"U.S. Treasuries are a disaster. Treasuries have been propped up by international buyers, mostly Asia or OPEC, who needed to find something to do with their trillions of excess US dollars. The oil price collapse and a sputtering Chinese economy have pretty much put an end to such buying. Treasury yields could drop to European levels; that is, zero or below."
I don't get it;If treasury yields drop to European levels won't I make a reasonable capital gain on my treasury bonds
I can even market time by selling at 10 year yield = .5 and so get out before the "smart money" who is watching this stuff on an hourly basis/So the question is why are treasuries a disaster?
Comments
Just to show my ignorance ... let me speculate a bit.
If you are a global investor of debt, like Dr. Hasenstab, I suspect he's relaying how expensive US Treasuries are relative to rest of world because of the strength of US dollar.
c
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More to Mr. Hasenstab later......gotta do fireworks viewing.
Regards,
Catch
Regards, Catch"
(The one about bonds)
Hope all is well.
c
@jerry noted: "U.S. Treasuries are a disaster..." My take on this quote from Mr. Snowball's July commentary is the wording stated to Mr. Snowball from Mr. Hasenstab. If I am incorrect, someone please state otherwise.
Disclosure: We were invested in Mr. Hasenstab's global bond fund for about 2.5 years, selling the holding in March, 2012.
Selected bond reference total returns, March 2012 - July 1, 2016
---TPINX, +6.6%
---IEF, +16.6%
---HYG, +20.2%
---EMB, +23.8%
---TLT, +42.5%
---EDV, +62%
As to the "Treasuries are a disaster", I would require a full explanation of the statement and to what time frame, past and/or present, from Mr. Hasenstab causes the disaster word. As Mr. Hasenstab has vastly more investment/economic studies versus my ongoing studies at Whats-a-matter U; I could only guess as to the decision making process for his investment choices. The presumption being that he is a dedicated value investor in the world of bonds. Not unlike Eric Cinnamon mentioned here recently searching for the ultimate values in the world of equity or whatever. Perhaps both managers have been sidetracked by the total dynamics of continued changes in the money flows of the global markets since the market melt. Sometimes it is difficult to deal with the "this time it is different".
Although our house is still bond slanted, I am not a fan of how this low interest rate environment is going to resolve. Money borrowing is dirt cheap, and will likely continue to temp more buyout/takeover action (whether sensible or not); as well as affects on consumer borrowing/spending.
However, until economies become more settled; I expect investment grade bonds to remain stable. The economies today are being pushed and shoved hard by politics and society in general.
Flexible and adaptable perhaps do not always fit into a managers mold of what he/she views as "what should be"; versus the real outcomes.
I suspect most here are really value investors. We want to buy cheap and sell at a higher price, yes? When the investment gears don't turn in the anticipated directions, value can become a sink hole.
Johnny Lee (Urban Cowboy movie) sang:
Lookin' for love
I've spent a lifetime looking for you
Single bars and good time lovers, never true
Playing a fools game, hoping to win
Telling those sweet lies and losing again.
I was looking for love in all the wrong places
Looking for love in too many faces
Searching your eyes, looking for traces
Of what.. I'm dreaming of...
Love/lovers being the love of an investment relative to the topic here. Sometimes folks are so in love, that they don't see and leave a bad relationship.
Regards,
Catch
Lookin' for love
I've spent a lifetime looking for you
Single bars and good time lovers, never true
Playing a fools game, hoping to win
Telling those sweet lies and losing again.
I was looking for love in all the wrong places
Looking for love in too many faces
Searching your eyes, looking for traces
Of what.. I'm dreaming of...
Love/lovers being the love of an investment relative to the topic here. Sometimes folks are so in love, that they don't see and leave a bad relationship.
Regards,
Catch
I must be in a nitpicking mood today. The song was # 1 on the country billboard sometime in 1980 and sung by Johnny Lee from the movie Urban Cowboy. Was it covered at some point by Waylon Jennings?
I'll have to stick with Bolero and Ravel.
Additionally, sincerely hope all is well in your world.
But I thought Catch explained it well.
Flexible and adaptable perhaps do not always fit into a managers mold of what he/she views as "what should be"; versus the real outcomes.
I suspect most here are really value investors. We want to buy cheap and sell at a higher price, yes? When the investment gears don't turn in the anticipated directions, value can become a sink hole.
FPACX. Not a sink hole .But certainly stuck in the mud.Mr Romick has consistently believed that Fed Policy has been in uncharted territory and will not end well.Eventually he may be correct,but in the meantime.....
Morningstar Moderate Target Risk
Rank in Category Ytd 95 1 Yr 78 3 Yr 77
http://performance.morningstar.com/fund/performance-return.action?t=FPACX®ion=usa&culture=en_US
Will Brexit spark a much-needed market revaluation?
Steven Romick
Co-Portfolio Manager, FPA Crescent Fund
June 28, 2016
Even when investing in pockets of value, it doesn’t mean the rest of the world will immediately agree
with you. That was evident recently with regards to our position in financials. As good of a value as we
perceive them to be, the market sold them off in the wake of Brexit and that has contributed to our
equity portfolio declining more than the market in this recent downturn. The financials we own have
largely U.S. exposure and what business they conduct overseas is broad-based without disproportionate
exposure to the UK. Nevertheless, their stock prices are volatile, causing our portfolio to do better than
the market some days but worse on others. What happens on any given day doesn’t matter; what does
matter is the businesses’ operating results while we own them and where these stocks are trading the
day we sell them. We don’t know how they will ultimately perform along the way or in the end, but low
valuations - combined with historically strong balance sheets – give us a margin of safety that will
hopefully protect our capital and then provide a return on it.
The Crescent Fund’s (the “Fund”) portfolio of value investments (both equities and debt) should provide
downside protection in a severe market downturn. The relatively small market price decline since the
Brexit vote is more market noise than anything else. The Fund’s 36% cash position provides additional
protection in the portfolio and will be used when the inevitable opportunities arise to purchase good
companies at cheap prices.
http://www.fpafunds.com/docs/special-commentaries/brexit-special-commentary-6-28-2016_final.pdf?sfvrsn=2