The bond buying will continue until moral improves
Dollar cost averaging into the long bond
I’m still buying TLT. A bit here, a bit there, working towards having about 10 to 15% of my assets in bonds. Previously I bought IEF at the local low and sold semi-close to the local high. If only it could always work out like that!
Barring an unexpected blow off top (March 2020 style), I expect to hold this position well into 2023. I have no idea how long it will take for the financial world to grab its ankles and gird itself for what’s to come.
What’s happening with the US treasury market?
It might appear a trifle strange that as we enter into the opening stages of financial infuckedness, the US treasury market is selling off. Is that all just inflation expectations? Probably some of it, but the larger force most likely has to do with foreign countries selling their treasury reserves to get dollars.
I saw a Tweet recently that said something to the effect of, “China is selling off all their treasuries and buying gold.” The insintuation was that nobody wants this crappy government debt and the United States is screwed.
To be sure, there is probably some element of truth in that statement. Between inflation and the government’s nifty new trick of stealing money without adjudicating the decision in court, well… Other countries are going to look for (have started looking for) alternatives to treasuries. But I don’t expect that in the short term a rush to alternatives will noticeably reduce demand. What the hell else are you going to do with your money if you’re a foreign government?
Chinese bonds? Do you really trust the Chinese government more than the American government?
Japanese bonds? Have yeh seen the Yen lately?
European bonds, the Bund? Investors buy bonds for safety. Europe screams many things, safety is not one of them.
Go on a world tour and try to find a better alternative to treasuries. Yes, over the course of the next decade the system may change. Gold may play a bigger role, as could digital currencies (BTC or otherwise). I get that. However, my timeframe for holding TLT is 3 to 12 months, and I don’t expect systemtic restructuring in the next year. If anything, I can foresee unexpectedly high demand as the financial winter freezes the world into submission.
Prepare accordingly.
