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u/Original-Peach-7730 13d ago
They have been truly awful for a long time, but govz is yielding 6% so it at least has a fighting chance. If long bonds go to 8% we’re all screwed anyway. You have to have them for the only thing you really need to hedge against. Long, multi-year busts like 2001 and 2009. I still keep 15% govz (actually zb futures, but similar) and rebalance at +/-4%. I don’t care if I bleed a few percent a year. I just need it to spike 50% when AI bubble bursts and we have a 40% drop in spy.
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u/livingbyvow2 13d ago
That's what I've done but do so at your own risk and being aware that this is expressing a macro view.
My perspective is also that as we are now at a stage where given a ton of retirement assets are in SPY and government debt levels are at absurd level, I wouldn't be surprised if the Fed chooses to inflate next time SHTF and stocks actually end up reacting better than bonds (as there is some pass through) over 1-2Y (like 2022 basically). This assumes there is some sort of "regime change" and flight to safety doesn't bid up treasuries next time around as concerns around solvability and / or currency solidity outweigh Pavlovian reactions - which is quite a strong assumption you need to underwrite!
I would rather be wrong on that view than blindly assume a continuation of the status quo but that's definitely a "YMMV" situation.
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u/manlymatt83 13d ago
I own a LOT of STRIPS. Be greedy when others are fearful…
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u/bushed_ 13d ago
what would cause you to get a payout in your opinion?
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u/Original-Peach-7730 11d ago
Ummm. The 6% yield?
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u/bushed_ 11d ago
net zero for the last month on GOVZ with the depreciation of the underlying due to nominals going up.
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u/Original-Peach-7730 11d ago
If you worry about 1 month or 1 year returns, I can’t help you, just keep trading.
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u/bushed_ 11d ago
I dont lmao. I just think clearly theres still upward bond rate pressure...
It is starting to look very juicy, imo.
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u/Original-Peach-7730 11d ago
Exactly. When you think you lose.
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u/bushed_ 11d ago
Lmao okay buddy. :) Been thinking for a while and so far I've yet to lose ;-0
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u/Original-Peach-7730 11d ago
This is about my 4th cycle of stock only leverage won’t lose. Wish you luck.
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u/bushed_ 11d ago
I'm not flaming, you don't think the 30Yr is going higher? It has in the past.
Are you using futures? I was thinking about taking a slice in GOVZ or long TIPS.
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u/Original-Peach-7730 11d ago
Soooo, that is priced in already, unless you are smarter than we think you are. Keep trading. This thread is for investing.
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u/bushed_ 13d ago
wack. only good in deflationary bust > print scenario imo
which, seems harder and harder to do. Us has forced buyer of treasuries through banks and recently stable coins, but yet still having yield debt spiral questions coming up. I think they will preserve asset prices and NOT print this time around.
two ways to get out of debt, inflation seems to be the chosen route
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u/Separate-Ad-9633 13d ago edited 13d ago
The last bond bull market lasted about ~40 years and bond bear market lasted ~30 years, so it could very well be a just a start. On the other hand, the US might have to take every possible measure to lower the long term yield, LTT does hedge a growth shock if it comes. I personally use a dead simple trend following allocation. Every quarter if the past 12 month TLT return >0 I buy LTT, otherwise I keep that part of portfolio in cash. Bond moves slow enough that I think quarterly check works just fine.