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30-year U.S. bond yields less than S&P dividend rate

bloomberg.com

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Re: 30-year U.S. bond yields less than S&P dividend rate

#71

Post by MuffinFlavored »

brenden2 wrote: post #23

It's worth noting that most people nowadays don't buy bonds directly, you would normally hold them through an ETF/index fund like BND or TLT. Yields typically drop when there's a flight to quality (i.e., people selling stocks to buy bonds). The upward pressure on bond prices drives yields down because people are willing to pay more for lower yields. Bonds are almost like a future of expected return on capital. If bon…

> I'm not giving investment advice, but I think the current market panic is short term and non-systemic

I agree. I just don't personally understand why FOMC is cutting rates.

Re: 30-year U.S. bond yields less than S&P dividend rate

#72

Post by outside1234 »

I'm not sure why this headline is news.

Bond yields should be less than S&P dividend rates because with a bond, there is a much higher likelihood of getting your principal back (debt is senior to capital) that isn't there with underlying stocks of the S&P.

Also, the underlying stocks of the S&P can cut their dividends to 0 tomorrow without warning, so you need to price this risk in.

Re: 30-year U.S. bond yields less than S&P dividend rate

#73

Post by MuffinFlavored »

tryptophan wrote: post #12

The dividend yield doesn't matter (alone). The more common way to return cash to shareholder's is via buybacks. The actual 'yield' of the market should thus be calculated as div yield + buyback yield, giving the investor yield, which is what intellectually honest people should compare to treasury yields.

> The more common way to return cash to shareholder's is via buybacks.

Is this more common throughout history or only common in today's modern market of cheap interest rates?

Re: 30-year U.S. bond yields less than S&P dividend rate

#74

Post by mraudiobook_com »

mrep wrote: post #7

Hm, I'm seeing the title "Bond Markets Shred History Books During Furious Fear Trade". Also, kinda silly to focus on just dividends considering buybacks are now greater than dividends [0]. [0] (pdf): https://www.yardeni.com/pub/buybackdiv.pdf

They focus on that because it is the most insane thing ever.

Title should have been, The markets are fucked, we are all fucked.

Re: 30-year U.S. bond yields less than S&P dividend rate

#76

Post by outside1234 »

thebrain wrote: post #36

I recently cashed out a Canada Savings Bond I had from when I was a kid and I after taking into account inflation I made about $8 while the government had my money for 20+ years.

This actually is a demonstration of an efficiently priced near zero risk asset.

Your Canadian bond was probably priced in Canadian dollars, which have a near zero risk of default (Canada can just print more dollars to pay it), so the pricing of these bonds should be such that it is largely inflation plus a vanishingly small premium for the black swan default.

$8 sounds about right.

Re: 30-year U.S. bond yields less than S&P dividend rate

#77

Post by [deleted] »

brenden2 wrote: post #23

It's worth noting that most people nowadays don't buy bonds directly, you would normally hold them through an ETF/index fund like BND or TLT. Yields typically drop when there's a flight to quality (i.e., people selling stocks to buy bonds). The upward pressure on bond prices drives yields down because people are willing to pay more for lower yields. Bonds are almost like a future of expected return on capital. If bon…

[deleted]

Re: 30-year U.S. bond yields less than S&P dividend rate

#78

Post by Der_Einzige »

brenden2 wrote: post #23

It's worth noting that most people nowadays don't buy bonds directly, you would normally hold them through an ETF/index fund like BND or TLT. Yields typically drop when there's a flight to quality (i.e., people selling stocks to buy bonds). The upward pressure on bond prices drives yields down because people are willing to pay more for lower yields. Bonds are almost like a future of expected return on capital. If bon…

Lmao the current market panic is not short term and is absolutely systemic.

Supply chains have ground to a halt . Actually, it's easy to "time the market"... Just buy puts when everyone is panicking.

Re: 30-year U.S. bond yields less than S&P dividend rate

#79

Post by thedance »

Der_Einzige wrote: post #78
brenden2 wrote: post #23

It's worth noting that most people nowadays don't buy bonds directly, you would normally hold them through an ETF/index fund like BND or TLT. Yields typically drop when there's a flight to quality (i.e., people selling stocks to buy bonds). The upward pressure on bond prices drives yields down because people are willing to pay more for lower yields. Bonds are almost like a future of expected return on capital. If bon…

Lmao the current market panic is not short term and is absolutely systemic. Supply chains have ground to a halt . Actually, it's easy to "time the market"... Just buy puts when everyone is panicking.

That's the beauty of a real crash. It doesn't matter much when you go short.

Re: 30-year U.S. bond yields less than S&P dividend rate

#80

Post by Der_Einzige »

glouwbug wrote: post #29
Proziam wrote: post #20

Earlier quoted context omitted.

I know someone who did this. It didn't work out and it's their single biggest financial regret in life.

I've seen 6 people in the last 2 weeks on wallstreetbets gamble away their student loans. The sad part is one guy will post their success of doubling their student loan, and it will just cause a bunch of younger inexperienced 19 year olds to lose tens of thousands to their own gambles. It's really sad. It's an addiction

Long term puts right now would be printing money for those kids. They just have to get a nice pair of diamond hands and some late April puts
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