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LunarEclipse
Enlil's Official Story


Registered: 10/31/04
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Loc: Building 7
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Bonds as "safe" investments
#22125876 - 08/22/15 08:05 AM (8 years, 5 months ago) |
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Granted, now that The Fed is somehow "forced" to sit on it's collective hands and not raise rate this year, and probably next as well, based on the continuing slide in the economy they helped to create, but at some point, the stuff will be hitting the fan, and hard.
Bonds, even supposedly "safe" completely unbacked by anything other than our collective taxed backs and the power to print funny money, are doomed to fail. Doomed. Folks, this really is a Ponzi scheme of the most epic proportions. We see the first "investors" completely losing out in the outlier countries of Cyprus and Greece. The literal bag holders that represent OUR future. Bail ins, resets of currency, "capital controls" (gotta love that one, in other words, we control your capital and good luck seeing it othre than enough to buy food on if you are lucky).
But, I digress. The Ten Year T Bill at 2% interest is roughly 1/2 the rate that would be considered even remotely "normal" on a historical basis. So, do some homework and see what will happen to the principal of your money should that rate be repeated, which it will be, and more.
This current malaise has been created precisely by the low rates that The Fed and other Central Banksters have artificially held to. Savers don't want to save, companies are better off buying their stock back than investing in machinery or research.
We are seeing that more and more debt with no incentive to invest in real business just isn't working out.
When, not if the bond rates start moving up, we will be seeing the biggest loss of money to those bag holders in the history of the world. The driver will be the far too late realization that "full faith" was just that. T Bag holders, you got played.
-------------------- Anxiety is what you make it.
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zorbman
blarrr



Registered: 06/04/04
Posts: 5,952
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Agree 100%.
Bonds are absolutely the WORST place to have your money right now. I expect a bond market implosion of Epic proportions soon.
-------------------- “The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.” -- Rudiger Dornbusch
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TravelerOfSorts
sober pro


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Re: Bonds as "safe" investments [Re: zorbman]
#22139235 - 08/25/15 07:23 AM (8 years, 5 months ago) |
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I own balanced mutual funds, im sure bonds are included there I just read that basically anyone can do as good a job at investing as a mutual fund without having to pay management expense.
-------------------- a soul of solitude but a master of ecstacy in waiting for my rebirth cycle i have hopes that when mushrooms find me it will occur then and i can go about the world as a medicine man walking staff in one hand spaceship in the other a journeyman of nature soon to be stepping up to novice hopefully i will have time to become an expert, and i believe only in death will i become a master
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Stonehenge
Alt Center


Registered: 06/20/04
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It doesn't matter what financial instrument you invest in, all will crash. Its like looking for the driest tree in a forest when it starts raining hard. All will get soaked.
The much maligned commodities including gold will make a resurgence. BTW, now is a great time to buy bitcoins as they crashed again after Greece stabilized (sort of).
-------------------- “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835) Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755
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qman
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Re: Bonds as "safe" investments [Re: Stonehenge]
#22140891 - 08/25/15 01:36 PM (8 years, 5 months ago) |
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There has to be a fundamental reason for bonds to sell off, with all the deflation we have today they still remain attractive for investors.
If we experience real inflation, we will see bonds trade lower, but I don't know how or why inflation would materialize at this point.
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LunarEclipse
Enlil's Official Story


Registered: 10/31/04
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Re: Bonds as "safe" investments [Re: qman]
#22142892 - 08/25/15 08:10 PM (8 years, 5 months ago) |
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Quote:
qman said: There has to be a fundamental reason for bonds to sell off, with all the deflation we have today they still remain attractive for investors.
If we experience real inflation, we will see bonds trade lower, but I don't know how or why inflation would materialize at this point.
For the most part, for things that matter, like food, energy, health care, property taxes, there has been inflation. Too bad they exclude food and energy and massage the rest to show such "low inflation".
The reality is that the economy has been shrinking, their trickle down funny money Keynsian race to the bottom approach is working. They want the collapse, in order to pick up the pieces and get that one world government and currency ball rolling.
The problem is also liquidity, and the market Monday in the supposedly liquid stock exchange where there was no price discovery, no buyers, only sellers. The shameful "opening" (read rape the market orders and stops) was just that, a real shameful and money grabbing event.
The problem in the bond market will the the same freezing up of the system with no buyers, and only sellers of bonds. They have had this happen already last year had you been paying attention. A huge swing in prices and the volume dried up. As in to a trickle, in the supposedly most liquid and largest market in the world.
So, it goes beyond inflation, and to the reality that the bonds aren't worth the paper they are printed on given the bankrupt situation we are in. We are flat broke and then some. 2% "interest rate" on a 10 year, under 3% on a 30 year? It is literally absurd by any metric other than pure and simple manipulation of the central banksters.
-------------------- Anxiety is what you make it.
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confuzzed
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Quote:
LunarEclipse said:
The reality is that the economy has been shrinking, their trickle down funny money Keynsian race to the bottom approach is working. They want the collapse, in order to pick up the pieces and get that one world government and currency ball rolling.
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crazybean
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Re: Bonds as "safe" investments [Re: confuzzed]
#22160509 - 08/29/15 12:09 PM (8 years, 5 months ago) |
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Bonds are bet on long term view of interest rate. If one gets it wrong, bonds may be painfull. I would not regard them as safe. Funny thing is that cat bonds are intristically speculative investment that due to diversification may turn as quite safe bet.
-------------------- Cranching numbers
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LunarEclipse
Enlil's Official Story


Registered: 10/31/04
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Re: Bonds as "safe" investments [Re: crazybean]
#22162002 - 08/29/15 06:41 PM (8 years, 5 months ago) |
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Quote:
crazybean said: Bonds are bet on long term view of interest rate. If one gets it wrong, bonds may be painfull. I would not regard them as safe. Funny thing is that cat bonds are intristically speculative investment that due to diversification may turn as quite safe bet.
Cat bonds?
The only way to be "safe" is to choose an individual bond that won't default, be happy with your interest rate now and even if rates in general go up, and hold it to maturity.
Bond funds, and ETF anything, are anything but safe. Note the complete screwing and lack of price discovery in general this last market drop, but the ETFs in particular got hit when everyone wants out at once. Who in their right mind would buy that trash let alone when they are in a crash?
-------------------- Anxiety is what you make it.
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crazybean
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Cat bonds = catastrophe bonds Cat bonds fund has less systemic risk Otherwise I agree that bond ETF or any bond fund has systemic risk (e.g. everybody wants out at the same time) and hence bond funds are less safe than anticipated Cat funds was meant as a joke, terribly risky papers that due to diversification effect usually turn out as safe, stable investment. A bit of irony.
-------------------- Cranching numbers
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