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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

#131

Post by flyGuyOnTheSly »

christocracy wrote: post #106
flyGuyOnTheSly wrote: post #83

Earlier quoted context omitted.

>The current market turmoil is mere noise in the long term. Which is exactly my point. Interest rates could skyrocket to 20% or more for yet another unknown unknown financial black swan event. Or your home could be worth 25% of what it is today before you know it. The ground could literally open up beneath your house and swallow it hole, leaving you with nothing but that massive debt obligation. (As most home insuran…

I’m 48 and I rent a nice place at $2100/month. All my loot is invested in balanced 60/40. 0 debt. Absolutely, if you’ve won the house lottery, cash out now, invest and rent a nice place.

That's awesome! Congrats! My comment was more directed at the GP than you.

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

#132

Post by papito »

dcftoapv wrote: post #124
papito wrote: post #42

I backed the truck up in 2018 for Fidelity Treasury Bond Index Fund. Most of of my 401K is in it. It's up 31% in the last year. With almost no management fee. That's all.

Congrats, but you should sell out of that before prices come crashing back down to earth, which they inevitably will after the covid-19 scare passes. It might be a couple of months, but history says that you're going to lose all of that money again over the next two years.

I am well aware of the risk of rising interest rates, but those will be in the toilet due to the lasting effect on the disrupted supply chain.

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

#133

Post by bluetwo »

im3w1l wrote: post #111
H8crilA wrote: post #65

Earlier quoted context omitted.

Any good brokerage allows for trading bonds. Interactive Brokers does. The bond market is far larger than the stock market. If you wanna know "what's going on" better become familiar with at least the basics of it (interest rates, how they relate to bond prices, spreads for risky credit, floating rate vs fixed rate, inflation protected securities, carry trades). And it's not true that most bonds are held via ETFs (ex…

Based on hazy recollections, isn't the big obstacle that normally bonds are traded in too large units to be convenient for an average person?

Treasury direct allows you to buy with smaller amounts if you like.

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

#134

Post by dcftoapv »

papito wrote: post #132
dcftoapv wrote: post #124

Earlier quoted context omitted.

Congrats, but you should sell out of that before prices come crashing back down to earth, which they inevitably will after the covid-19 scare passes. It might be a couple of months, but history says that you're going to lose all of that money again over the next two years.

I am well aware of the risk of rising interest rates, but those will be in the toilet due to the lasting effect on the disrupted supply chain.

You're betting against all of documented history. Also, your concern shouldn't be interest rate risk. Your concern should be a reversal in perceived credit risk. You benefited from a flight to quality. While these can persist much longer than one would expect (see LTCM), you will eventually lose.

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

#135

Post by throw0101a »

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…

> Bonds and stocks have been fairly non-correlated over recent years, but this hasn't always been so.

An analysis of how the correlation has faired between the S&P500 and bonds since WW2:

* https://awealthofcommonsense.com/2019/07/26793/

There were quite a few years when it has been positive.

One of the more useful attributes of bonds is that you could sell them when stocks tanked: when you rebalanced your portfolio to re-align things to the desired equities/fixed-income allocation, bonds were a form of 'keeping your powder dry' to buy low during stock market corrections.

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

#136

Post by LeoTinnitus »

icebraining wrote: post #104
LeoTinnitus wrote: post #38

Earlier quoted context omitted.

> Bonds are a commited fixed return, which means the value of bond goes up if the going rate for new bonds goes down. > Thus bonds can be much more profitable than stocks when the marketing is going down. The central bank will drop rates, and thus any holder of existing bonds gets to sell their old bonds for more, maybe much more. > Of course this is not the big driver for bond demand. Rather bonds are demanded by mo…

Please don't quote an entire post, you're just adding noise. We can already see which post you are replying to. Quoting is for replying to a specific excerpt.

I know...it was an accident. I was on mobile and it happened quick.
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