Monday, July 13, 2015

The Crock of @#$% Report v.014

July 11, 2015
Barron's: A New Approach to Bonds

“The absolute best-case scenario for bond investors is that rates remain low in the near future, which means your best hope is the status quo with no upside,” says Johnson, president and CEO of the American College of Financial Services.

No. The absolute best-case scenario for bonds is that rates remain low well into the distant future, which means a worst-case scenario nightmare of recreating the Japanese Keynesian housing bust aftermath experiment in all its glory may have been fully realized.

That's the absolute best-case scenario for bonds. I'm not saying that is guaranteed or even likely. Absolute best-case scenarios must simply be possible. Nobody can prove that interest rates will be going higher in the United States over the long-term, any more than they could prove that rates would go higher in Japan since their housing bubble popped in the early 1990s. Many have certainly tried though.

The real crock of @#$% here is making a ridiculous "absolute best-case scenario" bond claim while we're still stuck in ZIRP. What arrogance!

As I have said many times before, they can pry the long-term inflation-protected treasuries and I-bonds from my cold dead fingers. Bought with intent to hold to maturity. Will continue doing just that no matter what rates do or don't do.

If I am financially ruined with this plan, then I'll be taking the entire global economy with me. I have no doubts about that. Keep in mind that the US economy is a wee bit bigger than Greece's economy, much like an atomic bomb is a wee bit bigger than a hand grenade. So you better darned well root for my plan to work for me, lol. Sigh.

And lastly, show of hands. Who thinks that my neighbor's house, in semi-rural King County of Washington State, currently priced at $600k, can maintain that price with 10% interest rates? Got $60k in annual interest payments?

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