This Popular Government-Backed Income Investment Is Worthless
Treasury Inflation Protected Securities, better known by the acronym "TIPS."
You heard it here first. Short TIPS! It's the investment opportunity of a lifetime. Once the market realizes that TIPS have absolutely no value, just think how rich you will be. I'm talking to you CalPERS. Easy money! No risk! Back up the truck! Don't forget to leverage the sure thing!
Of course, these buyers are expecting to eventually receive a return on their investment.
Exactly. There's not one TIPS investor looking for a return OF his investment since the bottom of this economy started falling out (starting in 2000). I expect huge gains from here. I'm already planning to buy New York with my profits. That's right, the entire state! Mwuhahaha!
These TIPS buyers are betting that as the CPI rises, they will be compensated with an inflation-trumping payout.
As a TIPS investor, this explains why I am constantly rooting for higher inflation. I completely ignore the fact that it will financially ruin me as I pay enormous taxes on the enormous inflationary gains. Each and every year!! That is indeed my bet. How did he ever figure it out? Genius!
I rely on private, unbiased sources like Shadowstats to confirm inflation reality.
Nothing screams unbiased inflation reporting like a site that constantly predicts hyperinflation. And yet it miraculously can't seem to raise its own subscriber fees. Why can't they inflate? What's stopping them? The fees are still stuck at $175 per year. I just checked. Seriously. As a side note, I'd be willing to pay $0 for their service. At least in this particular case, call me Mr. Deflationary.
Unlike TIPS, high-yield and dividend-growth investments aren't subjected to manipulation to favor the issuer.
Indeed! We can trust every single high-yield company in America to continue to deliver healthy dividend growth as we delever! It's a sure thing! It's just like shorting TIPS! Why can't more investors understand this?
You want to know what else we can trust? No U.S. company could ever be accused of manipulation to favor the issuer. Take that to the bank!
The fun doesn't end here though. Check out those informed comments at the end of the post.
TIPS are, in fact, worthless as an investment to individuals. They're not worthless assets, but there's no set of personal circumstances that would make them an appropriate investment given today's conditions. - bearfund
BEARFUND said this? No set of personal circumstances? Given today's conditions? Seriously? Well, this is a sarcasm report!
The reality is that the CPI excludes food and energy prices. - Vincent1966
And there is yet another reality that says the CPI does include food and energy prices. Who to believe? It sure is a conundrum! "Again, while we publish many indexes, our broadest measure of inflation includes all items consumers purchase, including food and energy."
Them excluding food and energy makes the CPI number a joke and people are right to question it. - dreadlordnaf
Yes! Question away! Don't bother to read the actual reports. Just base opinions on what you read in the comments at Seeking Alpha. But don't limit yourself to all articles. Stick to the ones with "worthless" in their title. That way you know you'll be getting exactly the information you deserve!
This concludes yet another installment of The Sarcasm Report. Good times, good times.
Disclosure: I own long-term TIPS with intent to hold to maturity. I will NOT make out like a bandit (as the article assumes I believe). It is my personal opinion that TIPS are neither horribly overpriced nor anything approaching a screaming bargain. It really depends on where real GDP goes from here. I for one am not optimistic long-term. Your opinions may vary. This is not investment advice.
I don't mean to be mean, but my eyes could not stand the strain of reading the article and the comments. It was just too much. There were too many pet peeves all in the same place.
ReplyDeleteA pet peeve (or pet hate) is a minor annoyance that an individual identifies as particularly annoying to them, to a greater degree than others may find it.
That is no doubt the case here, lol.
That article is so funny. It might have been titled, "Everything Stagflationary Mark Believes is Worthless", or "Stagglationary Mark Kryptonite". TIPS bashing, CPI conspiracies, Shadowstats praise, and comment confirmation by none other than Dread Lord Naf! Hahahaha.
ReplyDeleteA quick search turned up a Mr Slippery Kryptonite article, Why Gold-Related Investments Are Slowly Becoming Worthless. From the article:
"The basic answer is that in the long run the price of gold can only go down. And it will keep going down until mining virtually stops."
Since that was written, gold is up over 11%. Genius!
Mr Slippery,
ReplyDeleteI just read the comments of the article again to see if anyone knew showed up.
DOGS THAT BARK!
Always enjoy the food for thought...Thank you Ian
..but nearing retirement and being a conservative investor...
Yes! Someone gets it!! A dog lover too apparently! Hurray!!
...I'd take any investment that returns 6% and be happy as a lark.
Forehead. Desk. Whack. Whack. Whack.
It was going so well until that point. He then points to TIP and clearly expects the 6% returns to continue even though the real yield of the fund has fallen to -0.89%. Tack on 3% inflation over the long haul say, and we could expect the fund to get 2% per year at best. And that assumes that real yields don't rise. I don't think they will but they could.
Wow! Freudian slip!
ReplyDeleteAnyone knew showed up? LOL!
Your link to the gold article appears to be broken. That said, I think I've read all I need to read.
ReplyDeleteWhy Gold-Related Investments Are Slowly Becoming Worthless
Believe it or not, that title actually hits two pet peeves of mine at once!
"Are" implies that there is proof that it is already happening and there is proof that it will continue. Neither of those things are true. No proof! Just opinions.
"Becoming Worthless" implies that gold's future value will be zero. Even as a gold heretic (would not buy at these prices), I would never claim something so ridiculous.
But for the moment, let's assume the headline is true.
If gold will be worthless, then that means aluminum will be worth much, much less than worthless!
And if aluminum is worth much, much less than worthless then we surely will NEVER hyperinflate!
And it also means that the dollars of the future will be worth than any amount of aluminum we could possibly ever hoard! Hurray!
In all seriousness, I'm not holding my breath, lol. ;)
Bonus thought!
ReplyDeleteIf aluminum becomes worthless due to it making up so much of the earth's crust and...
If labor becomes worthless due to 7 billion people looking for work in an increasingly automated world and...
If real estate becomes worthless because labor doesn't have enough employment to pay for new homes and...
If dollars will become worthless due to excessive monetary printing activities...
If video games become worthless due to next generation gaming consoles making the previous generation games obsolete...
Then everything becomes worthless simultaneously! Burn it all! Nothing will have value!
I've been doing this all wrong clearly. I've been enjoying the heck out of Borderlands 2.
I don't even want to guess how many hours I've played so far. This is so irrational. How can I enjoy doing something that I KNOW will eventually become worthless to me? ;)
A straw in the wind: Her Majesty's Government, in the shape of National Savings and Investments, has recently announced rules that make new issues in its heretofore glorious Index-linked Savings Certificates a much less attractive investment.
ReplyDeleteI interpret that as screaming "HMG expects increases in inflation and doesn't want you to protect yourself against them". As you might imagine, this makes me keener than ever to invest in these pieces of paper even though the terms on offer have deteriorated so much. Would that be classified as a negative elasticity of demand?
dearieme,
ReplyDeleteAs you might imagine, this makes me keener than ever to invest in these pieces of paper even though the terms on offer have deteriorated so much.
December 3, 2007
Annual Purchase Limit For Savings Bonds Set at $5,000
The reduction from the $30,000 annual limit in effect for both series since 2003 was made to refocus the savings bond program on its original purpose of making these non-marketable Treasury securities available to individuals with relatively small sums to invest.
I will always find it amusing that they announced the reduction in the amount we could buy the very month that the recession officially began (even as the vast majority of economists thought we would avoid a recession).