Comments on: Why Today’s Bond Investors Will Be Disappointed

by: Samuel

Sat, 05 Dec 2009 03:40:26 +0000

According to a recent sentiment report by Barrons 4% of professional money managers are bullish on Treasuries and 60% are bearish. Does that sound like a market top to you? Retail investors may be buying corporate bond funds but are they really going headlong into Treasuries? Does the retail public believe deflation is coming? Here is an analysis in favor of holding Treasuries. If you believe we are headed into a long period of stagnant economic activity then it seems Treasury bonds would be the asset class to own.

by: tradeking13

Wed, 30 Sep 2009 23:38:15 +0000

I recently watched an episode of House Hunters International on HGTV where an American working in Tokyo was looking to buy an apartment, because, to paraphrase, mortgage rates were at 1.6% so now he could afford to buy. Man, I hope it doesn’t come to that.

by: Babak

Wed, 30 Sep 2009 22:56:03 +0000

tradeking, so basically a replay of 2002 where the VIX gets pushed down artificially as calls are sold to generate extra yield?

kamchako, I hear ya. Personally I think deflation still has the upper hand. Where is there any evidence of inflation in the economy? there is so much slack in capacity, unemployment, etc.

by: enlightened wallstreeter

Sat, 26 Sep 2009 14:24:34 +0000

The world is ignoring the Huge level of debt that the us is issuing. This will come back to haunt us in a few years. Check out my blog of blogs

by: kamchako

Sat, 26 Sep 2009 05:28:58 +0000

Having just returned to the US after quite some time in japan, all I can say is don’t underestimate the possibility of deflation. It’s real, it’s frightening, and I’ve watched it in Japan since the 89 peak. I thought people were nuts at buying 10yrs at 2 percent, until I watched them eventually go to zero. Yes zero percent.

by: tradeking13

Sat, 26 Sep 2009 04:47:12 +0000

Baby boomers make up a large portion of retail investors and I don’t see them going head long back into equities, especially after two crashes in one decade (many are having to extend their retirement dates out due to their recent loss of wealth in the housing and stock markets). They will be looking for capital preservation and income, which favors fixed income instruments and stable, dividend-paying equities, as any financial planner will advise for those approaching retirement age.

by: Babak

Fri, 25 Sep 2009 12:01:51 +0000

right, what if the two opposing forces completely offset each other? and we have zeroflation™?

by: GreenAB

Fri, 25 Sep 2009 11:51:33 +0000

it all depends.

nobody knows, what the ultimate outcome of this crisis will be. inflation or deflation? there are tons of arguments for both sides.

until the picture becomes clear it makes sense to position for both scenarios and that includes buying government bonds.

JAPAN ist the ultimate example that long term rates can fall lower than one could imagine.

if deflation really makes a comeback, treasuries could get another boost. even cash would be a great asset to own.

good stuff on this debate here