Inflation could be 20% in the next three years [Sell bonds?]

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HanSolo
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by HanSolo »

cflannagan wrote: Sun Nov 28, 2021 9:01 pm So with all the talks of "Financial repression", what do we think this means for bonds from a "flight to safety" role viewpoint?

As in some investors might not necessarily rely on bonds for returns (and in fact might be okay with slightly negative returns over long period of time), but are relying on bonds as a form of crash insurance.
Perhaps there are two camps, those who think bonds have a different role in the current situation, and those who'd say "same as it ever was."

I'm in the latter camp. I think bonds were always about accepting lower expected returns in exchange for protection.
If we see another major crash like dotcom, housing, or COVID-19 crash.. how do we think bond funds would tend to react here, in times of "financial repression" that the govt is doing? Will this role become weaker, or will that role still be there? Will the positions in bond cushion the investor from downward movement (-50% becomes -30% or -20%) like they did before?
My guess is that if the Fed keeps taking actions that tend to push asset prices up and interest rates down, then that's what we'll continue to get. And people will continue to accept meager interest rates, just like they're doing now.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Phyneas »

cflannagan wrote: Sun Nov 28, 2021 9:01 pm So with all the talks of "Financial repression", what do we think this means for bonds from a "flight to safety" role viewpoint?

As in some investors might not necessarily rely on bonds for returns (and in fact might be okay with slightly negative returns over long period of time), but are relying on bonds as a form of crash insurance. If we see another major crash like dotcom, housing, or COVID-19 crash.. how do we think bond funds would tend to react here, in times of "financial repression" that the govt is doing? Will this role become weaker, or will that role still be there? Will the positions in bond cushion the investor from downward movement (-50% becomes -30% or -20%) like they did before?
According to Simba, treasuries at least remained highly correlated to TSM during the early years of Financial Repression back in the 40s, especially long-term treasuries (staying positively correlated from 1945-58.) Doesn't mean that it will be that way this time, but doesn't mean it won't either.
Last edited by Phyneas on Tue Nov 30, 2021 1:12 am, edited 1 time in total.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by dziuniek »

I just took a peek at Vanguard Total Bond (VBTIX):

And after inflation (since 1996), it underperformed inflation 23% of the time.
So next several years wouldn't surprise me either.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Robot Monster »

dziuniek wrote: Mon Nov 29, 2021 12:28 pm I just took a peek at Vanguard Total Bond (VBTIX):

And after inflation (since 1996), it underperformed inflation 23% of the time.
So next several years wouldn't surprise me either.
Maybe that's better for those with equity tilted portfolios e.g. 60/40. If Total Bond continues to suck, that means TINA remains strong, which supports risk assets.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by HanSolo »

Robot Monster wrote: Mon Nov 29, 2021 1:04 pm
dziuniek wrote: Mon Nov 29, 2021 12:28 pm I just took a peek at Vanguard Total Bond (VBTIX):

And after inflation (since 1996), it underperformed inflation 23% of the time.
So next several years wouldn't surprise me either.
Maybe that's better for those with equity tilted portfolios e.g. 60/40. If Total Bond continues to suck, that means TINA remains strong, which supports risk assets.
Except perhaps in the stagflation scenario.

If I understand correctly, the question being posed in this thread is whether or not to create and maintain an "all-weather" asset allocation and stay the course, or, shift allocations in certain kinds of weather. The latter is market timing, yes?

If the latter (market timing) is being advocated, does that mean the former (stay the course) is being advocated against?
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Phyneas »

HanSolo wrote: Tue Nov 30, 2021 1:39 am
Robot Monster wrote: Mon Nov 29, 2021 1:04 pm
dziuniek wrote: Mon Nov 29, 2021 12:28 pm I just took a peek at Vanguard Total Bond (VBTIX):

And after inflation (since 1996), it underperformed inflation 23% of the time.
So next several years wouldn't surprise me either.
Maybe that's better for those with equity tilted portfolios e.g. 60/40. If Total Bond continues to suck, that means TINA remains strong, which supports risk assets.
Except perhaps in the stagflation scenario.

If I understand correctly, the question being posed in this thread is whether or not to create and maintain an "all-weather" asset allocation and stay the course, or, shift allocations in certain kinds of weather. The latter is market timing, yes?

If the latter (market timing) is being advocated, does that mean the former (stay the course) is being advocated against?
I'd wonder what a true all-weather portfolio would look like at the moment (effectively something that can do okay during financial repression, stagflation, inflation, deflation, recession, and growth), since the two most famous ones are predicated significantly on either a) rates falling from a high point, or b) going off the gold standard. I can't find any back-tests that show how they'd do from say 1945 onwards due to the gold peg issue.

Adding TIPS has become extremely popular, and it's discussed in this parallel thread as to whether this is market timing, or people having not designed their portfolios correctly from the beginning by not assuming prolonged inflation, or even stagflation, were possibilities.

Even otherwise firm adherents of the PP are switching from LTTs to STTs, or increasing their equity position from 25% to 30-35%, or splitting nominals with treasuries. I'm not sure anyone has really figured out what the equipoise moment would be. So it could be advocating for market timing effectively, either because the situation is so extraordinary (like shifting your AA in the early 80s where LTTs became outrageously attractive), or it could just be a general admission that the portfolios weren't constructed as broadly as they maybe should have been to start with.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by HanSolo »

Phyneas wrote: Tue Nov 30, 2021 5:32 am
HanSolo wrote: Tue Nov 30, 2021 1:39 am If I understand correctly, the question being posed in this thread is whether or not to create and maintain an "all-weather" asset allocation and stay the course, or, shift allocations in certain kinds of weather. The latter is market timing, yes?

If the latter (market timing) is being advocated, does that mean the former (stay the course) is being advocated against?
I'd wonder what a true all-weather portfolio would look like at the moment (effectively something that can do okay during financial repression, stagflation, inflation, deflation, recession, and growth) ...
I'm thinking maybe the following (from the wiki page on Asset Allocation): "Bogleheads typically divide bond allocations between just two categories: nominal bonds such as the Vanguard Total Bond Market Fund, and U.S. Treasury Inflation Protected Securities (TIPS) such as the Vanguard Inflation Protected Securities Fund. The use of a TIPS fund provides additional diversification as well as inflation protection." (citation to Bogleheads' Guide To Investing, 2007, p. 103).

So maybe adding TIPS isn't really market timing, it's just people catching up in their reading to 2007 material.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Flymore »

Robot Monster wrote: Wed Nov 24, 2021 11:08 am
Flymore wrote: Tue Nov 23, 2021 6:26 pm As others have said, I cannot see how interest rates can rise due to the large federal debt. As long as the Fed can control the bond market, through quantitative easing etc. interest rates will stay low. IMO If the Fed looses control of the bond market...well.
Couldn't the Fed comfortably allow rates to go up, if the rates remained below inflation? If inflation is 3%, and rates are 2%, doesn't the debt still get inflated away at 1% (3%-2%)?
Short answer, yes. But some of the higher interest rates will impact the 30 trillion of national debt that leads to higher debt payments that feeds on itself,
Plus higher interest rates impacts other borrowers. The main thing here is the wealth effect. People borrow for stuff, houses, planes, cars etc. and if those purchases stop there may be a cascade down...recession.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

HanSolo wrote: Tue Nov 30, 2021 12:58 pm
Phyneas wrote: Tue Nov 30, 2021 5:32 am
HanSolo wrote: Tue Nov 30, 2021 1:39 am If I understand correctly, the question being posed in this thread is whether or not to create and maintain an "all-weather" asset allocation and stay the course, or, shift allocations in certain kinds of weather. The latter is market timing, yes?

If the latter (market timing) is being advocated, does that mean the former (stay the course) is being advocated against?
I'd wonder what a true all-weather portfolio would look like at the moment (effectively something that can do okay during financial repression, stagflation, inflation, deflation, recession, and growth) ...
I'm thinking maybe the following (from the wiki page on Asset Allocation): "Bogleheads typically divide bond allocations between just two categories: nominal bonds such as the Vanguard Total Bond Market Fund, and U.S. Treasury Inflation Protected Securities (TIPS) such as the Vanguard Inflation Protected Securities Fund. The use of a TIPS fund provides additional diversification as well as inflation protection." (citation to Bogleheads' Guide To Investing, 2007, p. 103).

So maybe adding TIPS isn't really market timing, it's just people catching up in their reading to 2007 material.
For a long time now, I've been recommending that investors hold 100% of their fixed income in inflation-linked bonds unless they have a solid reason not to do so.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by WhiteMaxima »

willthrill81 wrote: Mon Feb 07, 2022 7:26 pm
HanSolo wrote: Tue Nov 30, 2021 12:58 pm
Phyneas wrote: Tue Nov 30, 2021 5:32 am
HanSolo wrote: Tue Nov 30, 2021 1:39 am If I understand correctly, the question being posed in this thread is whether or not to create and maintain an "all-weather" asset allocation and stay the course, or, shift allocations in certain kinds of weather. The latter is market timing, yes?

If the latter (market timing) is being advocated, does that mean the former (stay the course) is being advocated against?
I'd wonder what a true all-weather portfolio would look like at the moment (effectively something that can do okay during financial repression, stagflation, inflation, deflation, recession, and growth) ...
I'm thinking maybe the following (from the wiki page on Asset Allocation): "Bogleheads typically divide bond allocations between just two categories: nominal bonds such as the Vanguard Total Bond Market Fund, and U.S. Treasury Inflation Protected Securities (TIPS) such as the Vanguard Inflation Protected Securities Fund. The use of a TIPS fund provides additional diversification as well as inflation protection." (citation to Bogleheads' Guide To Investing, 2007, p. 103).

So maybe adding TIPS isn't really market timing, it's just people catching up in their reading to 2007 material.
For a long time now, I've been recommending that investors hold 100% of their fixed income in inflation-linked bonds unless they have a solid reason not to do so.
Real asset fund (commodity + Tip blend)?
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Goldwater85 »

If I am 100% certain that inflation will run double digits for a while, what should my portfolio look like?

Borrow as much money as I can with a fixed interest rate and buy real property/gold/miners/crude futures/wheat futures? In a hot economy? In a soft economy?
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by muffins14 »

Goldwater85 wrote: Mon Feb 07, 2022 8:54 pm If I am 100% certain that inflation will run double digits for a while, what should my portfolio look like?

Borrow as much money as I can with a fixed interest rate and buy real property/gold/miners/crude futures/wheat futures? In a hot economy? In a soft economy?
I will give you $10 if inflation runs in double digits for “a while”
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Goldwater85 »

muffins14 wrote: Mon Feb 07, 2022 8:57 pm
Goldwater85 wrote: Mon Feb 07, 2022 8:54 pm If I am 100% certain that inflation will run double digits for a while, what should my portfolio look like?

Borrow as much money as I can with a fixed interest rate and buy real property/gold/miners/crude futures/wheat futures? In a hot economy? In a soft economy?
I will give you $10 if inflation runs in double digits for “a while”
As long as you’re betting 2021 dollars.

I don’t expect it to happen. In the long term, demographics sink demand-pull inflation and supply crunches are at most intermediate term. But I really am curious to hear suggestions for a good hedge against significant inflation. I’ve never been sold on gold and TIPs are a guaranteed way to lose money right now.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by peskypesky »

Goldwater85 wrote: Mon Feb 07, 2022 9:40 pm
muffins14 wrote: Mon Feb 07, 2022 8:57 pm
Goldwater85 wrote: Mon Feb 07, 2022 8:54 pm If I am 100% certain that inflation will run double digits for a while, what should my portfolio look like?

Borrow as much money as I can with a fixed interest rate and buy real property/gold/miners/crude futures/wheat futures? In a hot economy? In a soft economy?
I will give you $10 if inflation runs in double digits for “a while”
As long as you’re betting 2021 dollars.

I don’t expect it to happen. In the long term, demographics sink demand-pull inflation and supply crunches are at most intermediate term. But I really am curious to hear suggestions for a good hedge against significant inflation. I’ve never been sold on gold and TIPs are a guaranteed way to lose money right now.
Seems like stocks and real estate are good places to be during inflation. At least relative to other asset classes.
Cash no good.
Bonds have a return that is significantly less than inflation.
Gold recently seems to hold its value, but if you adjust for inflation, it's actually losing some value.

But...if the Fed ever actually starts monetary tightening, we'll see things change. Hard to predict, because we don't know how much they'll tighten, or if they even will.

P.S. I don't know anything about futures trading, so I can't express an opinion on that.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by WhiteMaxima »

Long term, equity will beat inflation
Short to medium term, commodity, real estate and Tip will keep up with the inflation
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by 000 »

Goldwater85 wrote: Mon Feb 07, 2022 8:54 pm If I am 100% certain that inflation will run double digits for a while, what should my portfolio look like?

Borrow as much money as I can with a fixed interest rate and buy real property/gold/miners/crude futures/wheat futures? In a hot economy? In a soft economy?
Assuming you mean CPI, then inflation swaps or long TIPS + short Treasury, right? But kind of hard for us to implement that.

Real estate is good if they keep rates low, but would probably suffer the most of all these choices if rates rise significantly. Imagine how much RE demand will be reduced if the average mortgage goes from 3% to 15%.

Gold is more of a currency failure hedge that, as last year has shown, is not a CPI tracker. I still think it and the miners are worth owning if we experience a "oh fiat has no fundamental value" societal moment.

The most accessible play might be commodity futures and producers funds, I think BCI has actually outperformed GUNR YoY. There are also levered fund variants.

Another interesting play is hard asset stocks with low P/B, i.e. a large percentage of their valuation is due to book value relative to other equities.

As always this is a bet on what's not already priced in.....
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

WhiteMaxima wrote: Mon Feb 07, 2022 8:34 pm
willthrill81 wrote: Mon Feb 07, 2022 7:26 pm
HanSolo wrote: Tue Nov 30, 2021 12:58 pm
Phyneas wrote: Tue Nov 30, 2021 5:32 am
HanSolo wrote: Tue Nov 30, 2021 1:39 am If I understand correctly, the question being posed in this thread is whether or not to create and maintain an "all-weather" asset allocation and stay the course, or, shift allocations in certain kinds of weather. The latter is market timing, yes?

If the latter (market timing) is being advocated, does that mean the former (stay the course) is being advocated against?
I'd wonder what a true all-weather portfolio would look like at the moment (effectively something that can do okay during financial repression, stagflation, inflation, deflation, recession, and growth) ...
I'm thinking maybe the following (from the wiki page on Asset Allocation): "Bogleheads typically divide bond allocations between just two categories: nominal bonds such as the Vanguard Total Bond Market Fund, and U.S. Treasury Inflation Protected Securities (TIPS) such as the Vanguard Inflation Protected Securities Fund. The use of a TIPS fund provides additional diversification as well as inflation protection." (citation to Bogleheads' Guide To Investing, 2007, p. 103).

So maybe adding TIPS isn't really market timing, it's just people catching up in their reading to 2007 material.
For a long time now, I've been recommending that investors hold 100% of their fixed income in inflation-linked bonds unless they have a solid reason not to do so.
Real asset fund (commodity + Tip blend)?
Perhaps.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Grt2bOutdoors »

willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Yup!
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Mel Lindauer »

Grt2bOutdoors wrote: Wed Mar 09, 2022 1:06 pm
willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Yup!
If that prediction comes true, it's nice to know that since there's no cap on my I Bonds, their return will move right along with whatever the inflation number turns out to be.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

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Mel Lindauer wrote: Wed Mar 09, 2022 3:22 pm
Grt2bOutdoors wrote: Wed Mar 09, 2022 1:06 pm
willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Yup!
If that prediction comes true, it's nice to know that since there's no cap on my I Bonds, their return will move right along with whatever the inflation number turns out to be.
Very true. I've long espoused I bonds and TIPS over nominal bonds. I just don't see the appeal of nominal bonds for retail investors.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Grt2bOutdoors »

willthrill81 wrote: Wed Mar 09, 2022 3:26 pm
Mel Lindauer wrote: Wed Mar 09, 2022 3:22 pm
Grt2bOutdoors wrote: Wed Mar 09, 2022 1:06 pm
willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Yup!
If that prediction comes true, it's nice to know that since there's no cap on my I Bonds, their return will move right along with whatever the inflation number turns out to be.
Very true. I've long espoused I bonds and TIPS over nominal bonds. I just don't see the appeal of nominal bonds for retail investors.
I hold both, they both serve a purpose. Most people have their fixed income in the Total Bond Market Index fund, which are nominal.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

Grt2bOutdoors wrote: Fri Mar 11, 2022 12:38 pm
willthrill81 wrote: Wed Mar 09, 2022 3:26 pm
Mel Lindauer wrote: Wed Mar 09, 2022 3:22 pm
Grt2bOutdoors wrote: Wed Mar 09, 2022 1:06 pm
willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Yup!
If that prediction comes true, it's nice to know that since there's no cap on my I Bonds, their return will move right along with whatever the inflation number turns out to be.
Very true. I've long espoused I bonds and TIPS over nominal bonds. I just don't see the appeal of nominal bonds for retail investors.
I hold both, they both serve a purpose. Most people have their fixed income in the Total Bond Market Index fund, which are nominal.
What purpose do nominal bonds serve for you that inflation-linked bonds wouldn't serve at least as well and likely better?

The only good argument I've ever heard of for owning TBM instead of I bonds and/or TIPS is because TBM is the only choice in one's employer-sponsored plan (e.g., 401(k)).
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by marcopolo »

willthrill81 wrote: Fri Mar 11, 2022 12:54 pm
Grt2bOutdoors wrote: Fri Mar 11, 2022 12:38 pm
willthrill81 wrote: Wed Mar 09, 2022 3:26 pm
Mel Lindauer wrote: Wed Mar 09, 2022 3:22 pm
Grt2bOutdoors wrote: Wed Mar 09, 2022 1:06 pm

Yup!
If that prediction comes true, it's nice to know that since there's no cap on my I Bonds, their return will move right along with whatever the inflation number turns out to be.
Very true. I've long espoused I bonds and TIPS over nominal bonds. I just don't see the appeal of nominal bonds for retail investors.
I hold both, they both serve a purpose. Most people have their fixed income in the Total Bond Market Index fund, which are nominal.
What purpose do nominal bonds serve for you that inflation-linked bonds wouldn't serve at least as well and likely better?

The only good argument I've ever heard of for owning TBM instead of I bonds and/or TIPS is because TBM is the only choice in one's employer-sponsored plan (e.g., 401(k)).
To not fall prey to recency bias?
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

marcopolo wrote: Fri Mar 11, 2022 2:25 pm
willthrill81 wrote: Fri Mar 11, 2022 12:54 pm
Grt2bOutdoors wrote: Fri Mar 11, 2022 12:38 pm
willthrill81 wrote: Wed Mar 09, 2022 3:26 pm
Mel Lindauer wrote: Wed Mar 09, 2022 3:22 pm

If that prediction comes true, it's nice to know that since there's no cap on my I Bonds, their return will move right along with whatever the inflation number turns out to be.
Very true. I've long espoused I bonds and TIPS over nominal bonds. I just don't see the appeal of nominal bonds for retail investors.
I hold both, they both serve a purpose. Most people have their fixed income in the Total Bond Market Index fund, which are nominal.
What purpose do nominal bonds serve for you that inflation-linked bonds wouldn't serve at least as well and likely better?

The only good argument I've ever heard of for owning TBM instead of I bonds and/or TIPS is because TBM is the only choice in one's employer-sponsored plan (e.g., 401(k)).
To not fall prey to recency bias?
Come again?

Inflation-linked bonds remove the risk of unexpected inflation. That's not recency bias. Many are just talking about inflation right now because it's high. I've been espousing inflation-linked bonds for a long time, well before the current inflation reared it's head. I know that you're big on that sort of thing, and if you peruse my posts, you'll quickly see this to be true.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by marcopolo »

willthrill81 wrote: Fri Mar 11, 2022 2:50 pm
marcopolo wrote: Fri Mar 11, 2022 2:25 pm
willthrill81 wrote: Fri Mar 11, 2022 12:54 pm
Grt2bOutdoors wrote: Fri Mar 11, 2022 12:38 pm
willthrill81 wrote: Wed Mar 09, 2022 3:26 pm

Very true. I've long espoused I bonds and TIPS over nominal bonds. I just don't see the appeal of nominal bonds for retail investors.
I hold both, they both serve a purpose. Most people have their fixed income in the Total Bond Market Index fund, which are nominal.
What purpose do nominal bonds serve for you that inflation-linked bonds wouldn't serve at least as well and likely better?

The only good argument I've ever heard of for owning TBM instead of I bonds and/or TIPS is because TBM is the only choice in one's employer-sponsored plan (e.g., 401(k)).
To not fall prey to recency bias?
Come again?

Inflation-linked bonds remove the risk of unexpected inflation. That's not recency bias. Many are just talking about inflation right now because it's high. I've been espousing inflation-linked bonds for a long time, well before the current inflation reared it's head. I know that you're big on that sort of thing, and if you peruse my posts, you'll quickly see this to be true.
But, they do so at the cost of lower returns when unexpected inflation does not show up. So, unless you can foresee the future (I know you believe you are better able to do that than us mere mortals), for most people having some diversity makes sense because you don't know if unexpected inflation will show up or not.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

marcopolo wrote: Fri Mar 11, 2022 3:06 pm
willthrill81 wrote: Fri Mar 11, 2022 2:50 pm
marcopolo wrote: Fri Mar 11, 2022 2:25 pm
willthrill81 wrote: Fri Mar 11, 2022 12:54 pm
Grt2bOutdoors wrote: Fri Mar 11, 2022 12:38 pm

I hold both, they both serve a purpose. Most people have their fixed income in the Total Bond Market Index fund, which are nominal.
What purpose do nominal bonds serve for you that inflation-linked bonds wouldn't serve at least as well and likely better?

The only good argument I've ever heard of for owning TBM instead of I bonds and/or TIPS is because TBM is the only choice in one's employer-sponsored plan (e.g., 401(k)).
To not fall prey to recency bias?
Come again?

Inflation-linked bonds remove the risk of unexpected inflation. That's not recency bias. Many are just talking about inflation right now because it's high. I've been espousing inflation-linked bonds for a long time, well before the current inflation reared it's head. I know that you're big on that sort of thing, and if you peruse my posts, you'll quickly see this to be true.
But, they do so at the cost of lower returns when unexpected inflation does not show up. So, unless you can foresee the future (I know you believe you are better able to do that than us mere mortals), for most people having some diversity makes sense because you don't know if unexpected inflation will show up or not.
Arguments can and have been made on both sides of the coin (e.g., 'buyers of TIPS are making a bet on future inflation being higher than the break-even point' and vice versa), but if a given investor's future obligations are real and not nominal, then it's only logical to prefer bonds that are priced in real and not nominal dollars.

I'm aware that David Swensen took the position of 50%/50% splits with nominal and inflation-linked bonds in the Yale portfolio. But for a retail investor, I believe this to be an error and a rather obvious one at that.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by marcopolo »

willthrill81 wrote: Fri Mar 11, 2022 3:10 pm
marcopolo wrote: Fri Mar 11, 2022 3:06 pm
willthrill81 wrote: Fri Mar 11, 2022 2:50 pm
marcopolo wrote: Fri Mar 11, 2022 2:25 pm
willthrill81 wrote: Fri Mar 11, 2022 12:54 pm

What purpose do nominal bonds serve for you that inflation-linked bonds wouldn't serve at least as well and likely better?

The only good argument I've ever heard of for owning TBM instead of I bonds and/or TIPS is because TBM is the only choice in one's employer-sponsored plan (e.g., 401(k)).
To not fall prey to recency bias?
Come again?

Inflation-linked bonds remove the risk of unexpected inflation. That's not recency bias. Many are just talking about inflation right now because it's high. I've been espousing inflation-linked bonds for a long time, well before the current inflation reared it's head. I know that you're big on that sort of thing, and if you peruse my posts, you'll quickly see this to be true.
But, they do so at the cost of lower returns when unexpected inflation does not show up. So, unless you can foresee the future (I know you believe you are better able to do that than us mere mortals), for most people having some diversity makes sense because you don't know if unexpected inflation will show up or not.
Arguments can and have been made on both sides of the coin (e.g., 'buyers of TIPS are making a bet on future inflation being higher than the break-even point' and vice versa), but if a given investor's future obligations are real and not nominal, then it's only logical to prefer bonds that are priced in real and not nominal dollars.

I'm aware that David Swensen took the position of 50%/50% splits with nominal and inflation-linked bonds in the Yale portfolio. But for a retail investor, I believe this to be an error and a rather obvious one at that.
By that argument everyone should be 100% TIPS, no equities either.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

marcopolo wrote: Fri Mar 11, 2022 3:21 pm
willthrill81 wrote: Fri Mar 11, 2022 3:10 pm
marcopolo wrote: Fri Mar 11, 2022 3:06 pm
willthrill81 wrote: Fri Mar 11, 2022 2:50 pm
marcopolo wrote: Fri Mar 11, 2022 2:25 pm

To not fall prey to recency bias?
Come again?

Inflation-linked bonds remove the risk of unexpected inflation. That's not recency bias. Many are just talking about inflation right now because it's high. I've been espousing inflation-linked bonds for a long time, well before the current inflation reared it's head. I know that you're big on that sort of thing, and if you peruse my posts, you'll quickly see this to be true.
But, they do so at the cost of lower returns when unexpected inflation does not show up. So, unless you can foresee the future (I know you believe you are better able to do that than us mere mortals), for most people having some diversity makes sense because you don't know if unexpected inflation will show up or not.
Arguments can and have been made on both sides of the coin (e.g., 'buyers of TIPS are making a bet on future inflation being higher than the break-even point' and vice versa), but if a given investor's future obligations are real and not nominal, then it's only logical to prefer bonds that are priced in real and not nominal dollars.

I'm aware that David Swensen took the position of 50%/50% splits with nominal and inflation-linked bonds in the Yale portfolio. But for a retail investor, I believe this to be an error and a rather obvious one at that.
By that argument everyone should be 100% TIPS, no equities either.
That's a false dichotomy, and I think you know it. Stocks and bonds, whether TIPS or otherwise, are very different investment instruments.

I'm far from the only one who believes 100% inflation-linked bonds for retail investors to be appropriate, at least as a starting reference point, as seen here. If you continue to disagree, then please start a new thread for all to see it more clearly.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

Jeremy Siegel is turning into my financial hero. :D
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by abc132 »

What did he suggest in May 2021?

- no cash
- no nominal bonds
- no TIPS

I believe he suggested dividend stocks.


Wouldn't 100% TIPS have done better at -1% real?
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by billaster »

willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Might be a bit premature to declare victory. Siegel predicted 20% inflation in the "next two or three years" in May 2021.

So far, a bit less than one year, there has been 6.8% inflation. His two-year prediction is in doubt. He's needs two more years with no reduction of inflation to meet his three-year prediction.

We shall see.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

billaster wrote: Sun May 01, 2022 9:48 pm
willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Might be a bit premature to declare victory. Siegel predicted 20% inflation in the "next two or three years" in May 2021.

So far, a bit less than one year, there has been 6.8% inflation. His two-year prediction is in doubt. He's needs two more years with no reduction of inflation to meet his three-year prediction.

We shall see.
Inflation is running at about 8.5% right now. It won't take 24 more months of that to reach 20%.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Northern Flicker »

willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Currently, the prediction is looking shakier.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by Robot Monster »

abc132 wrote: Sun May 01, 2022 9:23 pm What did he suggest in May 2021?

- no cash
- no nominal bonds
- no TIPS

I believe he suggested dividend stocks.


Wouldn't 100% TIPS have done better at -1% real?
In October he suggested Utilities and Consumer Staples.

Return from Oct 2021 - Apr 2022
Consumer Staples (VDC) +12.80
Utilities (VPU) +12.70%
Total Stock Market -6.21%
The inflationary backdrop, according to Siegel, may set-up underperformers utilities and consumer staples, known for their dividends, for a strong run.

“They may have their day in the sun finally,” said Siegel. “If you have a dividend, firms can raise their prices and historically dividends are inflation-protected. They’re not as stable, of course, as a government bond. But they have that inflation protection and a positive yield.”
CNBC link
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by abc132 »

Robot Monster wrote: Sun May 01, 2022 11:01 pm
abc132 wrote: Sun May 01, 2022 9:23 pm What did he suggest in May 2021?

- no cash
- no nominal bonds
- no TIPS

I believe he suggested dividend stocks.


Wouldn't 100% TIPS have done better at -1% real?
In October he suggested Utilities and Consumer Staples.

Return from Oct 2021 - Apr 2022
Consumer Staples (VDC) +12.80
Utilities (VPU) +12.70%
Total Stock Market -6.21%
The inflationary backdrop, according to Siegel, may set-up underperformers utilities and consumer staples, known for their dividends, for a strong run.

“They may have their day in the sun finally,” said Siegel. “If you have a dividend, firms can raise their prices and historically dividends are inflation-protected. They’re not as stable, of course, as a government bond. But they have that inflation protection and a positive yield.”
CNBC link
I guess I view a 3 year prediction as needing to apply for 3 years, so in my opinion his May comments should be applied for that period of time. The chief recommendation that stood out to me was to avoid TIPS completely, which some seem to be ignoring in this thread. We can certainly check back in 2 more years and compare May 2021 to May 2024 for VDC and/or VPU, to a stock/TIPS or stock/nominal portfolio that has the benefit of rebalancing.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by 000 »

This is a tough crowd.

It's not like VDC and VPU have a three year lockup.
abc132 wrote: When you start with an unreasonable assumption, your conclusion(s) derived from that assumptions can't be meaningful.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by Robot Monster »

abc132 wrote: Sun May 01, 2022 11:11 pm
Robot Monster wrote: Sun May 01, 2022 11:01 pm
abc132 wrote: Sun May 01, 2022 9:23 pm What did he suggest in May 2021?

- no cash
- no nominal bonds
- no TIPS

I believe he suggested dividend stocks.


Wouldn't 100% TIPS have done better at -1% real?
In October he suggested Utilities and Consumer Staples.

Return from Oct 2021 - Apr 2022
Consumer Staples (VDC) +12.80
Utilities (VPU) +12.70%
Total Stock Market -6.21%
The inflationary backdrop, according to Siegel, may set-up underperformers utilities and consumer staples, known for their dividends, for a strong run.

“They may have their day in the sun finally,” said Siegel. “If you have a dividend, firms can raise their prices and historically dividends are inflation-protected. They’re not as stable, of course, as a government bond. But they have that inflation protection and a positive yield.”
CNBC link
I guess I view a 3 year prediction as needing to apply for 3 years, so in my opinion his May comments should be applied for that period of time. The chief recommendation that stood out to me was to avoid TIPS completely, which some seem to be ignoring in this thread. We can certainly check back in 2 more years and compare May 2021 to May 2024 for VDC and/or VPU, to a stock/TIPS or stock/nominal portfolio that has the benefit of rebalancing.
I'm with you on the TIPS thing. I think I read the reason he didn't like TIPS is because of their low return. This may, or may not, be an issue for people. Personally, I don't mind, and have lots of TIPS. I bought into his recommendation to buy Utilities and Consumer Staples. I don't expect these to outperform the S&P over the next three years, but they certainly have had their day in the sun like Siegel predicted they might. I'm unsure if now would be a good time to dump them. They're just 8% of my portfolio, I think I might hang onto them. Unsure. I suppose they offer diversification. In a recession they might do nicely. If things improve they might lag.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by Forester »

Robot Monster wrote: Mon May 02, 2022 6:32 am
abc132 wrote: Sun May 01, 2022 11:11 pm
Robot Monster wrote: Sun May 01, 2022 11:01 pm
abc132 wrote: Sun May 01, 2022 9:23 pm What did he suggest in May 2021?

- no cash
- no nominal bonds
- no TIPS

I believe he suggested dividend stocks.


Wouldn't 100% TIPS have done better at -1% real?
In October he suggested Utilities and Consumer Staples.

Return from Oct 2021 - Apr 2022
Consumer Staples (VDC) +12.80
Utilities (VPU) +12.70%
Total Stock Market -6.21%
The inflationary backdrop, according to Siegel, may set-up underperformers utilities and consumer staples, known for their dividends, for a strong run.

“They may have their day in the sun finally,” said Siegel. “If you have a dividend, firms can raise their prices and historically dividends are inflation-protected. They’re not as stable, of course, as a government bond. But they have that inflation protection and a positive yield.”
CNBC link
I guess I view a 3 year prediction as needing to apply for 3 years, so in my opinion his May comments should be applied for that period of time. The chief recommendation that stood out to me was to avoid TIPS completely, which some seem to be ignoring in this thread. We can certainly check back in 2 more years and compare May 2021 to May 2024 for VDC and/or VPU, to a stock/TIPS or stock/nominal portfolio that has the benefit of rebalancing.
I'm with you on the TIPS thing. I think I read the reason he didn't like TIPS is because of their low return. This may, or may not, be an issue for people. Personally, I don't mind, and have lots of TIPS. I bought into his recommendation to buy Utilities and Consumer Staples. I don't expect these to outperform the S&P over the next three years, but they certainly have had their day in the sun like Siegel predicted they might. I'm unsure if now would be a good time to dump them. They're just 8% of my portfolio, I think I might hang onto them. Unsure. I suppose they offer diversification. In a recession they might do nicely. If things improve they might lag.
Why not simply own USMV instead of Utilities & Staples, you get the same downside protection but are spread across more sectors.

Also anyone who wants Siegel's latest thoughts should subscribe to the Behind The Markets podcast, Siegel is always the first guest to speak.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by abc132 »

000 wrote: Sun May 01, 2022 11:19 pm This is a tough crowd.

It's not like VDC and VPU have a three year lockup.
abc132 wrote: When you start with an unreasonable assumption, your conclusion(s) derived from that assumptions can't be meaningful.
I'm not familiar with the term lockup as you are using it, so I would need you to clarify what you find unreasonable about getting an overall benefit from following the advice about a prediction after the timeframe of that prediction.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

Northern Flicker wrote: Sun May 01, 2022 10:37 pm
willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Currently, the prediction is looking shakier.
I'm not sure how. Inflation from May of 2021 through this May will be over 9%. Even if the rate halves over the next two years, cumulative inflation will be at least 20%.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by billaster »

willthrill81 wrote: Mon May 02, 2022 9:57 am Inflation from May of 2021 through this May will be over 9%.
How sure are you of this? I guess we will know in a couple of weeks when the next CPI release occurs.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by abc132 »

Robot Monster wrote: Mon May 02, 2022 6:32 am
abc132 wrote: Sun May 01, 2022 11:11 pm
Robot Monster wrote: Sun May 01, 2022 11:01 pm
abc132 wrote: Sun May 01, 2022 9:23 pm What did he suggest in May 2021?

- no cash
- no nominal bonds
- no TIPS

I believe he suggested dividend stocks.


Wouldn't 100% TIPS have done better at -1% real?
In October he suggested Utilities and Consumer Staples.

Return from Oct 2021 - Apr 2022
Consumer Staples (VDC) +12.80
Utilities (VPU) +12.70%
Total Stock Market -6.21%
The inflationary backdrop, according to Siegel, may set-up underperformers utilities and consumer staples, known for their dividends, for a strong run.

“They may have their day in the sun finally,” said Siegel. “If you have a dividend, firms can raise their prices and historically dividends are inflation-protected. They’re not as stable, of course, as a government bond. But they have that inflation protection and a positive yield.”
CNBC link
I guess I view a 3 year prediction as needing to apply for 3 years, so in my opinion his May comments should be applied for that period of time. The chief recommendation that stood out to me was to avoid TIPS completely, which some seem to be ignoring in this thread. We can certainly check back in 2 more years and compare May 2021 to May 2024 for VDC and/or VPU, to a stock/TIPS or stock/nominal portfolio that has the benefit of rebalancing.
I'm with you on the TIPS thing. I think I read the reason he didn't like TIPS is because of their low return. This may, or may not, be an issue for people. Personally, I don't mind, and have lots of TIPS. I bought into his recommendation to buy Utilities and Consumer Staples. I don't expect these to outperform the S&P over the next three years, but they certainly have had their day in the sun like Siegel predicted they might. I'm unsure if now would be a good time to dump them. They're just 8% of my portfolio, I think I might hang onto them. Unsure. I suppose they offer diversification. In a recession they might do nicely. If things improve they might lag.
I think if you believe the prediction, you hold the assets expected to outperform until you see that 20% inflation. If the prediction had been, "some time in the next 3 years inflation will spike. You can capture a premium with the sector bet and then go back to your prior allocation" then that would allow you to exit with a profit any time. The second is a much weaker prediction than the first, as all it needs is for one sector to come out ahead at a single point in time. The problem with the weaker prediction is you could exit at $1 profit, 10,000 profit or 1,000,000 profit. It can technically be a true prediction while you still lose money as you try to decide when/how to exit.

The first prediction (wait 3 years, and the sector bet will have a better outcome --> or even wait for 20% inflation, and the sector bet will have a better outcome) is actionable but we have to be careful of replacing it with the much weaker prediction, or declaring the prediction true before the expected inflation is finished. The prediction should be clear enough to test as true or not true. I would give greater than 50% odds that at least one of the two predictions may come true (after 3 years or after 20% inflation), but I think Swedroe had the better inflation analysis - that TIPS are your true protector, as the sector bets become a drag as you wait for inflation. Inflation has been predicted yearly since 2008.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Maverick3320 »

willthrill81 wrote: Mon May 02, 2022 9:57 am
Northern Flicker wrote: Sun May 01, 2022 10:37 pm
willthrill81 wrote: Wed Mar 09, 2022 11:30 am Right now, Siegel looks like an oracle. It seems almost certain to me at least that his 'almost' prediction of 20% cumulative inflation between 2021-2024 will be close to accurate, maybe even spot on.
Currently, the prediction is looking shakier.
I'm not sure how. Inflation from May of 2021 through this May will be over 9%. Even if the rate halves over the next two years, cumulative inflation will be at least 20%.
You sound very confident speaking on matters of inflation. In your opinion, why is inflation so high right now?
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by JBTX »

willthrill81 wrote: Fri Mar 11, 2022 12:54 pm
Grt2bOutdoors wrote: Fri Mar 11, 2022 12:38 pm
willthrill81 wrote: Wed Mar 09, 2022 3:26 pm
Mel Lindauer wrote: Wed Mar 09, 2022 3:22 pm
Grt2bOutdoors wrote: Wed Mar 09, 2022 1:06 pm

Yup!
If that prediction comes true, it's nice to know that since there's no cap on my I Bonds, their return will move right along with whatever the inflation number turns out to be.
Very true. I've long espoused I bonds and TIPS over nominal bonds. I just don't see the appeal of nominal bonds for retail investors.
I hold both, they both serve a purpose. Most people have their fixed income in the Total Bond Market Index fund, which are nominal.
What purpose do nominal bonds serve for you that inflation-linked bonds wouldn't serve at least as well and likely better?

The only good argument I've ever heard of for owning TBM instead of I bonds and/or TIPS is because TBM is the only choice in one's employer-sponsored plan (e.g., 401(k)).
I realize I’m responding to an exchange 45 days ago. While I’m not a huge fan of conventional bonds and have been underweighted in them for literally decades (arguably to my portfolio detriment) I thought the argument for conventional bonds was for diversification purposes, and the “ballast” argument, including the sometimes negative correlation in sever economic shocks. Particular for treasuries. TIPS are a thinner market and over the short term can have funky outcomes such as in 2008 and at one point years later. Perhaps if you are longer term that doesn’t matter, but if you are longer term the bond ballast argument would also be diminished.

For the record I’ve pretty much been 1/3 - 1/2 TIPS and ibonds in bond allocation for many years now.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by 1789 »

A lot of people is overreacting to this inflation and rate increases. It is not the first that this is happening. World wont crash and things will be alright. Stay the course. Don't fall into the trap of fortune telling.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by Northern Flicker »

Robot Monster wrote: Mon May 02, 2022 6:32 am I'm with you on the TIPS thing. I think I read the reason he didn't like TIPS is because of their low return. This may, or may not, be an issue for people. Personally, I don't mind, and have lots of TIPS. I bought into his recommendation to buy Utilities and Consumer Staples. I don't expect these to outperform the S&P over the next three years, but they certainly have had their day in the sun like Siegel predicted they might. I'm unsure if now would be a good time to dump them. They're just 8% of my portfolio, I think I might hang onto them. Unsure. I suppose they offer diversification. In a recession they might do nicely. If things improve they might lag.
I believe his issue with TIPS is the risk of rising real yields when inflation accelerates. I believe he also may have published results suggesting a dividend factor as an equity risk/return factor, so he may not be an unbiased observer with respect to dividend stocks.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by Robot Monster »

Northern Flicker wrote: Mon May 02, 2022 3:23 pm
Robot Monster wrote: Mon May 02, 2022 6:32 am I'm with you on the TIPS thing. I think I read the reason he didn't like TIPS is because of their low return. This may, or may not, be an issue for people. Personally, I don't mind, and have lots of TIPS. I bought into his recommendation to buy Utilities and Consumer Staples. I don't expect these to outperform the S&P over the next three years, but they certainly have had their day in the sun like Siegel predicted they might. I'm unsure if now would be a good time to dump them. They're just 8% of my portfolio, I think I might hang onto them. Unsure. I suppose they offer diversification. In a recession they might do nicely. If things improve they might lag.
I believe his issue with TIPS is the risk of rising real yields when inflation accelerates. I believe he also may have published results suggesting a dividend factor as an equity risk/return factor, so he may not be an unbiased observer with respect to dividend stocks.
Well, I did find this...check it out:
So forget bonds, he said, even inflation-shielded ones. “You could go to TIPS at minus 1%” yield,” he said, in a reference to Treasury inflation-protected securities. “That’s not an answer.” On the other hand, “You have dividend-paying stocks at 2.5%, 3%, 3.5%, 4%—well-protected dividends that are rising, and you have capital gains.”
article link

My interpretation is that he's saying dividend paying stocks are preferable because they have a better yield.
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Re: Inflation could be 20% in the next three years [Sell bonds?]

Post by 000 »

abc132 wrote: Mon May 02, 2022 9:31 am
000 wrote: Sun May 01, 2022 11:19 pm This is a tough crowd.

It's not like VDC and VPU have a three year lockup.
abc132 wrote: When you start with an unreasonable assumption, your conclusion(s) derived from that assumptions can't be meaningful.
I'm not familiar with the term lockup as you are using it, so I would need you to clarify what you find unreasonable about getting an overall benefit from following the advice about a prediction after the timeframe of that prediction.
A person is allowed to sell VDC and VPU anytime (after purchasing funds settle).

Active management isn't the same as passive set it and forget it. Even if an active manager has a three year view, if an investment comes to what they consider fair value or overvalued sooner, they don't have to keep holding it for the full three years.

Now, if one is going to follow buy advice from gurus this raises the question of how one is going to handle the sell side, I grant you that.
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Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

billaster wrote: Mon May 02, 2022 12:23 pm
willthrill81 wrote: Mon May 02, 2022 9:57 am Inflation from May of 2021 through this May will be over 9%.
How sure are you of this? I guess we will know in a couple of weeks when the next CPI release occurs.
It's an estimate, but I bonds will be paying 9.62% starting in May 2022, so I'm not standing on very shaky ground.
Maverick3320 wrote: Mon May 02, 2022 12:55 pm You sound very confident speaking on matters of inflation. In your opinion, why is inflation so high right now?
See above for the source of my estimate.

The reason behind the current inflation seems to be very simple. It's the classic recipe for inflation: too many dollars chasing too few goods and services. We have too many dollars due to all the stimulus over the last two years, and we have too few goods and services caused by supply problems and labor shortages. None of that is going away in a matter of months.
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