Germany for First Time Sells 30-Year Bonds Offering Negative Yields

Post by teambayleaf » Fri, Aug 23, 2019, 10:44 AM UTC

JumpCrisscross wrote: post #162

TheSoftwareGuy wrote: post #2

I 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 still don't understand negative yields Safe assets sell a service: they’re a safe place to put your money. For this service, you pay a fee. There are other places to put your money, from cash to money market accounts to listed equities, but they aren’t safe. (They compensate for this unsafeness by promising you a return.)

Post by unreal37 » Mon, Aug 26, 2019, 3:07 PM UTC

nostrademons wrote: post #152

unreal37 wrote: post #141

Earlier quoted context omitted.

Expecting the price of something to rise in the future is not the definition of a bubble. When people were selling houses in Detroit at the bottom of the housing crisis for $1000, the people buying them were expecting the value to rise in the future. It's almost like profiting off of fear not greed.

Expecting the price to rise when you know the underlying fundamentals don't support that price is the definition of a bubble. People buying houses in Detroit have an investment thesis that there will still be people living in Detroit and they will still need houses, and even more broadly, that there will be more people needing more houses than there were at the bottom of the housing crisis. They may be right or wrong…