Why isnt everyone buying TIPS?
Re: Why isnt everyone buying TIPS?
I bought some per IPS.
Re: Why isnt everyone buying TIPS?
You are misinterpreting the data.watchnerd wrote: ↑Fri May 07, 2021 12:15 amYes, inflation has been declining for 40 years.
In 1979, inflation was about 13%
Now it's about 2%.
That's a pretty big decline in inflation.
USA green, EU red.
See graph.
Source: https://www.worlddata.info/america/usa/ ... -rates.php
Those are both Y-o-Y growth rates. When you look at inflation or CPI from point A to point B, it should be obvious.
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Re: Why isnt everyone buying TIPS?
You are misinterpreting what cbeck said. This started with:
cbeck never said prices have been declining, but instead used the term "inflation" in the way many/most people do, which is the Y-o-Y change in prices. That rate of change most certainly has declined over the last 40 years.BJJ_GUY wrote: ↑Thu May 06, 2021 9:35 pmInflation has gone up, not down over the last 40 years. This is kind of a silly statement if you think about what you said. 40 years ago, how much was a Big Mac, gallon of gas, home price, new car etc.?cbeck wrote: ↑Thu May 06, 2021 7:25 pm We have been in a world of declining inflation for forty years. During the revival of the economy there may be a blip of inflation as the money dikes break open, but the conditions that have prevailed for these past decades are most likely to resume. Those conditions are weakness of labor due to anti-union legislation and exposure to international competition.
You seem to be using the term "inflation" to be synonymous with the price index itself (and you are correct that prices have not declined, but nobody was saying otherwise), but that is not typical.
Re: Why isnt everyone buying TIPS?
Bond investors had a 40 year period of positive returns beginning at a time when inflation and subsequently interest rates were at peak levels. We all know this referred to as the ~35 year year secular bull bond market (or something similar).CuriousTacos wrote: ↑Fri May 07, 2021 2:37 amYou are misinterpreting what cbeck said. This started with:
cbeck never said prices have been declining, but instead used the term "inflation" in the way many/most people do, which is the Y-o-Y change in prices. That rate of change most certainly has declined over the last 40 years.BJJ_GUY wrote: ↑Thu May 06, 2021 9:35 pmInflation has gone up, not down over the last 40 years. This is kind of a silly statement if you think about what you said. 40 years ago, how much was a Big Mac, gallon of gas, home price, new car etc.?cbeck wrote: ↑Thu May 06, 2021 7:25 pm We have been in a world of declining inflation for forty years. During the revival of the economy there may be a blip of inflation as the money dikes break open, but the conditions that have prevailed for these past decades are most likely to resume. Those conditions are weakness of labor due to anti-union legislation and exposure to international competition.
You seem to be using the term "inflation" to be synonymous with the price index itself (and you are correct that prices have not declined, but nobody was saying otherwise), but that is not typical.
Why do we think about the cumulative performance of bond investors over this time period, and say that had a 'positive return' for several decades? Would you. really defined that time period as one in which bond investors experienced 40 years of declining returns?
If something changes by 200 or 400% over a 4 decade period, I think that's the headline. That is the only point I was trying to make.
Re: Why isnt everyone buying TIPS?
Yes, that's what inflation is: YoY growth in price.
The YoY growth in price has declined over the last 40 years, ergo inflation is declining.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
Re: Why isnt everyone buying TIPS?
Not that much. The not seasonally adjusted CPI-U increased from 176.2 in March 2001 to 264.877 in March 2021, an annual growth rate of 2.06%. Here are the growth rates for various time periods over the past 50 years:
Code: Select all
------- CPI-U Annual Growth Rate for Various Number of Years -------
March CPI-U 1 2 3 5 10 15 20 30 40
Code: Select all
1971 40.000
1972 41.400 3.50%
1973 43.300 4.59% 4.04%
1974 47.800 10.39% 7.45% 6.12%
1975 52.700 10.25% 10.32% 8.38%
1976 55.900 6.07% 8.14% 8.89% 6.92%
1977 59.500 6.44% 6.26% 7.57% 7.52%
1978 63.400 6.55% 6.50% 6.36% 7.92%
1979 69.800 10.09% 8.31% 7.68% 7.87%
1980 80.100 14.76% 12.40% 10.42% 8.73%
1981 88.500 10.49% 12.60% 11.76% 9.62% 8.27%
1982 94.500 6.78% 8.62% 10.63% 9.69% 8.60%
1983 97.900 3.60% 5.18% 6.92% 9.08% 8.50%
1984 102.600 4.80% 4.20% 5.05% 8.01% 7.94%
1985 106.400 3.70% 4.25% 4.03% 5.84% 7.28%
1986 108.800 2.26% 2.98% 3.58% 4.22% 6.89% 6.90%
1987 112.100 3.03% 2.64% 3.00% 3.47% 6.54% 6.87%
1988 116.500 3.93% 3.48% 3.07% 3.54% 6.27% 6.82%
1989 122.300 4.98% 4.45% 3.98% 3.58% 5.77% 6.46%
1990 128.700 5.23% 5.11% 4.71% 3.88% 4.86% 6.13%
1991 135.000 4.90% 5.06% 5.04% 4.41% 4.31% 6.05% 6.27%
1992 139.300 3.19% 4.04% 4.43% 4.44% 3.96% 5.83% 6.25%
1993 143.600 3.09% 3.14% 3.72% 4.27% 3.91% 5.60% 6.18%
1994 147.200 2.51% 2.80% 2.93% 3.78% 3.68% 5.10% 5.78%
1995 151.400 2.85% 2.68% 2.82% 3.30% 3.59% 4.34% 5.42%
1996 155.700 2.84% 2.85% 2.73% 2.89% 3.65% 3.84% 5.26%
1997 160.000 2.76% 2.80% 2.82% 2.81% 3.62% 3.57% 5.07%
1998 162.200 1.37% 2.07% 2.32% 2.47% 3.36% 3.42% 4.81%
1999 165.000 1.73% 1.55% 1.95% 2.31% 3.04% 3.22% 4.40%
2000 171.100 3.70% 2.71% 2.26% 2.48% 2.89% 3.22% 3.87%
2001 176.200 2.98% 3.34% 2.80% 2.50% 2.70% 3.27% 3.50% 5.07%
2002 178.800 1.48% 2.23% 2.71% 2.25% 2.53% 3.16% 3.24% 5.00%
2003 184.200 3.02% 2.24% 2.49% 2.58% 2.52% 3.10% 3.21% 4.94%
2004 187.400 1.74% 2.38% 2.08% 2.58% 2.44% 2.89% 3.06% 4.66%
2005 193.300 3.15% 2.44% 2.63% 2.47% 2.47% 2.75% 3.03% 4.43%
2006 199.800 3.36% 3.26% 2.75% 2.55% 2.53% 2.65% 3.09% 4.34%
2007 205.352 2.78% 3.07% 3.10% 2.81% 2.53% 2.62% 3.07% 4.22%
2008 213.528 3.98% 3.38% 3.37% 3.00% 2.79% 2.68% 3.08% 4.13%
2009 212.709 (0.38%) 1.78% 2.11% 2.57% 2.57% 2.48% 2.81% 3.78%
2010 217.631 2.31% 0.96% 1.95% 2.40% 2.43% 2.45% 2.66% 3.39%
2011 223.467 2.68% 2.50% 1.53% 2.26% 2.40% 2.44% 2.55% 3.14% 4.39%
2012 229.392 2.65% 2.67% 2.55% 2.24% 2.52% 2.43% 2.53% 3.00% 4.37%
2013 232.773 1.47% 2.06% 2.27% 1.74% 2.37% 2.44% 2.44% 2.93% 4.29%
2014 236.293 1.51% 1.49% 1.88% 2.13% 2.35% 2.42% 2.39% 2.82% 4.08%
2015 236.119 (0.07%) 0.72% 0.97% 1.64% 2.02% 2.17% 2.25% 2.69% 3.82%
2016 238.132 0.85% 0.39% 0.76% 1.28% 1.77% 2.03% 2.15% 2.65% 3.69%
2017 243.801 2.38% 1.61% 1.05% 1.23% 1.73% 2.09% 2.13% 2.62% 3.59%
2018 249.554 2.36% 2.37% 1.86% 1.40% 1.57% 2.04% 2.18% 2.57% 3.48%
2019 254.202 1.86% 2.11% 2.20% 1.47% 1.80% 2.05% 2.18% 2.47% 3.28%
2020 258.115 1.54% 1.70% 1.92% 1.80% 1.72% 1.95% 2.08% 2.35% 2.97%
2021 264.877 2.62% 2.08% 2.01% 2.15% 1.71% 1.90% 2.06% 2.27% 2.78%
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Re: Why isnt everyone buying TIPS?
This is state-dependent. Florida assessments are capped at 3% increase for legal residents. Many who saw their assessments crater in 2008 are not back to that level, although their property values are rising again.watchnerd wrote: ↑Wed May 05, 2021 4:03 pmMy assessment just got bumped up.lazynovice wrote: ↑Wed May 05, 2021 1:39 pm
Fair point, Dad. So far my county is not jacking up my assessed value, but it is coming next year.
Theoretical example: assessment $100,000. Over 10 years, values are +10%, +10%, +10%, +10%, -30%, +10%, +10%, +10%, +10%. Tax assessments are +3%, +3%, +3%, +3%, -30%, +3%, +3%, +3% +3% +3%. Assessment without the cap $165,000; with the cap $91,000.
Another way to see that: snowbird with residency up north $165,000; snowbird with Florida residency $91,000.
Re: Why isnt everyone buying TIPS?
There has been inflation every year, but the rate of inflation has been declining since the 80's. https://fred.stlouisfed.org/graph/?g=i6u6BJJ_GUY wrote: ↑Thu May 06, 2021 9:35 pmInflation has gone up, not down over the last 40 years. This is kind of a silly statement if you think about what you said. 40 years ago, how much was a Big Mac, gallon of gas, home price, new car etc.?cbeck wrote: ↑Thu May 06, 2021 7:25 pm We have been in a world of declining inflation for forty years. During the revival of the economy there may be a blip of inflation as the money dikes break open, but the conditions that have prevailed for these past decades are most likely to resume. Those conditions are weakness of labor due to anti-union legislation and exposure to international competition.
I'll stay away from the second point you are making. Your rationale seems more emotion that data driven, so no point in furthering the point.