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Bearish on Bonds / a poignant comment …..

edited February 2022 in Other Investing
We have an entire generation of investors who have never been "weaned" off artificial interest rates. They have no clue about real interest rates. Many of them don't even know what a bond is, limiting their "knowledge and wisdom" to NFTs, crypto scams, trend chasing, paid-to-play idiots, forever fearful of falling behind their index bogies. Add in the "Robin Hood" generation of newly minted "geniuses", and you get a very toxic brew of ignorance, guiding the financial markets into a very nasty mess.

Excerpted from: Bill Fleckenstein's “Market Rap” / Question & Answer Portion. Posted Friday, February 11 by an anonymous reader / contributor. It’s a paid subscription site and so I rarely quote from it. But I thought the above to be a particularly succinct and sobering take on bonds and today’s investment climate - whether you agree or disagree.


  • ding. ring that bell.

    I personally find myself in midstream at the moment, wanting to stick to my own plan, after a fashion--- while at the same time feeling the need to adjust, without throwing the plan out the window... I don't want to lose the reduced volatility provided by bonds, but don't want the bonds to drag me down like an anchor, either. Important, I think, to keep a perspective beyond the moment. I've been slightly overweight in bonds for 2-3 years, now... That weighting has kept my (unrealized) losses so far in 2022 from matching the major stock indices. Still not too much pain.
  • edited February 2022
    Just don’t lose sight of the fact the same individual is also bearish on equities. “… guiding the financial markets into a very nasty mess“ encompasses a lot more than just bonds.

    FWIW - I checked RPSIX the other day and it seems to have held up fairly well during the recent bond selloff. Looks like RPEIX is its largest holding - a bond fund designed to counteract rising rates.
  • To quote a recent Tweet regarding crypto after the rash of Super Bowl ads..."One reason I still have trouble believing crypto currency is money, is that there aren’t commercials for money".

    When that Ponzi scheme crashes, it will be one for the ages.
  • Which one press? The dollar or the crypto?

    I'd like to think I'm joking but maybe not... what did munger say today... working under the assumption that long run dollar goes to zero due to inflation?


    Baseball Fan
  • Btw... don't you need a new logo now?
  • Is he an Atlanta baseball fan ? ................. LOL
  • Chief Wahoo LIVES!
    SAVE FERRIS! oops, wrong town.
  • edited February 2022
    Today’s WSJ leads off with an in-depth piece - “The Fed Missed Inflation. Can Jay Powell Tame It Without Causing a Recession?”

    Excerpt 1: “There are people who are living in a world in which an aggressive Fed tightening—an increasing possibility here—is not an outcome they can accept, so they’re pretending it won’t happen,” said Scott Minerd, chief investment officer at the investment firm Guggenheim Partners. “The places where that’s very real—cryptocurrency, tech-related companies in private equity—could be in deep trouble.” Once there’s a sharp decline in one of those sectors, that could set off volatility in other corners of the market, he said.

    Excerpt 2 “They’re saying they’re going to keep inflation in check and I believe them, but they’re suggesting not a lot of work will be necessary,”said former New York Fed President William Dudley. He believes rates will need to rise to 3% or 4%, which could damage markets. “You’re going to be a lot less popular” in that environment than the one the Fed was in during the past decade, said Mr. Dudley.

    Excerpted from The Wall Street Journal (print edition) February 16, 2022
  • Sounds about right. Buy and hold forever became untenable decades ago, now. Despite my wish to keep volatility in check in my portfolio, I'm needing to respond to facts: the current situation--- not the situation I WISH were true. So, I've bought more stocks in a niche corner, and my bonds are a bit lighter than just last month. The dividends I'd been trying to grow are going to get me nowhere. I hate the volatility, but must embrace it. The bigger risk is burying money in dead-end stuff. Like the bible parable in which the unwise servant buried the assets and gave them back to the owner, as-is. That's not a good plan at the moment. Maybe never.
  • @Crash : Good morning !
    I think dry powder is alright to hold at this time. It lets me sleep like a new born baby!
    As you know most investors have their own venue, so keep on trucking as the road buster's say.
    Have a good week, Derf
  • Derf said:

    @Crash : Good morning !
    I think dry powder is alright to hold at this time. It lets me sleep like a new born baby!
    As you know most investors have their own venue, so keep on trucking as the road buster's say.
    Have a good week, Derf

    +1. Thanks for stopping by, @Derf. Holding cash. Good idea. Growing my cash stake into a meaningful amount, I cannot argue with. :)
  • @Derf. @ Crash. With the true intentions of both Powell and Putin unclear to us and perhaps to them, lots of dry powder seems very prudent. For those of us of a certain age it’s possible the last great buying opportunity of our lifetime might be just over the horizon. And if not it’s always good to remember Rule Number 1!
  • edited February 2022
    Derf said:

    I think dry powder is alright to hold at this time. It lets me sleep like a new born baby!

    Is this what you mean Derf?

  • @hank : To many law suits for me to be using that.
  • @Derf is indeed a good holding right now in my opinion. I sold 2 positions today, both leveraged preferred holdings. There may be some good bones to pick through in the near future.

  • In the current market environment, preserving capital is more important than seeking return on capital.

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