It’s amazing that the entirely unproven article of faith called the “wealth effect” was an expressly-stated goal of the Bernanke administration.
We are still in the intellectual stone age, and it is embarrassing and deeply disappointing.
I’m afraid it will prove to be a short term solution accompanied by long term pain.
Maserati wrote:
It’s amazing that the entirely unproven article of faith called the “wealth effect” was an expressly-stated goal of the Bernanke administration.
We are still in the intellectual stone age, and it is embarrassing and deeply disappointing.
but meanwhile, these stone age economists just maneuvered us through the first decade in at least 170 years (and possibly since the start of time) without a recession.
Sally Vix wrote:
Macaroon wrote:
My personal cost of living has been increasing much faster than CD’s have been gaining.
Negative real returns, indeed.
Actually, CDs over the last 30 years have a real rate of return of about 1.03%. They are blown away by the market real rates of return. I think about 7% which is remarkable when you consider some years inflation was extremely high.
Long term bonds have done better than stocks over 20 years, I believe. Amazing, epochal bull market in bonds. The conquering of inflation.
In other words, the utter triumph of the Federal Reserve. Congrats, boys and girls at the Fed.
agip wrote:
Sally Vix wrote:
Actually, CDs over the last 30 years have a real rate of return of about 1.03%. They are blown away by the market real rates of return. I think about 7% which is remarkable when you consider some years inflation was extremely high.
Long term bonds have done better than stocks over 20 years, I believe. Amazing, epochal bull market in bonds. The conquering of inflation.
In other words, the utter triumph of the Federal Reserve. Congrats, boys and girls at the Fed.
This.
agip wrote:
Sally Vix wrote:
Actually, CDs over the last 30 years have a real rate of return of about 1.03%. They are blown away by the market real rates of return. I think about 7% which is remarkable when you consider some years inflation was extremely high.
Long term bonds have done better than stocks over 20 years, I believe. Amazing, epochal bull market in bonds. The conquering of inflation.
In other words, the utter triumph of the Federal Reserve. Congrats, boys and girls at the Fed.
Idiotic policies by our children at the Fed. You have destroyed price discovery in all assets, created the biggest asset bubble and economic disparity ever, and now painted yourself into a corner. Sleep well.
J. Hardy wrote:
agip wrote:
Long term bonds have done better than stocks over 20 years, I believe. Amazing, epochal bull market in bonds. The conquering of inflation.
In other words, the utter triumph of the Federal Reserve. Congrats, boys and girls at the Fed.
This.
Interesting. Would you consider this a good time to invest in a Long Term Bond Index fund?
Vanguard Long-Term Bond ETF (BLV) has an effective duration of 15.64, which means a one percent move in interest rates either direction will drive the principal value up or down +-15.64%. Over the past year the 10 Year Treasury has dropped from 3.2% to 1.7% driving the return proportionally. So your bet would be hinged to the Fed interest rates/QE or belief these debts can be repaid or not repaid.
Ghost of Igloi wrote:
Vanguard Long-Term Bond ETF (BLV) has an effective duration of 15.64, which means a one percent move in interest rates either direction will drive the principal value up or down +-15.64%. Over the past year the 10 Year Treasury has dropped from 3.2% to 1.7% driving the return proportionally. So your bet would be hinged to the Fed interest rates/QE or belief these debts can be repaid or not repaid.
Thanks, I am looking at a BlackRock High Yield Bond Instl BHYIX which is offered through my employer's plan. Has better returns and I don't mind that it is riskier.
High Yield will be affected by interest rates but more correlated with the stock market since the credit quality is low. So you are invested in junk bonds in high yield.
Thanks. Going to take a serious look at it and appreciate your input.
One last point, high yield does not diversify a stock heavy portfolio. They tend to move in the same direction. Intermediate term bonds would be a better balance, experience positive flows with poor equity market returns, and are more sensitive to deteriorating economic conditions. Of course if you believe the risk is benign than junk bonds.
Ghost of Igloi wrote:
Vanguard Long-Term Bond ETF (BLV) has an effective duration of 15.64, which means a one percent move in interest rates either direction will drive the principal value up or down +-15.64%. Over the past year the 10 Year Treasury has dropped from 3.2% to 1.7% driving the return proportionally. So your bet would be hinged to the Fed interest rates/QE or belief these debts can be repaid or not repaid.
My signature fund has lost over 18% this year alone. Thanks for your continued support. Sleep well.
Good and I see that the high yield did take a beating just like stocks at the end of last year, so not a good counter-balance. I found one that is mainly investment-grade securities in the top four credit rating categories by Moody's or S&P. Looks good to me, and makes sense to be locking in some of the profits of an extended bull market and nearing retirement. Thx.
You’re welcome. Remember, Igy has only been here since 2015 while I have been making bad bearish predictions since last century. I was even right once! Anyway, Igy is a lightweight compared to me. No wonder he is infatuated with me.
Yea troll, the market needs dopes like you to keep the bubble growing.
Ghost of Igloi wrote:
Vanguard Long-Term Bond ETF (BLV) has an effective duration of 15.64, which means a one percent move in interest rates either direction will drive the principal value up or down +-15.64%. Over the past year the 10 Year Treasury has dropped from 3.2% to 1.7% driving the return proportionally. So your bet would be hinged to the Fed interest rates/QE or belief these debts can be repaid or not repaid.
well ok but the other big bet is on inflation.
Buying long term bonds at these yields makes good sense if we go into deflation. If a long term bond yields 2% but deflation is 2%, then you get a nice tidy real 4% yield.
Given europe's negative rates and our very low rates...I think the bond market is pricing in a solid chance of deflation.
Which would make sense since the populations of USA and Europe will start shrinking, causing demand to fall.
If we have a very small birth rate and lowered immigration, we'll definitely have deflation.
seattle prattle on another browser wrote:
J. Hardy wrote:
This.
Interesting. Would you consider this a good time to invest in a Long Term Bond Index fund?
only if you think deflation is going to happen. Which it might.