Thomas CainParticipantAugust 4, 2020 at 10:32 PMPost count: 3
Hey Sean, Interested if you have any comments on bonds, specifically TIP. Are certain investors thinking inflation is kicking in? When would TIP be a safe place to go? Looks a bit high right now…Sean HymanKeymasterAugust 5, 2020 at 12:26 AMPost count: 3412
I’m not a big fan of it. Why? 1) It’s extended way away from its major moving average. But even more importantly, 2) gold and silver do a better job of appreciating better than TIP in an inflationary environment and we already have those bases covered by having been in gold and currently in silver. So we’d add nothing in diversification by adding them in.
Attachments:You must be logged in to view attached files.Thomas CainParticipantAugust 6, 2020 at 4:02 PMPost count: 3
Thanks Sean, I appreciate the perspective on TIP versus gold and silver. Makes sense. A few more questions on the big picture. Seems like stocks continue to go through the roof and many business fundamentals seem the economic opposite. Does this appear to be a huge disconnect to you, or are earning stabilizing? Or perhaps the huge CARE stimulus is a greater punch bowl? Are we about done with quarterly earning season?
Thanks! TomSean HymanModeratorAugust 6, 2020 at 5:08 PMPost count: 2794
I’d say the Warren Buffett indicator (stock market vs GDP) charts…they show how much of a dangerous bubble the stock market is in vs where the economy is at. It’s never been higher on its chart. https://logicalinvestor.net/members-only/monthly-members-downloads/the-logical-investor-newsletter-july-2020/
BekkaParticipantAugust 8, 2020 at 4:07 PMPost count: 224
- This reply was modified 1 month, 2 weeks ago by Sean Hyman.
I am not a big fan of bonds either but we have them b/c my husband IS a big fan of them. The bonds he chose are Vanguard and each of them currently are anywhere from 2% to 6% above the 200 MA on the weekly chart (I set up the same parameters as Sean did for TIP, which is 12% above its 200 MA). My question is, in the coming C wave, which will hit harder and fall more – bonds or mutual funds (I’m thinking mutual funds)?Sean HymanKeymasterAugust 10, 2020 at 7:23 AMPost count: 3412
Stock mutual funds would fall further than bonds.
Gold and silver will likely do far more than TIP ever will.BekkaParticipantAugust 10, 2020 at 9:21 AMPost count: 224
OK, just wanted to make sure. He follows Bogle so part of our investments are the traditional “bonds/mutual fund” gig! Thank you.Sean HymanKeymasterAugust 10, 2020 at 9:40 AMPost count: 3412
Bogle is just “index/mutual fund and forget it” kind of guy. Works in a bull market where a “rising tide lifts all boats”. Fails miserably in bear markets in the stock market.
Additionally “normally” bonds trade somewhat opposite of stocks. This time around, that’s not been the case. Bonds went up with stocks. Why? Because yields went to historic lows on interest rates and people had to go further out on the risk curve in order to get higher yields. So, those that would normally stay in money markets, CD’s, etc. had to go out and buy bonds to get a similar return as before. Well, that pushed bond prices higher even as stocks went higher.
So, this time around, bonds aren’t near the counter/alternative to stocks that they typically are. Now, would bonds fall as much as stocks? Not likely. But they’re also not as counter to stocks as they’ve historically been due to the lowest interest rates in our lifetimes hurting savers’ ability to get yield and thus having to go into bonds and dividend stocks when it would be past their normal comfort zones.
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