My economics teacher: Buy treasury bonds!

[John F Kennedy III]

My economics professor just told all of us that we should buy treasury bonds. He said they are a good investment.

HAHAHAHAHA!

 

[legion]

He's right. US Government Securities are a good investment.

 

[The Gold Standard]

He's right. US Government Securities are a good investment.

They are the most expensive they will ever be and the interest payments are worth less every day. Sounds like a great investment.

 

[legion]

They are the most expensive they will ever be and the interest payments are worth less every day. Sounds like a great investment.

I'm sorry, but I fail to see your point. What interest does gold pay?

 

[The Gold Standard]

I'm sorry, but I fail to see your point. What interest does gold pay?

None, but you don't lose your principal either. With treasuries you lose value over time.

 

[legion]

None, but you don't lose your principal either. With treasuries you lose value over time.

When my bonds mature I will get the principal back.

Bonds are calculated so that the sum of the present value of the coupon payments, and the present value of the principal being paid back are always equal to the "par" value of the bond.

 

[The Gold Standard]

When my bonds mature I will get the principal back.

Bonds are calculated so that the sum of the present value of the coupon payments, and the present value of the principal being paid back are always equal to the "par" value of the bond.

Yes, good for you. How much will the principal buy when you get it back? Not as much as it did when you bought the bond. Even if you add in the pitiful coupon payments.

 

[Danke]

I'm sorry, but I fail to see your point. What interest does gold pay?

None, but it went from around 1100 in 2009 to over 1600 now when you were 70% into US dollars.

 

[tsai3904]

When my bonds mature I will get the principal back.

What happens to your principal in real terms if interest rates are substantially higher the day you get your principal back?

 

[cubical]

He's right. US Government Securities are a good investment.

We need more guys like you. You give me a chance to load up.

 

[Lafayette]

How many double cheese burgers will your investment buy you from the $35.99 Mc Donald's value menu in 10-30 years?

 

[John F Kennedy III]

How many double cheese burgers will your investment buy you from the $35.99 Mc Donald's value menu in 10-30 years?

Good question.

 

[smhbbag]

Y'all must consider me really dumb. My entire 401k has been in a long-term treasury fund for over a year now.

Being dumb, I only got 30% return on my whole pot in the last 12 months.

Maybe if I hang around I'll learn something.

When the stock market corrects by a few thousand points some time in the next year or two, and gold is down, I'll really need some help understanding why I should abandon my booming treasuries.

 

[John F Kennedy III]

Y'all must consider me really dumb. My entire 401k has been in a long-term treasury fund for over a year now.

Being dumb, I only got 30% return on my whole pot in the last 12 months.

Maybe if I hang around I'll learn something.

When the stock market corrects by a few thousand points some time in the next year or two, and gold is down, I'll really need some help understanding why I should abandon my booming treasuries.

Don't worry, it'll get confiscated. Hopefully you'll learn then.

 

[pmbug]

Buying Treasuries is a vote of confidence in the Federal Reserve and PPT. Buying gold is a vote of no confidence.

Foreign investment into Treasuries is disappearing:

http://www.zerohedge.com/news/china...one-year-low-russia-cuts-holdings-50-one-year

The Fed is picking up the slack:

In 2011, the Fed purchased a stunning 61% of Treasury issuance. ...

http://online.wsj.com/article/SB10001424052702304450004577279754275393064.html?mod=googlenews_wsj

Bill Gross is dumping Treasuries in favor of mortgage bonds.

http://finance.yahoo.com/blogs/dail...qe3-inflation-muted-growth-way-115229488.html
http://www.investmentnews.com/article/20120312/FREE/120319999

Treasuries are "earning" a negative real rate of interest:

http://www.zerohedge.com/news/guest-post-golds-critical-metric
older: http://gata.org/node/10899

Caveat emptor.

 

[thoughtomator]

It's one thing to use UST as a short-term trading vehicle, but don't be a fool - there is a real risk of getting stuck with them while the value they represent is devalued out from under you.

PMs of course are a hedge against that risk. Unfortunately PM markets are also jacked to all hell with leveraged speculation, nothing in this market is clean anymore.

 

[PaulConventionWV]

My economics professor just told all of us that we should buy treasury bonds. He said they are a good investment.

HAHAHAHAHA!

Lol. Anyone who knows anything about investing knows that is bull***. And he's a professor? Rofl.

 

[PaulConventionWV]

When my bonds mature I will get the principal back.

Bonds are calculated so that the sum of the present value of the coupon payments, and the present value of the principal being paid back are always equal to the "par" value of the bond.

They are a low-risk investment. You never get good returns on something that has very low risk. High risk, high reward. Government bonds have a higher chance of not beating inflation over time, whereas Fortune 500 companies have higher chances of getting good returns over time. If low-risk automatically means it's a good investment, then by all means, but don't expect to make much off of it. I've had a bond in for over 10 years and it's not even halfway matured.

However, if you invest in small business or big companies, you have a much higher chance of good returns, and as long as you diversify your portfolio, you should be able to eliminate most of the risk associated with those types of investments. Treasury bonds are just becoming more and more worthless as an investment.

 

[No Free Beer]

I remember my ECON professor gave me (literally gave me) Atlas Shrugged, saying, "I ordered this and I don't want to read it. You can have it."

She went to MIT.

My advice would be to just do your work and ignore your professors stupid ass advice. Don't fight w/ your professor, won't get you anywhere.

There isn't any reason to debate them in class because the market will prove us correct, everytime.

You 1 v Professor 0

 

[rpwi]

The real value in treasuries is not their yield but their resale value. They are speculative instruments because they are the primary means in which the Fed inserts reserves into the banking system. If you suspect that the demand for reserves will go up in the banking system you buy t-bills...even if they yield a pathetic 2% interest for a 10 year maturity. Why...because you know however overpriced they are now (and they are big time...we have a bubble) they can become even more overpriced through increased open market transactions.