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You are crazy to invest in bonds

Suze Orman: ‘You have to be crazy’ to put your money in this investment
Published: June 19, 2020 at 1:24 p.m. ET
By Shawn Langlois
‘Do you really think that tax brackets aren’t going to have to go up five, 10, 15 years from now in order to pay for all the debt that we’re carrying’

Dont think I am crazy. Ms Orman maybe indeed nutty


  • edited June 2020
    Are you joking? Since when have the wealthy not managed to water-down the dollar and kick the can down the road in terms of paying their fair share of taxes? Since when did growing an already-"YUGE" national debt matter to the Repugnant Party? Raise tax rates? They'd rather take a bullet. "Let the next 12 generations worry about it."
  • I believe Susie Orman is crazy. Good luck following her.
  • perhaps of interest; taken, though not verbatim, from email and docs making the rounds at GS

    Subject: Some assorted market stats and anecdotes about what has happened in the last months

    It has been a few months of records. They say a lot about the relationship between risk-taking by economic policies and financial conditions.

    1. 2020 has likely featured the sharpest -- but the shortest -- recession in US history (certainly since the 1850s for the US, and since WWII on a global scale).

    2. in turn, we’ve just seen the strongest rally out of a bear market since ... 1932.

    3. the US alone had conducted $2.3T of QE in the past three months (Treasuries + mortgages). For those keeping score at home, that’s an average of around $35B of bond buying per business day since mid-March.

    4. GIR expects zero interest rates in the US for several more years -- until the economy reaches 2% inflation and full employment -- which is perhaps not until 2025.

    5. largely thanks to fiscal support, GIR expects US disposable income to grow 4.0% in 2020.

    7. USTreasury planned to borrow $3T in Q2 alone; despite that supply glut, we’re just off the alltime low yields in US 2y notes and 5y notes.

    8. in that same general context, US 30yr mortgage rates are down to alltime lows .

    9. the past six weeks have seen the largest amount of global equity issuance on record, at $205B.

    10 and 11 are driven by the Fed purchases of corporate bonds:

    10. March saw record outflows from corporate bond funds (-$42B); we’re now witnessing record inflows to corporate bond funds (+$85B since the start of April).

    11. it’s not just that we’re witnessing record new issue in the credit markets, it’s that we’re also seeing record low corporate financing costs (e.g. AMZN raised $10B of capital at the lowest 3/5/7/10 and 40y yields ever).

    What is the rationale for buying 40y bonds now? Don't they want more flexibility? Don't they think that there is a high probability that underlying conditions will change well before 40 years?

    One possible explanation: as yields get lower, investors have to go out the yield curve (thus take more duration risk) in order to obtain higher yields (think of a pension fund that needs to generate a fixed return). This would be one example of the portfolio-rebalancing effect of QE. Also note that few investors ever hold bonds to maturity, and a 40y bond would "enjoy", because of its longer duration, a large price appreciation should interest rates fall further (of course the opposite is true if rates increase). Recall that, in 2018-19, the Austrian 100y bond doubled in price as yields declined from 2 percent to 1 percent.
    So this would be investors betting that interest rates will not increase from here and may decline further.

    12. March saw record outflows from equity mutual funds and ETFs; one can argue we’re now seeing legitimate signs of retail investor euphoria (e.g. a record # of account openings at US retail brokers).

    13. subject to interpretation: the market cap of MSFT is larger than the entire US HY market.
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