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Post by chang on Mar 6, 2023 17:53:29 GMT
From the BSW thread: Consider 5 year the sweet spot in balance between yield and duration (maturity licked in). Thursday April 15 there will be a 5-year TIPS auction. (Also, March 23 there will be a 10Y TIPS auction.) Although we won't know the yields for a little while yet, do these have any interest in your opinion? |
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Post by newtecher on Mar 7, 2023 0:45:03 GMT
I would go much longer. You can get the same ~1.6% real yield with a 20 year TIPs bond as with a 5-year. The inflation threat is much bigger over the next 20 years than the next 5 years. The federal debt problem will likely be inflated away but I do not think it will happen very soon. Unless there is another war or calamity, the Fed will choke inflation in the next year (or at most two).
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Post by retiredat48 on Mar 7, 2023 3:13:00 GMT
I have no interest in any TIPs Funds, at any duration, or any time. Long story...best explained by poster Capecod (sold bonds for a living). Has to do with this: "Why invest in TIPs, giving up lots of current yield, waiting for inflation to come, perhaps waiting years. And when inflation does arrive, you can get treasury yields that are higher anyway."
We now had this scenario, and I keep seeing many posts that investors in TIPs were very disappointed with their returns during the last two years, as well as returns going forward. It appears the capecod scenario played out in his favor, as he predicted.
Continuing...my post stating "5 year the sweet spot in balance between yield and duration (maturity licked in)" is the CURRENT SWEET SPOT, according to investing guru's I follow. However, the goal is to eventually move out on the duration curve to ten-to-twenty year maturities. Locking in yields for this long a time has several advantages to a retiree portfolio. This will be the next step.
Lock in 4% now...or wait for possible 4.75-5% on Treasuries? That is the art-part of investing.
R48
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Post by FD1000 on Mar 7, 2023 5:13:32 GMT
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Post by Deleted on Mar 7, 2023 11:28:46 GMT
From the BSW thread: Consider 5 year the sweet spot in balance between yield and duration (maturity licked in). Thursday April 15 there will be a 5-year TIPS auction. (Also, March 23 there will be a 10Y TIPS auction.) Although we won't know the yields for a little while yet, do these have any interest in your opinion? I'm interested in the 5 yr auction and will be watching the real rate and the inflation breakeven rate closely. fred.stlouisfed.org/series/T5YIEI've planned on buying a new 5 yr TIP every 6 months until I have about a 10% portfolio allocation. At this stage in my life, I'm not interested in longer duration individual bonds. The last time I was grocery shopping, my bag boy was an 80 yr old man. I would not underestimate the effect of inflation on retirees. I-Bonds, TIPS, Gold, and Stocks are all part of my portfolio's inflation insurance. |
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Post by retiredat48 on Mar 10, 2023 18:40:50 GMT
The more I ponder TIPS, the more I conclude how disappointing they must have been to investors.
TIPS just failed their first big test. We went from 2% or less inflation, quickly to large inflation. TIPs did not protect.
Here is an excerpt from a Wall Street Journal article today:
"Historically, investors have turned to TIPS to lock in bond income while eschewing inflation risk. The bonds' value fluctuates with the consumer price index. But like other bonds, higher interest rates dent their worth. As the Fed Reserve aggressively raised rates last year, the Bloomberg TIPS index declined 12%, the worst performance in its 25 year history."
Whew.
TIPs are out of my lexicon for a long time.
R48
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Post by Fearchar on Mar 10, 2023 20:01:31 GMT
Comes down to what the price/yield is. However,
it's been over 20 years since TIPS were attractively priced.
If 10 year TIPs were yielding over 2%, I'd say that's a fair price.
However, they'd really have to be over 3% to be very interesting.
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Post by yogibearbull on Mar 11, 2023 14:36:34 GMT
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Post by Deleted on Apr 4, 2023 20:34:50 GMT
Latest Tipswatch post: tipswatch.com/2023/04/04/after-three-months-of-volatility-where-do-we-stand/Bill Bernstein: "A TIPS is risky in the short term and riskless in the long run, which is precisely the opposite of, and complementary to, a T-bill, which is riskless in the short term but, because of reinvestment rate volatility, risky in the long run.". I hadn't really thought of it that way, but I think that makes sense. Thoughts? I'm still planning on participating in the April 20 auction, with fingers crossed that real rates stay above 1%. |
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Consider 5 year the sweet spot in balance between yield and duration (maturity licked in).
