Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by Pikel » Fri Apr 17, 2020 12:17 pm

I was curious a week or two ago, Ray predicted depressions in 82, 92, several times said a "30-50%" chance during/after the tech crash around 03, in 2009 he called the financial crisis a "d-process," several times in 2016-2018, and now is calling current situation a depression.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by Hector » Fri Apr 17, 2020 2:59 pm

redbarn wrote:
Fri Apr 17, 2020 12:27 am
The duration of BND is currently about 6 years. The SEC yield for BND 6 years ago was just above 2%. I know the duration changes somewhat over time but even if you take 5 or 7 years ago, the SEC yield would be either a bit below or above 2%. Under some assumptions, the SEC yield should give us a reasonable estimate of the return of a bond fund over its duration. In this case, the actual return from 2016-2020 is closer to twice the SEC yield than the SEC yield. Does someone know what exactly accounts for this? Why would BND with an SEC yield of about 2% and a duration of about 6 years do so much better than holding a 6-year bond with a 2% SEC yield to maturity would have done?
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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by millennialinvestor » Fri Apr 17, 2020 4:44 pm

Here's a hypothetical:

So let's say interest rates go back to 1.75% (slowly over a year or so starting in the summertime), such conditions will make current bonds less desirable, right?

So people sell old bonds and buy new bonds, but the yield of the old bonds increases. So is the net result the same?

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by Starfox » Fri Apr 17, 2020 5:10 pm

JoMoney wrote:
Wed Apr 15, 2020 6:54 pm
petilon wrote:
Wed Apr 15, 2020 6:20 pm
JoMoney wrote:
Wed Apr 15, 2020 6:18 pm
... but I would hold a short-term high quality one that is paying interest.. at least relative to holding cash.
What's an example of such a bond?
I'm currently using Series I Savings Bonds and a 1.5% bank money market account. Bank CD's would be another option of something yielding better than nothing...
My non-equity side of the portfolio is currently split 3 ways, and IMO short-term and high quality, paying interest:

35% VWSUX (Short Term Muni Tax Free Fund) SEC Yield 2.17% and 1.3year duration
35% VMSXX (Muni Tax Free Market Fund) SEC Yield 0.69% and 0.1year duration
30% VUSFX (Ultra Short Taxable Fund) SEC Yield 2.34% and 0.9year duration (in my IRA/rIRA)

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by whodidntante » Fri Apr 17, 2020 5:20 pm

Is Ray Dalio's health OK? He seems to have involuntary movements/twitches.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by staustin » Fri Apr 17, 2020 6:32 pm

AlphaLess wrote:
Fri Apr 17, 2020 12:04 pm
I like Dalio as a person. I like him as someone who understands long-term macroeconomic theory.

I like him for educating the masses.

I like him for his philanthropic endeavors.

And on top of that, I *COMPLETELY* ignore what he has to say about investing.
I do agree with most of your post.. and in this case, i think he's also making more of a macroeconomic theory point as well; does it make sense to hold an instrument earning near zero interest, denominated, and repaid, in a currency of which the supply is being massively increased? It's a very valid question. His response is an investor would be dumb to do that. I hold a large amount of bonds in my portfolio and stewing on where to go from here. No good answers just yet.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by nigel_ht » Fri Apr 17, 2020 6:43 pm

staustin wrote:
Fri Apr 17, 2020 6:32 pm
AlphaLess wrote:
Fri Apr 17, 2020 12:04 pm
I like Dalio as a person. I like him as someone who understands long-term macroeconomic theory.

I like him for educating the masses.

I like him for his philanthropic endeavors.

And on top of that, I *COMPLETELY* ignore what he has to say about investing.
I do agree with most of your post.. and in this case, i think he's also making more of a macroeconomic theory point as well; does it make sense to hold an instrument earning near zero interest, denominated, and repaid, in a currency of which the supply is being massively increased? It's a very valid question. His response is an investor would be dumb to do that. I hold a large amount of bonds in my portfolio and stewing on where to go from here. No good answers just yet.
Yah, that’s the conundrum isn’t it? What is the alternative?

It’s obviously not cash.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by finite_difference » Fri Apr 17, 2020 6:54 pm

petilon wrote:
Wed Apr 15, 2020 6:20 pm
JoMoney wrote:
Wed Apr 15, 2020 6:18 pm
... but I would hold a short-term high quality one that is paying interest.. at least relative to holding cash.
What's an example of such a bond?
What do you have against these bond like holdings?

-TIAA traditional.
-TSP G Fund.
-Vanguard Inflation Protected Securities fund (VAIPX)
-Vanguard Total Bond (VBTLX).
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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by Willmunny » Fri Apr 17, 2020 7:13 pm

watchnerd wrote:
Thu Apr 16, 2020 11:06 am
Coltrane75 wrote:
Thu Apr 16, 2020 11:04 am
He's becoming like Bill Gross; constantly bloviating with predictions.
I find it deeply ironic that he's saying this after he teamed up with Tony Robbins to create the "All Weather" portfolio that is 40% long Treasuries.
I'm not sure I follow. If you followed his advice in the last 5 years since Robbins released that book, then you would have done pretty well for fixed income investments. It appears $10k invested 5 years ago into Vanguard's long treasury fund (VLGSX) would have grown into $14,200. Close to a 7% average annual return if held for 5 years (although most of that gain would have taken place over the last year). The question is should investors follow his 2014-2015 advice in 2020 or follow his 2020 advice in 2020. I know which way I lean. One can sell the long treasury position on the next day the market is open, reposition his or her capital, and lock in the gains. He's telling investors right now to sell long treasuries. If they don't do it, despite what he is telling them now, and they base that decision on publications of conversations with him from 5 years ago, then I don't think such investors could reasonably blame him.

https://investor.vanguard.com/mutual-fu ... ance/vlgsx

Jack Bogle said to stay the course with equities, except for himself around 2000 when he saw the dot.com bubble about to burst and shifted heavily into fixed income. Did he share what he was doing at that time or warn investors that this time is really different? I actually don't remember, he could have. I was much too young and broke. But I clearly remember him explaining that he had done this well after the fact.

I'm not trying to pick on Jack Bogle, he should be on the Mount Rushmore of personal finance for what he has done for average Joes like me. Dalio has been successful, but I don't think he has helped average investors anywhere near the level of Jack Bogle. The point I am trying to make is that if someone believes a portfolio they have long recommended is not currently tenable, and they want to share that with the public, I don't necessarily see that as a bad thing. I think that is the noble thing to do.

I also happen to agree with him. It is my opinion that there is a floor somewhere between 0% and the current 1.3% yield on long treasuries where I believe investors will say to heck with this - I am not taking this interest rate and inflation risk for such a tiny return. I believe when that point is reached (and I've already reached that point personally at current yields), investors will sell and move to short treasury bonds, T-Bills, money markets, or cash in the mattress. The ceiling for capital gain is the floor of the yield. I believe there is a floor and that we are very close to it. The gains in long treasuries over the last year have been due to a yield movement from approximately 3% to approximately 1.3%. Unless one thinks investors will buy long treasuries at negative NOMINAL yields, the mathematics dictate that the capital gain of the past year r(which resulted from a drop in yield from 3% to 1.3%) cannot be replicated from here.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by AlphaLess » Fri Apr 17, 2020 7:32 pm

staustin wrote:
Fri Apr 17, 2020 6:32 pm
AlphaLess wrote:
Fri Apr 17, 2020 12:04 pm
I like Dalio as a person. I like him as someone who understands long-term macroeconomic theory.

I like him for educating the masses.

I like him for his philanthropic endeavors.

And on top of that, I *COMPLETELY* ignore what he has to say about investing.
I do agree with most of your post.. and in this case, i think he's also making more of a macroeconomic theory point as well; does it make sense to hold an instrument earning near zero interest, denominated, and repaid, in a currency of which the supply is being massively increased? It's a very valid question. His response is an investor would be dumb to do that. I hold a large amount of bonds in my portfolio and stewing on where to go from here. No good answers just yet.
I agree: if this is a general, rhetorical MACRO questions, then this is a good question. Emphasis: rhetorical.

The reason I have o *COMPLETELY* ignore what he has to say about investing is that he has a terrible track record, in recent past.

In my opinion, hedge funds have to be all about alpha. Alpha works most of the time. Dalio is more about beta, which is definitely not what hedge funds pitch.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by BJJ_GUY » Fri Apr 17, 2020 8:05 pm

AlphaLess wrote:
Fri Apr 17, 2020 7:32 pm
I agree: if this is a general, rhetorical MACRO questions, then this is a good question. Emphasis: rhetorical.

The reason I have o *COMPLETELY* ignore what he has to say about investing is that he has a terrible track record, in recent past.

In my opinion, hedge funds have to be all about alpha. Alpha works most of the time. Dalio is more about beta, which is definitely not what hedge funds pitch.
LOL @ "terrible track record, in recent past."
Which fund are you referring to? If you're talking about All Weather, that isn't really an 'alpha' vehicle, right? Isn't that risk-parity?

Jim Simons also had a poor 1st quarter (especially March). Shall we consider Renaissance no longer elite? What about Two Sigma?

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by AlphaLess » Fri Apr 17, 2020 8:29 pm

BJJ_GUY wrote:
Fri Apr 17, 2020 8:05 pm

Jim Simons also had a poor 1st quarter (especially March). Shall we consider Renaissance no longer elite? What about Two Sigma?
I think you are mistaken: Jim Simon's clients had a poor 1st quarter. Jim Simons had a fantastic quarter.
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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by fredflinstone » Fri Apr 17, 2020 8:30 pm

current yield on Switzerland's 50-year bond: -0.281%

Interest rates here in the US can fall further. A lot further.

I own long-term US treasuries because they are great at zigging when my stocks are zagging. I don't think I'm crazy. They've performed beautifully.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash 22 / TIPS 8

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by BJJ_GUY » Fri Apr 17, 2020 8:37 pm

AlphaLess wrote:
Fri Apr 17, 2020 8:29 pm
BJJ_GUY wrote:
Fri Apr 17, 2020 8:05 pm

Jim Simons also had a poor 1st quarter (especially March). Shall we consider Renaissance no longer elite? What about Two Sigma?
I think you are mistaken: Jim Simon's clients had a poor 1st quarter. Jim Simons had a fantastic quarter.
Okay, fair enough. The point was more symbolic anyway. (I don't know how Meritage does each quarter with all they own, so you must have some good first hand knowledge.)

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by fennewaldaj » Sat Apr 18, 2020 12:55 am

fredflinstone wrote:
Fri Apr 17, 2020 8:30 pm
current yield on Switzerland's 50-year bond: -0.281%

Interest rates here in the US can fall further. A lot further.

I own long-term US treasuries because they are great at zigging when my stocks are zagging. I don't think I'm crazy. They've performed beautifully.
They certainly could. But some sort of yield spike due to inflation is not out of the question either. TIPs certainly seem safer to me than long nominals.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by fredflinstone » Sat Apr 18, 2020 5:34 am

fennewaldaj wrote:
Sat Apr 18, 2020 12:55 am
fredflinstone wrote:
Fri Apr 17, 2020 8:30 pm
current yield on Switzerland's 50-year bond: -0.281%

Interest rates here in the US can fall further. A lot further.

I own long-term US treasuries because they are great at zigging when my stocks are zagging. I don't think I'm crazy. They've performed beautifully.
They certainly could. But some sort of yield spike due to inflation is not out of the question either. TIPs certainly seem safer to me than long nominals.
I think we call can agree that TIPS are safer than long-term treasuries. CDs (under FDIC limits) also are safer than long-term treasuries and offer higher yields, at least in the short run. For example, I can get a CD that pays an interest rate of 1.75% for the next 18 months. By comparison, the 30-year treasury currently offers a yield of only 1.27%.

But investing isn't always about buying low-volatility "safe" assets. For me, it's about constructing a well-diversified portfolio with different components that interact with each other well. We want assets that zig when the other assets in the portfolio zag. The beauty of long-term treasuries is that they perform extremely well in times of severe economic stress. We saw this in 2008-09 and we saw it again last month. In this respect, the volatility of LTTs is a positive, not a negative. There is no other asset on the planet that can fulfill this role as well as LTTs.

Also, LTTs are the asset in my portfolio that would perform best during deflation. Intermediate treasuries would do OK, but LTTs would do much better. If a highly virulent strain of the coronavirus leads us to shut down the economy again in the fall, I have no doubt that LTTs will be the strongest performer in my portfolio. Not saying that will happen but can't say that it won't. Nobody knows what the future holds. Which is why it's so important to have a portfolio that can hold up in a variety of different economic scenarios.

If there is some sort of yield spike due to inflation, the value of my LTTs will collapse. But other parts of my portfolio -- stocks, golds -- will more than make up for it. So I am not concerned in the least.

Is there some point at which I would no longer feel comfortable holding LTTs? Yes. As interest rates decline further, I will continue to reduce my LTT holdings. At some point, maybe 0.5%, I would drop them altogether and replace them with 5- and 6-year CDs (current yield of 1.90-1.95%).
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash 22 / TIPS 8

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by Willmunny » Sat Apr 18, 2020 8:25 am

fredflinstone wrote:
Sat Apr 18, 2020 5:34 am
fennewaldaj wrote:
Sat Apr 18, 2020 12:55 am
fredflinstone wrote:
Fri Apr 17, 2020 8:30 pm
current yield on Switzerland's 50-year bond: -0.281%

Interest rates here in the US can fall further. A lot further.

I own long-term US treasuries because they are great at zigging when my stocks are zagging. I don't think I'm crazy. They've performed beautifully.
They certainly could. But some sort of yield spike due to inflation is not out of the question either. TIPs certainly seem safer to me than long nominals.
...
Is there some point at which I would no longer feel comfortable holding LTTs? Yes. As interest rates decline further, I will continue to reduce my LTT holdings. At some point, maybe 0.5%, I would drop them altogether and replace them with 5- and 6-year CDs (current yield of 1.90-1.95%).
I think you are being prudent to have a plan for the point at which you no longer think the risk of owning LTT is worth the potential rewards. This forum preaches "staying the course," but like all rules of thumb, that doesn't mean we can suspend our thinking in unprecedented/unusual times. Jack Bogle didn't suspend his thinking with respect to his own stock investments just before the dot.com bubble.

I've owned LTT in the past (VLGSX), but at the current yield (1.26%), I've already reached the point that I am no longer comfortable owning any. I realize there may be a little room for the yield to go down and a little capital appreciation is possible from here, but I think everyone owning LTT would be wise to at least think about this question and ask themselves at what nominal yield are they no longer comfortable owning them. Maybe it's 0.5%, 1%, or 1.5% or something else, reasonable minds can differ. It is my opinion that it is not reasonable to expect that investors will accept the LTT risk for something as extreme as a 0% or 0.1% nominal yield in LTT, for example. If that is true, and I think it is, then we can mathematically calculate that the return of the past year in LTT, driven mostly by a drop in yields from approximately 3% to approximately 1.3%, cannot be replicated from here. We would need a LTT yield drop to a yield of negative 0.4% to replicate the capital appreciation of the past year, wouldn't we?

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by CULater » Sat Apr 18, 2020 2:14 pm

There doesn't seem to be anything complicated about what Dalio is saying. On the U.S. Treasury website you can see that the real yield of treasury bonds is negative all the way out to 30 years. What that means is that if you were to buy a treasury bond of any maturity and hold it to maturity you would not even get your initial investment back in real (inflation adjusted) terms. That would also be the expected real return from holding a treasury bond fund. So, there's not much there in terms of building or increasing one's wealth - if by wealth we mean purchasing power. Treasury bonds are zero-return assets. That's looking at treasuries as a stand-alone asset.

That doesn't mean that you can't make money in the short run by owning treasuries. For example, if I hold long term treasuries and interest rates decline, I'll experience a capital gain if I sell them. However, that gain is just "borrowing from the future" because if I continue to hold them I'll eventually just make the expected real return of zip.

Also, it doesn't mean that treasuries can't play a diversifying role in my portfolio, since it's likely that if stocks tank treasuries will experience a capital gain. Essentially, one of the useful roles that bonds can still play is to offset stock returns - but that can work both ways; if stocks have good returns, then bonds will probably experience a capital loss. Is it worth owning treasury bonds to "hedge" stock losses if there's a risk it could work the other way?

And it doesn't mean that bonds can't continue to play a role in "diluting" or dampening portfolio volatility. If some of your portfolios is invested in a zero-return - low volatility asset, that will smooth returns while also lowering overall returns. Over long periods of time, gold has acted like that also. Treasury bonds are the new gold for your portfolio. And actually, gold itself may prove to be more useful going forward than treasuries since they can't "print" more gold as easily as the Federal Reserve can print currency to buy treasuries.
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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by anon_investor » Sat Apr 18, 2020 2:41 pm

whodidntante wrote:
Fri Apr 17, 2020 5:20 pm
Is Ray Dalio's health OK? He seems to have involuntary movements/twitches.
I noticed that too...

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by birdog » Sat Apr 18, 2020 3:06 pm

CULater wrote:
Sat Apr 18, 2020 2:14 pm
There doesn't seem to be anything complicated about what Dalio is saying. On the U.S. Treasury website you can see that the real yield of treasury bonds is negative all the way out to 30 years. What that means is that if you were to buy a treasury bond of any maturity and hold it to maturity you would not even get your initial investment back in real (inflation adjusted) terms. That would also be the expected real return from holding a treasury bond fund. So, there's not much there in terms of building or increasing one's wealth - if by wealth we mean purchasing power. Treasury bonds are zero-return assets. That's looking at treasuries as a stand-alone asset.

That doesn't mean that you can't make money in the short run by owning treasuries. For example, if I hold long term treasuries and interest rates decline, I'll experience a capital gain if I sell them. However, that gain is just "borrowing from the future" because if I continue to hold them I'll eventually just make the expected real return of zip.

Also, it doesn't mean that treasuries can't play a diversifying role in my portfolio, since it's likely that if stocks tank treasuries will experience a capital gain. Essentially, one of the useful roles that bonds can still play is to offset stock returns - but that can work both ways; if stocks have good returns, then bonds will probably experience a capital loss. Is it worth owning treasury bonds to "hedge" stock losses if there's a risk it could work the other way?

And it doesn't mean that bonds can't continue to play a role in "diluting" or dampening portfolio volatility. If some of your portfolios is invested in a zero-return - low volatility asset, that will smooth returns while also lowering overall returns. Over long periods of time, gold has acted like that also. Treasury bonds are the new gold for your portfolio. And actually, gold itself may prove to be more useful going forward than treasuries since they can't "print" more gold as easily as the Federal Reserve can print currency to buy treasuries.
Base on what you say, the take away for me is to:

1. Look toward TIPS if I suspect increased future inflation.
2. Look to high interest online savings as an alternative to putting additional dollars into treasuries right now.
3. Look to sending dollars to equities at a higher allocation since I can get positive real expected returns there, albeit with increased risk.

Obviously dependent on individual circumstances.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by CULater » Sat Apr 18, 2020 5:32 pm

Seems to me it's a really tough call right now. I'm wondering if it makes any sense to hold anything other than T-bills along with stocks. T-bills have zero yield, but the real yield of anything longer is also zero or slightly negative. Another option might be a short TIPS fund, which I think would track inflation more closely if that happens. How would they do with deflation? In any event, the fixed-income portion of one's portfolio might not provide much help and your total return would be almost entirely driven by your equities. Is this a correct analysis?
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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by birdog » Sat Apr 18, 2020 8:48 pm

CULater wrote:
Sat Apr 18, 2020 5:32 pm
Seems to me it's a really tough call right now. I'm wondering if it makes any sense to hold anything other than T-bills along with stocks. T-bills have zero yield, but the real yield of anything longer is also zero or slightly negative. Another option might be a short TIPS fund, which I think would track inflation more closely if that happens. How would they do with deflation? In any event, the fixed-income portion of one's portfolio might not provide much help and your total return would be almost entirely driven by your equities. Is this a correct analysis?
More or less what I was thinking.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by redbarn » Sat Apr 18, 2020 11:44 pm

Hector wrote:
Fri Apr 17, 2020 2:59 pm
redbarn wrote:
Fri Apr 17, 2020 12:27 am
The duration of BND is currently about 6 years. The SEC yield for BND 6 years ago was just above 2%. I know the duration changes somewhat over time but even if you take 5 or 7 years ago, the SEC yield would be either a bit below or above 2%. Under some assumptions, the SEC yield should give us a reasonable estimate of the return of a bond fund over its duration. In this case, the actual return from 2016-2020 is closer to twice the SEC yield than the SEC yield. Does someone know what exactly accounts for this? Why would BND with an SEC yield of about 2% and a duration of about 6 years do so much better than holding a 6-year bond with a 2% SEC yield to maturity would have done?
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Thank you for the suggestion. I spent some time reading about this now, including some great threads where BHs went back and forth, and this is all absolutely fascinating. The whole thing appears extremely doubtful at first but is so obvious after the fact. I am surprised this point is not discussed more often.

When you buy a bond that matures in 6 years and hold it to maturity, the average bond duration over the course of your holding period is about 3 years. In contrast, a bond fund with a fixed duration of about 6 years will have an average duration of about 6 years over any holding period. As long as the yield curve is upward sloping, the latter should have a higher expected return.

It seems that a better indicator than the SEC yield for a bond fund of X duration would be the SEC yield on a bond fund with a similar credit composition that has a duration of 2X. I have not calculated this, but it does seem plausible that the difference in the BND example would be reasonably accounted for by the spreads over the past few years.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by steve321 » Mon Apr 20, 2020 1:16 am

abuss368 wrote:
Wed Apr 15, 2020 6:07 pm
When Vanguard and other experts recommend no bonds, then I will listen and try to make an informed decision.
why would Vanguard do that? They mnage many bond funds and ETFs.
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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by nisiprius » Mon Apr 20, 2020 7:58 am

So I have now borrowed a copy of "Money, Master the Game," because another poster said it contained what I was asking for: a table of the annual returns for all of Dalio's hedge funds. (It doesn't.)

But meanwhile, yes, I have a problem with Ray Dalio's statement. Robbins says:
I looked in Ray’s eyes, and a smile came across his face. “All right, Tony. It wouldn’t be exact or perfect, but let me give you a sample portfolio that the average person could implement.” And then slowly he began to unfold the exact sequence for what his experience shows will give you and me the increased probability of the highest return in any market environment, as long as we live, with the least amount of risk.
Please note: any market environment, as long as we live.

And it is described and shown on p. 392.

And it is 40% 20-to-25-year Treasuries, 15% 7-to-10-year Treasuries, 30% stocks, 7.5% commodities, 7.5% gold.

In other words, it is 55% bonds. Unleveraged.

So if "This period, like the 1930-45 period, is a period in which I think you’d be pretty crazy to hold bonds," then I think it is perfectly stinking of him not to make any aside to tell the people who followed his advice (by way of Robbins) what they should do now, and to admit that somebody was grossly overpromising when they said that this allocation would continue to be suitable in any market environment, as long as we live.
Last edited by nisiprius on Mon Apr 20, 2020 8:03 am, edited 1 time in total.
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.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by birdog » Mon Apr 20, 2020 8:03 am

nisiprius wrote:
Mon Apr 20, 2020 7:58 am
So I have now borrowed a copy of "Money, Master the Game," because another poster said it contained what I was asking for: a table of the annual returns for all of Dalio's hedge funds. It doesn't. But meanwhile, yes, I have a problem with Ray Dalio's statement. Robbins says:
I looked in Ray’s eyes, and a smile came across his face. “All right, Tony. It wouldn’t be exact or perfect, but let me give you a sample portfolio that the average person could implement.” And then slowly he began to unfold the exact sequence for what his experience shows will give you and me the increased probability of the highest return in any market environment, as long as we live, with the least amount of risk.
Please note: any market environment, as long as we live.

And it is described and shown on p. 392.

And it is 40% 20-to-25-year Treasuries, 15% 7-to-10-year Treasuries, 30% stocks, 7.5% commodities, 7.5% gold.

In other words, it is 55% bonds. Unleveraged.

So if you'd be pretty crazy to hold bonds right now, then I think it is perfectly stinking of him not to make any aside to tell the people who followed his advice (by way of Robbins) what they should do now, and to admit that somebody was grossly overpromising when they said that this allocation would continue to be suitable in any market environment, as long as we live.
Applause. Well stated.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by Call_Me_Op » Mon Apr 20, 2020 8:04 am

petilon wrote:
Wed Apr 15, 2020 5:26 pm

And now this hedge fund manager says you're crazy if you hold bonds right now. (Ray Dalio is founder of Bridgewater Associates, the world’s largest hedge fund): https://www.marketwatch.com/story/billi ... latestnews
I strongly disagree. The term "bonds" needs to be opened-up to include all fixed-income instruments. In my view, you are crazy "not" to own bonds (unless you are very young).
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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by epilnk » Mon Apr 20, 2020 3:33 pm

watchnerd wrote:
Thu Apr 16, 2020 5:35 pm
epilnk wrote:
Thu Apr 16, 2020 5:23 pm
Crazy like a fox. For simplicity (ok too lazy to calculate) I am pulling simple yoy numbers off VG, so this isn't limited to the downturn:

total return since april 2019: -5.7%
equities: -12.9%
bonds: +5.0%
What kinds of bonds are you holding?

If I average across my bond holdings for 1 year, I get +17.15%.
Mostly government issue, mostly munis (taxable Ted here) with a chunk of perpetually underperforming TIPS in my IRA. I forgot to include the TBM that is the lion’s share of my husband’s unlinked 401K and which would bring that up. But where I have choice of funds I prefer to take corporate risk on the equity side.

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Re: Ray Dalio: ‘you’d be pretty crazy to hold bonds’ right now

Post by CULater » Mon Apr 20, 2020 3:43 pm

The only bonds worth holding now are long treasuries, in order to hedge stocks. Rest goes to trash (er, cash).
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