My economics teacher: Buy treasury bonds!

[PaulConventionWV]

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

Why not debate them in class? Staying silent does even less good. If debating is what class is about, then make it on a subject that actually matters.

 

[WilliamC]

For the 1% who have enough wealth to make diversification a good strategy and who have enough cash flow to make regular contributions to their investments then I could see having some in T-bills would make more sense than keeping the equivalent amount in cash.

For the rest of the 99% who don't have enough cash flow to make regular contributions to a portfolio, the strategy changes.

I recall Harry Browne's investment strategy for lazy investors, 25% cash, 25% long-term US treasuries, 25% in low fee S&P 500 index fund, 25% gold.

Each month or so buy whichever asset is the least expensive at that time.

Supposedly this generates between 10 and 12% year to year.

Of course this is for 'normal' situations, I don't know if Harry Browne would recommend the same strategy now.

Thank you Harry Browne, you were my first introduction to Libertarianism and you were also of the same mold as Ron Paul, humble and more interested in promoting the message than yourself.

 

[psi2941]

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.

what you are saying is the same thing as...
its 2005 or 2006 and your telling everyone to buy homes because your homes on fire.
Then you run into peter schiff, and thinks his crazy because your to up in the moment.

 

[Tudo]

He's a "professor" because he can't make it in the real world.

 

[Tudo]

For the 1% who have enough wealth to make diversification a good strategy and who have enough cash flow to make regular contributions to their investments then I could see having some in T-bills would make more sense than keeping the equivalent amount in cash.

For the rest of the 99% who don't have enough cash flow to make regular contributions to a portfolio, the strategy changes.

I recall Harry Browne's investment strategy for lazy investors, 25% cash, 25% long-term US treasuries, 25% in low fee S&P 500 index fund, 25% gold.

Each month or so buy whichever asset is the least expensive at that time.

Supposedly this generates between 10 and 12% year to year.

Of course this is for 'normal' situations, I don't know if Harry Browne would recommend the same strategy now.

Thank you Harry Browne, you were my first introduction to Libertarianism and you were also of the same mold as Ron Paul, humble and more interested in promoting the message than yourself.

Harry was the first I read too more than 2 decades ago and Harry is still the ONLY 3rd party candidate to EVER get on the ballot in all 50 states. Here's Harry on firing line fending off 2 jerk off neocons and now of course we can look back and know that Harry was RIGHT
http://www.youtube.com/watch?v=jK01aLsKw7w

And I'm sorry but nobody has better election commercials than Harry Browne:
http://www.youtube.com/watch?v=y-P4pv3288Q

Enjoy

 

[matt0611]

There's a place in one portfolios for bonds, but the yields right now are below inflation, I'd rather buy gold.

The Federal Reserve bought 61% of all treasuries last year. What more do you need to know?

 

[CaptainAmerica]

tell your professor he is a morong.

 

[Tudo]

I had a customer who sold all his coins just before the bear market began in 1981 and bought 30 year t-bills at something like 20%. Now THATS when you buy tbills!

Not now.

 

[Tudo]

Then again I have another customer who also sold out in 1981 realizing BIG gains and bought baseball cards from the 1800's that he's also made millions on. Neither one of them are professors.

 

[smhbbag]

If you think:

Inflation is a threat
Interest rates may rise
The stock market will rise in nominal terms
International, institutional money will begin to prefer foreign debt to US debt....

then skip on treasuries.

I think, however,

Interest rates are absolutely not going to go up significantly under any near-term circumstances
The stock market is going to have a major correction downward in the next year or two
Institutional money will prefer US debt even more relative to the debt of Europe and others.

Then treasuries are a great buy. I made 20% in a month last year during the European debt crisis. I see more European debt crises coming, so I'm going nowhere. Treasuries are negatively correlated with the DOW, generally. I'm confident the DOW will be lower in a year or two, probably by a large amount. It would be apocalyptic for the Fed to raise interest rates any time in the near future, therefore I don't fear them going up.

I'm sitting pretty, and y'all are laughing. I made 30% return in the past 12 months, and I expect the next 24 to be even better. I'm 100% in for treasuries. Debt-deflation is the name of the game.

I'm not advocating something akin to buying at the housing market high. I've been renting since '06, despite having 50+% of a home value saved. We're not at the bottom yet, so I'm holding. I held during last of the boom years, too.

 

[luctor-et-emergo]

This is why school is supposed to teach people to question and to stimulate their brains to logically think the situation through.
School is meant to give support in learning, not stuff ones head full of government authorized 'facts'.

I used to have an economy teacher in high school who liked to brag about his investments in stocks, then there was some economic downturn and we never heard about his stocks again. I guess it didn't work out for him. This made me aware that 'experts' really can be more likely to make mistakes as they get accustomed to certain situations and often misjudge the risks involved. I'm not in stocks though.

 

[The Gold Standard]

If you think:

Inflation is a threat
Interest rates may rise
The stock market will rise in nominal terms
International, institutional money will begin to prefer foreign debt to US debt....

then skip on treasuries.

I think, however,

Interest rates are absolutely not going to go up significantly under any near-term circumstances
The stock market is going to have a major correction downward in the next year or two
Institutional money will prefer US debt even more relative to the debt of Europe and others.

Then treasuries are a great buy. I made 20% in a month last year during the European debt crisis. I see more European debt crises coming, so I'm going nowhere. Treasuries are negatively correlated with the DOW, generally. I'm confident the DOW will be lower in a year or two, probably by a large amount. It would be apocalyptic for the Fed to raise interest rates any time in the near future, therefore I don't fear them going up.

I'm sitting pretty, and y'all are laughing. I made 30% return in the past 12 months, and I expect the next 24 to be even better. I'm 100% in for treasuries. Debt-deflation is the name of the game.

I'm not advocating something akin to buying at the housing market high. I've been renting since '06, despite having 50+% of a home value saved. We're not at the bottom yet, so I'm holding. I held during last of the boom years, too.

How much higher do you think treasuries can go? They already yield less than inflation, even using their half assed understated CPI. Do you think the federal government will be borrowing money for free any time soon? That is the only way they can go higher. If you are advocating buying treasuries now then you are advocating something exactly akin to buying at the top of the housing bubble.

 

[smhbbag]

How much higher do you think treasuries can go? They already yield less than inflation, even using their half assed understated CPI. Do you think the federal government will be borrowing money for free any time soon? That is the only way they can go higher. If you are advocating buying treasuries now then you are advocating something exactly akin to buying at the top of the housing bubble.

Yes, I think yields can go down even more - a lot more. Big, institutional money has to go somewhere. When the stock market goes down, that drives people to treasuries, even at absurd rates. We're screwed as far as national finances, but Europe is screwed infinitely worse. So, even as our debt is objectively worse as a buy, objectivity doesn't matter. Relativity does. We don't have to outrun the debt bear. We have to outrun the other guy, so to speak.

And our debt will become more attractive relative to all other options as more global and domestic debt unwinds in a deflationary way. Raising interest rates would be absolute suicide, and will not occur. The fed has directly states their low-interest policy will continue for a few more years. That means I have little to no possibility of losing money. The upside is tremendous, and the downside is minimal, if even existing (because of the fed guarantee of low rates - which is foolish, but it's what they want)

 

[Zippyjuan]

Treasury yields are too low to be a good investment- unless you crave maximum security. If you want to keep them until maturity go shorter term. If you are thinking about possibly reselling later, you face enormous risk of higher yields in the future comared to today which means you would have to sell at a lower price than what you paid. But even most dividend paying stocks have higher yields and if you choose stable companies like say utilities the security is about the same as well.

Now if Treasury yields ever get to ten percent, that is the time to stock up on them and go for longer term bonds. Today is not a great time to be buying Treasuries.

 

[anaconda]

I'm not an investment expert by a long shot, but I think the best returns I've seen lately are in what my girlfriend is doing, which is picking up rehabilitated foreclosures in lower cost, stable areas, with no money down, built in equity, and then renting them out. All done in absentia. Between the massive housing meltdown and continued Fannie Mae rules, the opportunities are astonishing if one has a decent job, a little cash cash saved up, and good credit. A friend I used to work with at a restaurant who is into real estate helped her get into it.

 

[Blueskies]

Heard this from Hue Hendry (hudge fund manager):

If you believe we will have hyperinflation sometime in the next few years, you should buy long term treasury bonds right now. Why?

Well, for hyperinflation to occur, we would need significant amounts of money printing (QE3, 4, 5) and in order for these programs to happen, we would need much more deflation. Deflation is very good for long term bonds.

 

[Zippyjuan]

Check out the yield curve. You will see that there is scant room for "massive" moves- rates of return offered to go "down a lot more". http://www.treasury.gov/resource-ce...interest-rates/Pages/TextView.aspx?data=yield

As of April 2. 2012 you can lock up your money for two years and get a total return of one third of one percent. Stretch it out to three years and you up it to one half of one percent. If you think these rates will fall farther, then buy. If you think inflation will be lower than that over the time frame of the Treasury you purchase, buy. Otherwise, not a good investment. Meanwhile the energy stock I own (SRE) has an annual yield of 3.82% while a one year Treasury bill will yield me 0.18% (that is zero point one eight percent or less than one fifth of a percent).

 

[GeorgiaAvenger]

What is the general opinion on TIPS?

 

[GeorgiaAvenger]

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

They confiscated Gold during the Great Depression.

Which brings to mind, they even confiscated pigs.

 

[GeorgiaAvenger]

tell your professor he is a morong.

No, play along and pass the class.