I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
I rode the Top Thrill Dragster at Cedar Point (Ohio) which is the same ride, only about 20 feet shorter and it only goes 120mph at launch instead of 128mph. Top Thrill was first.
What a ride, very apropos of today's market. I took some profit on a day trade from the morning just before The Bernank spoke, fearing that the market would plunge.
I didn't expect the massive ramp job in the last 30 minutes but I can't complain. Did you see the big drop, then spike in the 10 year? The whole world is crazy!
I missed the spike but I can see it in the intraday trading of TIP. What violent moves.
As for my bonds, I never expected to see investors lock in a 1.0% real yield for 30 years. Then again, 20 years ago I would never have expected to see investors lock in a 1.99% nominal yield on 30 year Japanese bonds.
It's a shame that investors today can't get any real return at all though. Even if you lock in a 1% real yield in a retirement account for 30 years, you'll still end up losing it in taxation at the other end more than likely. Sigh.
That said, it still might be better than many alternatives if real growth grinds to a halt and stays there.
I'm certainly still willing to hold my TIPS until maturity, for what that's worth.
Right now I'd still strongly recommend I-Bonds over TIPS though. Although I-Bonds only offer a 0.0% real rate, you can cash them out without having to find a greater fool if I am wrong about what interest rates will do (and I very well could be).
I rode the Top Thrill Dragster at Cedar Point (Ohio) which is the same ride, only about 20 feet shorter and it only goes 120mph at launch instead of 128mph. Top Thrill was first.
ReplyDeleteWhat a ride, very apropos of today's market. I took some profit on a day trade from the morning just before The Bernank spoke, fearing that the market would plunge.
I didn't expect the massive ramp job in the last 30 minutes but I can't complain. Did you see the big drop, then spike in the 10 year? The whole world is crazy!
I missed the spike but I can see it in the intraday trading of TIP. What violent moves.
ReplyDeleteAs for my bonds, I never expected to see investors lock in a 1.0% real yield for 30 years. Then again, 20 years ago I would never have expected to see investors lock in a 1.99% nominal yield on 30 year Japanese bonds.
Adapt to the new reality or die.
This has been going on for years and suddenly everyone notices? The whole world is indeed crazy!
Nice pick! Wild stuff today. Where can I buy TIPS????
ReplyDeleteGYSC,
ReplyDeleteYou can buy individual TIPS directly from your broker or you can buy them directly from the government (through the auction process).
Here are some instructions I wrote last year.
TIPS Buying Instructions
It's a shame that investors today can't get any real return at all though. Even if you lock in a 1% real yield in a retirement account for 30 years, you'll still end up losing it in taxation at the other end more than likely. Sigh.
That said, it still might be better than many alternatives if real growth grinds to a halt and stays there.
I'm certainly still willing to hold my TIPS until maturity, for what that's worth.
Right now I'd still strongly recommend I-Bonds over TIPS though. Although I-Bonds only offer a 0.0% real rate, you can cash them out without having to find a greater fool if I am wrong about what interest rates will do (and I very well could be).