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Bonds, Bonds are king
nipper
post Posted: Oct 13 2016, 08:50 AM
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In Reply To: early birds's post @ Oct 12 2016, 10:30 PM

Scary days, indeed.... 3.27% for 30 years

OK, so you want risk free (and even that's questionable in this day and age); retire at 55, and live to 85 - not unreasonable - and you need $1mill to earn $32.7k. which is not particularly attractive. Nor with any inflation lift. And not eligible for the pension.

So, $2mill for a decent lifestyle, not too much baked-beans-on-toast.

And, if this is the best on offer, (Japan anyone?); it's worse in other mature economies., No wonder you've got to take on a bit of risk to get ahead. Or devise a different strategy.... Bit of lock- it-in trading?



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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early birds
post Posted: Oct 12 2016, 10:30 PM
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In Reply To: nipper's post @ Oct 12 2016, 07:08 PM

there is a pair trade
short us 10y t note/long aussie 10y , it should be a safer and profitable trade for next few months. imho





 
nipper
post Posted: Oct 12 2016, 07:08 PM
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Demand exceeded the $13 billion mark for the new 30 year bond, which matures on March 21, 2047. The Australian Office of Financial Management confirmed pricing on Wednesday, at a yield of 3.27 per cent.

"It's an extremely attractive yield. Australia still has a triple-A rating, so you can't get better," said Katrina King, QIC's director of research and strategy. "The offshore investors [will] also look at it from a currency perspective as well. The Aussie dollar's been reasonably stable. What they'd like is to buy the bond and see the currency go up, but that is a secondary point." The Australian dollar was fetching US75.71¢ on Wednesday.

The final pricing is within the 3.21 per cent to 3.28 per cent range investors had speculated. Highlighting the appeal of the AOFM's issue, a 30-year Japanese government bond was also being marketed on Wednesday with a yield of around 0.53 per cent. The US 30-year bond trades at about 2.5 per cent and the UK's 1.7 per cent.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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mullokintyre
post Posted: Aug 14 2016, 11:54 AM
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Sometimes the people who write blogs, spruik their expertise , and generally give advice are really not much help.
Although I get John Maudlins research every day, most of the time I see it as self promotion, but just occasionally he cpmes up with some gems.
The quote below is, I reckon, one of those gems.

QUOTE
In 1981, as inflation and Treasury yields were screaming to new heights, good friend Gary Shilling had the audacity to announce, “We’re entering the bond rally of a lifetime.” He was right, as that bond rally is already 35 years old and I think it will see a few more birthdays. Gary’s with us today to assert that the rally is still underway – and to back up that assertion with a rather compelling case for Treasuries and for the “long bond” (the 30-year) in particular.

Gary recalls his famous public debate on stocks versus bonds with Professor Jeremy Siegel of Wharton, in 2006 – just before the Great Recession kicked in and sent Treasury prices sky-high. Siegel remarked to the audience of 500, “I don’t know why anyone in their right mind would tie up their money for 30 years for a 4.75% yield” (the then-yield on the 30-year Treasury). When it was Gary’s turn, he asked the audience, “What’s the maturity on stocks?” He got no answer, but pointed out that unless a company merges or goes bankrupt, the maturity on its stock is infinity – it has no maturity. His follow-up question was, “What is the yield on stocks?” to which someone correctly replied, “It’s 2% on the S&P 500.”

Gary continued, “I don’t know why anyone would tie up money for infinity for a 2% yield. I’ve never, never, never bought Treasury bonds for yield, but for appreciation, the same reason that most people buy stocks. I couldn't care less what the yield is, as long as it’s going down since, then, Treasury prices are rising.”


Its not his work, he is just quoting someone else, as indeed am I.

Mick




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sent from my Olivetti Typewriter.

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