TLT TMF and Treasuries in general

[MarkD]

My 2 cents, deflation is the LT moral of the story. Sol and team share my perspective. I am looking forward to the transition. Will TI morph into a bond investment strategy? Bonds do well during deflationary periods, especially government bonds. If LT bonds are selling at current rates the return will be interesting once AI/Botz take over and deflation kicks in.

https://www.bloomberg.com/markets/rates ... t-bonds/us

Current rates for TLT are nearly 1% lower than 30 year rates so you could do better with individual bonds rather than TLT.

https://finance.yahoo.com/quote/TLT?.tsrc=fin-srch

during the lockdowns rates dumped if you recall 30 year treasuries dropped to 1% (0.99% per the source data)

https://home.treasury.gov/resource-cent ... value=2020

That led to TLT returning 2x plus over a number of years. Below is a LT chart of TLT vs 30 year yields. We should have a tremendous rally near term imo. And LT I will likely be a bond investor. The smartest guy I know was an old construction manager. He put all of his money into 30 year treasuries in 1982. Check out that return.

https://ibb.co/XFcjJ92

[MarkD]

With regards to bonds, there's a third book I would recommend for those who are conservative. It is difficult to locate as it took me some time to find. The title is , "The World's Most Valuable Investment Strategy", by B. Beck Fisher.

It is a good overall portfolio management strategy for Growth and Income, particularly how to play bonds if rates go ballistic to the upside.

[MarkD]

Seems like a good time to update bond A/D chart

https://ibb.co/km2JC9G

[jonnyfrank]

I'm still looking for input as to how TLT or TMF can actually go up based on doubtful rate cuts and rising inflation. Are we still going with approximately 89 entry point on TLT ? My primary question revolves around the now and how this entry point can be justified based on what we are seeing from the Fed and inflation. That is all.

[MarkD]

My suggestion is to look at a very long term chart of the 2 year / 5 year US treasury ratio vs stocks represented by SPX. This chart tells a story like no other.

When stocks drop there is always a move into bonds. The first move down in yields boosts short term bonds, then switch to long term like TLT.

My technical review is the stock market is in a topping phase, which will take months to be fully complete. Sellers need frothy public buyers and that's why tops take so long. In the meantime, smart money sellers are moving into safer, liquid investments, like government bonds.

Rate cuts are coming in my analysis. Fed and treasury only control two things: FED Funds/Discount Rate, auction of new treasuries (which at the moment the Treasury is mainly a majority of ST bills/bonds because the big buyers know LT rates may need to rise a bit more). The other issue is banks are being required to buy bonds to improve liquidity by the Fed. That takes money OUT of the economy, which fuels stock buying. I believe that requirement is this month or next. Fewer LT bonds means demand will outstrip supply.

[jonnyfrank]

Well, I guess there is no reason to be holding TLT or TMF at this time. Bad call.

[jonnyfrank]

I don't think psychology of the markets has a place when evaluating and recommending treasury bonds, since they are at the complete mercy of Federal policy. I can only hope for some true insight into this recommendation in the next market update, because very little has been provided in these forums. I cannot see how TLT or TMF can go up as long as inflation is going up and the Federal government moves the goal posts regarding what a recession is and the GDP is inflated by government expansion, which is approaching Soviet Union levels. Why are TLT and TMF purchases recommended? I am still holding some TMF and I can't help but to think it may be time to dump it. Why should I hold it or even average down at these levels?

[AstuteShift]

I don't think psychology of the markets has a place when evaluating and recommending treasury bonds, since they are at the complete mercy of Federal policy. I can only hope for some true insight into this recommendation in the next market update, because very little has been provided in these forums. I cannot see how TLT or TMF can go up as long as inflation is going up and the Federal government moves the goal posts regarding what a recession is and the GDP is inflated by government expansion, which is approaching Soviet Union levels. Why are TLT and TMF purchases recommended? I am still holding some TMF and I can't help but to think it may be time to dump it. Why should I hold it or even average down at these levels?

I wouldn’t buy bonds in general. Crypto and palladium are better in terms of gains and potential.