Germany for First Time Sells 30-Year Bonds Offering Negative Yields
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Re: Germany for First Time Sells 30-Year Bonds Offering Negative Yields
#2I feel like I still don't understand negative yields, despite really trying to.
Negative yields means that I put in $X (or euro/whatever germany is using) and I later am guarenteed no more than $Y out of the exchange, where Y < X. I am literally guaranteed to lose money. I could just hold on to my money, "keep it under my mattress" and still make a better ROI than bonds with negative yields. Why would anybody buy these bonds?
Re: Germany for First Time Sells 30-Year Bonds Offering Negative Yields
#3Those of you (US) with large stock/cash positions: what are you doing to weather the (inevitable) storm? Feels like we’re in the doom and gloom media phase. I suspect lots of people will start forgetting within the next 6 months in which the stock market will go sideways, until the next catalyst which is the US election cycle.
Re: Germany for First Time Sells 30-Year Bonds Offering Negative Yields
#4I feel like I still don't understand negative yields, despite really trying to. Negative yields means that I put in $X (or euro/whatever germany is using) and I later am guarenteed no more than $Y out of the exchange, where Y < X. I am literally guaranteed to lose money. I could just hold on to my money, "keep it under my mattress" and still make a better ROI than bonds with negative yields. Why would anybody buy the…
It's cheaper than a bank vault and more secure than a home safe. I can't think of any other reason to buy them, though.
Re: Germany for First Time Sells 30-Year Bonds Offering Negative Yields
#5I feel like I still don't understand negative yields, despite really trying to. Negative yields means that I put in $X (or euro/whatever germany is using) and I later am guarenteed no more than $Y out of the exchange, where Y < X. I am literally guaranteed to lose money. I could just hold on to my money, "keep it under my mattress" and still make a better ROI than bonds with negative yields. Why would anybody buy the…
Because the interest rate will soon be less than the bonds. Negative interest rates coming down the pipe globally. Only way that I can see it getting justified.
Re: Germany for First Time Sells 30-Year Bonds Offering Negative Yields
#6I feel like I still don't understand negative yields, despite really trying to. Negative yields means that I put in $X (or euro/whatever germany is using) and I later am guarenteed no more than $Y out of the exchange, where Y < X. I am literally guaranteed to lose money. I could just hold on to my money, "keep it under my mattress" and still make a better ROI than bonds with negative yields. Why would anybody buy the…
From what I understand it’s moreso for institutional investors that have lots of capital they need to park somewhere. Making the bet that the gov will be around longer the bank
But for retail investors who can store their money in a FDIC insured savings account it’s not clear why they would buy negative yield bonds.
Re: Germany for First Time Sells 30-Year Bonds Offering Negative Yields
#7I feel like I still don't understand negative yields, despite really trying to. Negative yields means that I put in $X (or euro/whatever germany is using) and I later am guarenteed no more than $Y out of the exchange, where Y < X. I am literally guaranteed to lose money. I could just hold on to my money, "keep it under my mattress" and still make a better ROI than bonds with negative yields. Why would anybody buy the…
I'm also curious about this. Does it mean that people are betting that $Y will be more valuable than future cash equivalent of $X due to inflation?
Re: Germany for First Time Sells 30-Year Bonds Offering Negative Yields
#8Those of you (US) with large stock/cash positions: what are you doing to weather the (inevitable) storm? Feels like we’re in the doom and gloom media phase. I suspect lots of people will start forgetting within the next 6 months in which the stock market will go sideways, until the next catalyst which is the US election cycle.
>what are you doing to weather the (inevitable) storm?
Stay invested in equities. Keep some cash on hand as an emergency fund in case you lose your job, but just don't sell your stocks when the market is down. Stay diversified and stay in the market.
Re: Germany for First Time Sells 30-Year Bonds Offering Negative Yields
#9I feel like I still don't understand negative yields, despite really trying to. Negative yields means that I put in $X (or euro/whatever germany is using) and I later am guarenteed no more than $Y out of the exchange, where Y < X. I am literally guaranteed to lose money. I could just hold on to my money, "keep it under my mattress" and still make a better ROI than bonds with negative yields. Why would anybody buy the…
The only reason I can think of is to mitigate the downside risk of financial collapse. These are banks buying these bonds. Banks which might be worried that short term financial pressures might tempt the governments might to reach for their cash positions. I would rather hold some negative-yield bonds instead of cash in that scenario.
Re: Germany for First Time Sells 30-Year Bonds Offering Negative Yields
#10I feel like I still don't understand negative yields, despite really trying to. Negative yields means that I put in $X (or euro/whatever germany is using) and I later am guarenteed no more than $Y out of the exchange, where Y < X. I am literally guaranteed to lose money. I could just hold on to my money, "keep it under my mattress" and still make a better ROI than bonds with negative yields. Why would anybody buy the…
If it's a large amount of money, you might decide to put it in a bank so that you don't have to worry about it being stolen.
Once it is in a bank now you have to play the game of trying to figure out the comparative risk between the bank not being around any more 30 years from now, versus the chance that the German government will have forgotten how to operate the money printing presses.
Of course, since this is the EU, I'd actually be rather worried about the latter. Unlike sovereign currency countries, EU countries do not just get to print Euros. A lot can happen in 30 years, especially to a country with 1.5 births per woman like Germany.