of 2008 and you look even better.

It is easy to look back and say those bonds were a great deal. It is much harder when you don't know if bonds are stoping at 15% or on the way to 20%.
We were in a bond bull market those years apparently. What would of been the strategy? Going into a low-expense long-term bond fund? Maybe not clear at the time, like you indicated if interest rates went to 20% that 15% would of been meh.
EmergDoc wrote:The really crummy thing about being in a high interest rate/high inflation environment is that you pay taxes on the nominal gains.
Oops.

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Re: If interest rates would ever reach double digits again

Post by HornedToad » Fri Jul 18, 2014 11:43 pm

I would be happy that I had a 30 year mortgage at 4%.... 3% after tax.

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Re: If interest rates would ever reach double digits again

Post by sport » Fri Jul 18, 2014 11:46 pm

EmergDoc wrote:The really crummy thing about being in a high interest rate/high inflation environment is that you pay taxes on the nominal gains. Better to make 6% with 3% inflation than 15% with 12% inflation. If your tax rate is 33%, you're making 1% real in a low interest rate environment but -2% real in a high interest rate environment.
The high inflation causes other problems as well. If you have life insurance to provide for your family, the value of that insurance coverage is eroded by the inflation. So, that means you would have to increase your coverage. However, you may no longer be insurable at good rates, or you may not be insurable at all due to health problems. In addition, while newly purchased bonds would have attractive yields, any existing bonds you had prior to the increase in rates would suffer large losses.
Jeff

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Re: If interest rates would ever reach double digits again

Post by freddie » Sat Jul 19, 2014 9:35 am

HenryPorter wrote:
freddie wrote:
Your ignoring the fact that you get paid along the way. Reinvest that money and you do very well. If you would have invested for 30 years in long bonds starting in late 1981, your return would have beaten stocks by .7%/yr and your worst year would have been about -12%. Stop the clock at the end of 2008 and you look even better.

It is easy to look back and say those bonds were a great deal. It is much harder when you don't know if bonds are stoping at 15% or on the way to 20%.
We were in a bond bull market those years apparently. What would of been the strategy? Going into a low-expense long-term bond fund? Maybe not clear at the time, like you indicated if interest rates went to 20% that 15% would of been meh.
EmergDoc wrote:The really crummy thing about being in a high interest rate/high inflation environment is that you pay taxes on the nominal gains.
Oops.

The bond bull market was a result of those inflated rates and people seeing the inflation bogey man everywhere for 15 years. You know the same way everyone is expecting 2008 to happen again real soon:) Reinvesting in long term bonds is the strategy that beat stocks but the point was just that your return was much higher than 450% when you did anything with the payment stream. The return of the stock market when you spend the dividends every year is a lot less than when you invest them. Of course this analysis ignores the fact that you tend to get brutalized on taxes with bonds (i.e. not a lot of IRAs in 1981) compared to stocks.

The other fun thing about high inflation is you get to learn about all the parts of the tax code that are not inflation adjusted. After 10 years of 7% inflations things like child tax credits, AOTC, 500k home gain exclusion, the 250k ACA surtax limits, 3k deduction of losses, and who knows what else don't seem anywhere near as big.

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