Nov 28...Cigars all around, eh? Those silly bond traders !

catch22

No afternoon coffee,

Did that silly subject line cause you to wander into this space? Good, now that you are here.

I can't imagine one finding many equity funds that won't be positive today.

On the other hand, I will also say the same for bond funds. HY...up, Treasuries...up, EM...up (weak $), investment grade...up.

I fully expect every mish-mash of funds we hold to end positive today.

But, the bond kids are not convinced by the equity kids.

Perhaps the Fed bought all bonds in sight; I sure don't know.


Treasury's Yield % change

3 Month 0.01% 0.00 (0.00%)
6 Month 0.05% 0.00 (0.00%)
2 Year 0.25% -0.02 (-7.41%)
5 Year 0.92% -0.07 (-7.07%)
10 Year 1.97% -0.09 (-4.37%)
30 Year 2.93% -0.10 (-3.30%)

Not trying to pick any fights with any of this. Just an observation on the day, and where the monies flowed.

As Jim Morrison once noted, "Strange days have found us..."

Take care,
Catch

randynevin

Is the 5-year Tnote really below 1%? I find that to be incredible. Who, in their right mind, would be willing to tie up money for 5 years for less than 1%? Certainly not me. Do you think it's the case that the Federal Reserve - US Treasury can, by simple force of will, push interest rates arbitrarily low and keep them there for extended periods? It seems to me the "normal" market forces of supply and demand just don't operate for treasuries.

catch22

Hi randynevin,

Here is a link at MFO from a few days ago, inside of the "strong/weak dollar" thread.

http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/comment/6279#Comment_6279

Take care,
Catch

hank

Cigars being a favorite, let's see. R-Man is correct on the insanity issue if you expect some inflation going forward. However, 5 year at 1% would be a nice return in a deflationary environment. (@4% deflation you'd have about +5% real return) I think prospects are about 50/50 on that question. However, will side with the inflation prognosis, so I avoid "quality" U.S. bonds where possible, though the balanced funds have some. Junk and foreign bonds are fine and may actually help counter inflation.

While official inflation numbers remain low, probably in the 2-3% range, those numbers are deceptive. Yep, one can buy a pocket calculator for $1 that cost $100 30-40 years back. Pretty much same with anything electronic that's been around awhile. That's how the bureaucrats offset rising food & energy prices in their inflation calculations. Ever try munching a calculator?

The history of paper currencies is that they depreciate over time, sometimes quite rapidly as in the 70's and 80's. But over time, they all depreciate. Admittedly,, we are in a period of moderate or low inflation which favors paper curriencies and to some extent safe govt. bonds. Now, to me you invest your short term money in cash or similar, but the long term stuff you take some risk in return for a good chance of outpacing inflation. Housing bust? Yes. But for somebody who bought housing back in the 50s, 60s or 70s and hung on, not hearing much sobbing there. Folks got greedy and blinded to the downside risks. Happens with all investments from time to time.

Folks smarter than me can make suggestions as what to buy now. Lots to choose from in addition to stocks. ( gold, foreign currencies, housing, farmland, timber, art and other collectables. And, as Ol Ben said: "Investment in knowledge always pays the best dividend.")

johnN

hi catch...good morning
what about the Australian, I thought they are playing balls w/ China and consider the 4th or 5th strongest economy in the world due to PMs... They are goin' to belly up also [....and so is china] ?????

http://www.smh.com.au/business/markets/bank-bond-spreads-jump-on-debt-worries-20111129-1o3xs.html