For: In backtests, long term bonds have equity-like risk/returns, and are anti-correlated with equities (especially during the 2009 crisis), so a levered equity/bond portfolio like some mix of upro/tmf shows excellent returns with tolerable risk.seersucker wrote: ↑Mon Feb 24, 2020 8:48 pmThat’s nuthin’. The first thread is 68 pages.
Seriously, start reading Hedgefundie’s first post in the first thread. Most of what you need to know is there.
Against: There's nothing insightful to this. It's basically just a bet on perpetually falling interest rates, which is essentially all that has happened within the backtest window. The portfolio will get crushed in any rising rate environment (like it did if you extend backtests to the 60s/70s). You're selling highly leveraged insurance against that risk, and in the backtests, it's worked out, for obvious reasons. The author of this thread tends to give glib and disingenuous replies to substantive critiques (It's a new normal! Look at the backtests!), while otherwise persistently cheerleading this "strategy."
About ten years ago, in a famous thread here, MarketTimer similarly rationalized making leveraged investments after a long run-up in the markets, garnering substantial interest from some, while others warned of impending disaster. He got *un*lucky, and everyone else got lucky, to learn a valuable lesson from his pain. So far, this has been the opposite.