OK, I guess I see where you’re coming from, but I’m not sure you’ve thought this through fully, and please correct me if I’m wrong. Price fluctuations along the way are irrelevant at maturity, when the bonds cash out at face value. I suppose your reasoning holds some validity for a bond trader, but not so much for somebody buying the bonds for a long term income stream. Like me, for example. 😀
sure, if you hold to maturity (20+ years!) then you get your money back
but all those years you may be missing out on higher interest rates (if they happen) and if you need to sell the bond for spending money you'd be forced to sell at a big loss.
but also inflation...if you buy a bond for $25,000 and cash it in 20 years from now you'll get your $25,000....but its buying power will of course be far less because of inflation. And inflation comes along with debt crises and currency crises such as we may get from this debt spiral that seems to be starting.
Question is: are you being compensated for the additional risk you are taking over someone who buys a 2 year bond. That's the hard question.
Short term bond holders have less inflation risk, but they have 'reinvestment risk' in which their bond matures in 2 years and if rates are far lower then, they will wish they had locked in a longer rate, as you did.
If one is managing a bond portfolio in this environment, I would believe laddering where one always has liquidity is wise. Bank balance sheets exposed the problem of assuming a rates position. Same could be said of Fed balance sheet.
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Gee, I don't know. It seems to be doing quite well for me (and has been).
On the other hand, an aversion to it means you've been 'left out of the party'- the technology, that is. You know, metaphorically speaking.
"Cool" enough for you, daddy-o?
I have a running friend that downloads all his data from . Not sure how useful that is. Or you see folks in the gym running an app for their workout. It runs counter to proprioception.
I have one of those, but it is way more complicated, and solar powered, fwiw.
I got it from my son, who tends to off-load a lot of his stuff on me. It replaced my Garmin Forerunner 220, which finally quit after something like 10 years, and was beautifully simple and streamlined and fit my needs and nothing more.
The new Garmin has a lot of things I don't even comprehend, and it took me forever to figure out how to shut most of it off - it announced everything during my runs, interupting what is by all accounts, an absolutely amazing playlist, with every change of pace and other nonsense I didn't want to hear.
I could go on, but to be blunt, the damn thing owns me.
But anyway, I was refering to investing in tech. That's worked out much better.
I have learned quite a bit about running at an older age from my new 80 year old training partner. He runs with a Gym Boss to do the Galloway run/walk thing, and Garmin for distance and pace. He pushes me, so it is working.
Garmin 955 solar sports watch, synced to iPhone Airpods Rechargable LED headlamp iPhone (to receive streaming audio transmitted to Airpods and receive messaging) Streaming video service plan, enabled on iPhone Siri app enabling voice commands to the iPhone Recently discarded (no longer needed) - wrist strap heart rate monitor
Sure, seems like a lot (and it is). But it's worth it to get myself out, to stay in touch with nature. And to enjoy the simple things!
That could be a metric measured on my Garmin for all I know, so I hardly know if you are serious.
It measures things I've never heard of. Okay, quick check: "HRV Status", or ""Training Readiness".
And I get messages throughout the day popping up and telling me about my Resting metrics, and others about how I am doing on meeting my "Fitness Goal".
On 5/3, I posted on $AAPL with the stock -5% YTD about a likely AI driven iPhone replacement cycle. Now the stock is up ~20% YTD on AI optimism. But the comments from both $T and $VZ on their earnings calls over the past two days do not support it. I would be cautious into Apple…
This sharp drop in inflation didn't really happen...in May core CPE was 3.0...now it's 2.7 and rising a bit. Inflation's refusal to get down to a flat 2% is why bond yields have been rising.
Carl Quintanilla @carlquintanilla MORGAN STANLEY: “.. After the sharp upswing in inflation in 1Q24, we believe a similarly sharp downswing is coming. .. leading indicators point to even weaker rents inflation in 2H24 than [we] previously anticipated. .. residual seasonality contributed to the 1Q24 upside, suggesting payback in 2H24.” [Huberty] #PCE 🇺🇸
NVDA is up an astonishing 225% over the past year. After this poster pointed out how unlikely that was to happen.
Post See new posts Conversation Swordfish Trading @Swordfishv44183 $NVDA's share price has increased 9400% across the QE bubble, while its P/S ratio rallied 1300%. This means that if $NVDA returned to its historic price ratios, it'd be down over 90% from current levels. $NVDA needs to grow over 1000% to justify these price ratios.
10:17 AM · Oct 15, 2023 · 210.8K Views
comment and answer:
WestportParent @Dmodeology · Oct 15, 2023 What about the argument that looking out 12-mos, it’s 30x PE, and it’s now trading 25% below its trailing 5-yr & 7-yr avg PE Swordfish Trading @Swordfishv44183 · Oct 15, 2023 that's A, perfection if they're able to achieve that in reality. and B, 30 is still insane in a 5% rate environment.
NVDA is up an astonishing 225% over the past year. After this poster pointed out how unlikely that was to happen.
Post See new posts Conversation Swordfish Trading @Swordfishv44183 $NVDA's share price has increased 9400% across the QE bubble, while its P/S ratio rallied 1300%. This means that if $NVDA returned to its historic price ratios, it'd be down over 90% from current levels. $NVDA needs to grow over 1000% to justify these price ratios.
10:17 AM · Oct 15, 2023 · 210.8K Views
comment and answer:
WestportParent @Dmodeology · Oct 15, 2023 What about the argument that looking out 12-mos, it’s 30x PE, and it’s now trading 25% below its trailing 5-yr & 7-yr avg PE Swordfish Trading @Swordfishv44183 · Oct 15, 2023 that's A, perfection if they're able to achieve that in reality. and B, 30 is still insane in a 5% rate environment.
Sally, you need to apologize to the posters here. You said NVDA would be $200 by the end of the year. Get on your knees, grovel, apologize for god’s sake. :-)
A bond being callable isn’t necessarily a particularly risky thing, I think, at least if you bought at below face value. Then if they call it the distributions end but you’ll get a capital gain on pay out. Big fat yields like 9.9% should raise eyebrows, though. I’m assuming the coupon on that bond is well below 9.9% and a lot of the yield comes from price appreciation between purchase and maturity. The 6% one mentioned later had a coupon of 3.25 or 3.5% (don’t recall exactly) and a price of around $82 (same). I’ve seen so-called investment grade bonds for sale with BBB rating and fat yields, and when I dug a bit the companies were in danger of bankruptcy. Buyer beware… When I go shopping for bonds, after screening for a minimum yield, I look first to see the credit rating is adequate (don’t want the company going bankrupt and your bonds worth Pennie’s on the dollar), and then I try to find issues with price relatively close to face value. I prefer that most of the yield come from the coupon, which reduces, but doesn’t eliminate, some concerns. I am, however, no expert in these matters and will be happy to be schooled by somebody who knows better.
IMHO, I believe a major consideration for Bond investors will be maturity selection. Understanding the Break-even Interest rate should help.
You can download the data into excel. The investor who has a 10 year time horizon has 2 choices (actually more than 2, but let's keep it simple) Buy a 10 YR Note now or buy a 5 YR Note now and roll into another when it matures. The BE Rate will give the market's current opinion where the 5 YR Rate will be 5 years from now. When I downloaded the data I compared BE Rate to the actual 5 YR Rate five years later. The results were interesting. From early 1953 until December 1979, buying a 5 YR Note and then rolling into a new one 5 years later worked almost every month (293/317). Starting in 1980 to March 2017, complete pattern change. Now buying the 10 YR Note was what worked (444/446 months). It now appears to be a shift back to the 1953-1979 regime which shouldn't be ignored.
Here's another graph showing 10 yr treasury note yield (cherry line) and nominal GDP change year over year (ebony line) from 1953. From the late 30s to 1951 The Fed bought long term treasury debt to support a 2.5% ceiling (T-Bills .375%). You can see as nominal GDP rose until 1979-81 that the 10 yr yield follows. After that the NGDP growth trends lower until 2020 and the 10 yr note does as well. The past few years have seen a reversal, is this the beginning of a new upward trend?
Also regarding treasury debt issuance, here's a graph of year over year % total debt securities issuance for all sectors (ebony line); Federal Government (cherry line); and non-financial corporate business (lime line).
Graph and download economic data for All Sectors; Total Debt Securities; Liability, Level from Q4 1945 to Q2 2024 about liabilities, sector, debt, securities, USA, Treasury, federal, government, IMA, nonfinancial, corporate,...
Here's all sector debt securities issuance growth y-o-y (ebony line) and NGDP growth y-o-y (Robin egg line). The cherry line (all sector debt growth - NGDP growth) shows if debt is growing more or less than NGDP. Since the GFC, with the exception of Covid, all sector debt growth is not exceeding NGDP growth.
Graph and download economic data for All Sectors; Total Debt Securities; Liability, Level from Q4 1945 to Q2 2024 about liabilities, sector, debt, securities, USA, and GDP.
gente, that GIF is priceless, and hit the nail squarely on the head. Whenever you write something for us, I know it's important and thoughtful, but I always feel like I'm reading it in Portuguese or something. On behalf of us all, could you add a plain language summary to all your posts, with emphasis on the (obvious?) point you are trying to lead us to? :-D
Graph and download economic data for Gross Domestic Product from Q1 1947 to Q3 2024 about GDP, USA, 10-year, maturity, Treasury, interest rate, interest, and rate.
