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Old 04-22-2011, 10:13 AM
 
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Quote:
Originally Posted by jimhcom View Post
Perhaps you boys should ask your wives opinions, since they are the really successful ones in the family.
i would say we are pretty equal in that respect.. she has gained enough knowledge from just being around me and my interests that she provides interesting ideas and perspectives to whatever i want to do.. . so yes while we both provide the capital to invest her input is valuable to making us both successful.

while her end is from a family buisness my end came the old fashion way. investing on my own since i was in college back in the 70's.. buying rental real estate and the markets were my game. i even had the distinction of being the worst timer in the world closing on my first property 2 weeks before the stock market crash of 1987.watched my investment plunge 30% until the smoke cleared and that was in nyc too.

but today i no longer want to be a landlord so everything has been sold that could be sold....

Last edited by mathjak107; 04-22-2011 at 10:23 AM..
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Old 11-29-2011, 04:52 AM
 
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Quote:
Originally Posted by jimhcom View Post
Either you do not understand the bond market, or you are incapable of logical thought.
Which ever it is, your statement is ludicrous.
so now that the end of the year is upon us lets see just who it is that has no undertanding of how bond markets work and see just how treasuries performed.

i was told i have no understanding of the bond market if i thought there was a chance long term rates would drop after qe2 ended when we discussed this last april..

well rates have plunged and treasuries are up 30% ytd......

just a reminder that no matter what anyone thinks will happen odds are things will not play out that way as things not even on the radar will alter even the most obvious outcomes. anyone who believes only their way is the only way things can play out and everyone else is not logical is a fool.

Last edited by mathjak107; 11-29-2011 at 05:04 AM..
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Old 11-29-2011, 12:22 PM
 
Location: Ohio
22,798 posts, read 15,930,808 times
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Quote:
Originally Posted by mathjak107 View Post
so now that the end of the year is upon us lets see just who it is that has no undertanding of how bond markets work and see just how treasuries performed.

i was told i have no understanding of the bond market if i thought there was a chance long term rates would drop after qe2 ended when we discussed this last april..

well rates have plunged and treasuries are up 30% ytd......
Who couldn't see that coming?

The flaw was here:

Quote:
Originally Posted by jimhcom View Post
When interest rates reach their desired level, the uber wealthy step in and buy the Treasuries cheap at attractive interest rates.
Treasury currently has $10+ TRILLION in bills, bonds and notes issued and $9.5+ TRILLION of that are held by foreign governments (through their federal reserve), foreign and domestic banks, foreign and domestic corporations, domestic pension plans, US States, cities and counties, pension plans for US States, cities and counties, foreign cities, and foreign and domestic philanthropic groups (like the kind that fund PBS shows).

The über-rich aren't really into US government bonds. Other governments have higher bond rates, and so do US States and cities, and then there are any number of private bonds issued foreign and domestically that pay better.

Quote:
Originally Posted by mathjak107 View Post
just a reminder that no matter what anyone thinks will happen odds are things will not play out that way as things not even on the radar will alter even the most obvious outcomes. anyone who believes only their way is the only way things can play out and everyone else is not logical is a fool.
That's right.

There's a high potential for hyper-Real Inflation in the mid-future (about 12 years from now), but that depends on how things play out. Right now the world economy can absorb an extra $9 TRILLION to $13 TRILLION in US Dollars. Depending on how things play out in Europe, the world economy could easily absorb about another $3 TRILLION to $5 TRILLION on top of that.

Will that money have to come out of the system? That depends on how things play out. If developing nations continue their rapid development, and if the US and Europe recover simultaneously, and if their growth rates are normal, then Real Inflation continues in the 2%-3% range.

If developing nations slow or Europe recovers before the US (assuming the US does "recover") Real Inflation is a helluva lot higher than the normal 2%-3%

A lot of variables at play.

Then there's also the matter of the future oil coming out of Central Asia 10 years from now when the pipelines and rigs are starting their upswing in production, and that oil (and natural gas) ends up passing through Russia or Iran or China (the most likely case unless the US invades Iran) and is sold in Euros or Rubles, that will create surplus US Dollars and affect the Real Inflation rate.
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Old 11-29-2011, 01:12 PM
 
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The rich vs poor spin was that the rich were going to wait for treasury prices to plunge after bill gross sold them . then they were going to ride them back up.

the way it played out treasuries rose right from day 1 of them being dumped and havent looked back yet.
they never even fell .........
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Old 08-07-2012, 07:07 PM
 
85,322 posts, read 82,845,500 times
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Quote:
Originally Posted by jimhcom View Post
Either you do not understand the bond market, or you are incapable of logical thought.
Which ever it is, your statement is ludicrous.
its always fun to go back and see just how some of our great predicators did over the course of the last 14 months .

i was in the camp that rates on treasuries were headed way lower when qe2 ended. of course i was in the minority and was told more than once my thinking was all screwed up.

rates have to go higher when qe2 ends the great predictors said, and any one who doesnt understand this has no understanding of the bond market.


so lets see,14 months later from being told my statement about the long treasury bond going higher was ludicrouse the long treasury bond has gained 40% since then.

want another prediction?

the long treasury bond isnt down for the count and im predicting a drop in rates of about 1% on the 30 year within a year or so. thats another 20-25% capital gain.

with the fed at zero and other countries even at negative rates and unable to spur demand for spending and loans the potential for the R word is getting stronger and stronger.

corporations have record cash levels, most need no loans and quite a few are de-leveraging and selling assets paying down debt.

energy and food increases are pulling our limited money from other sectors slowing them down.

sweeden had a negative rate on the 5 year.

70% of the 500 companies in the s&p slashed earnings guidance predictions or had analysts do it for them.

there are quite alot of compelling reasons im convinced short term the 30 year treasury will once again take top honors.

Last edited by mathjak107; 08-07-2012 at 07:36 PM..
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Old 08-08-2012, 05:06 AM
 
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Quote:
Originally Posted by jimhcom View Post
Ok, I will write real slow so maybe even you can understand.
The bond market is subject to the same laws of supply and demand as any other market.
Less demand means increases in interest rates to attract buyers.
And as we all should all know, the value of bonds is directionally inverse to the direction of the interest rates.
If you buy a bond and the interest rate goes down you make money, if it goes up you loose.
The only reason rates went down after QE1 is that the Fed let it be known in no uncertain terms that they were going to continue quantitative easing. There was no doubt in the bond market that the Fed would continue to be the majority buyer of Treasuries.
What you are seeing now is a different tone from the Fed. It is clear they are facing some lose/lose scenarios by their actions.
You might want to read this to get a more focused picture Charles Plosser and the 50% Contraction | FINANCIAL SENSE
Like most jerry rig fixes, there is a limit to how much good QE can do and too much can be very detrimental. It appears we have come fairly close to that limit. As far as your articles go, if you read them yourself, you would have read how the authors were in direct disagreement with Bill Gross who has become very bearish on the bond market. Now you can side with some "wantobe" expert financial writers who have never invested money professionally in their lives if you want to, but personally, when the largest private bond investor moves his money, I am going to sit up and take notice.


anyone notice bill gross moved the pimco fund back in to about 35%-40% treasuries again and how in his interviews he tells how the move out was a huge mistake that cost him dearly ?
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Old 08-08-2012, 10:57 AM
 
Location: San Diego California
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Quote:
Originally Posted by mathjak107 View Post
anyone notice bill gross moved the pimco fund back in to about 35%-40% treasuries again and how in his interviews he tells how the move out was a huge mistake that cost him dearly ?
If you can refrain for a few moments from your self adoration, perhaps you could answer a few simple questions.
First did QE have any affect on interest rates to begin with? If you say yes, then it stands to reason the end of QE would have an opposite effect. If you say no then please explain why the Fed was wrong in saying they were doing it for just that purpose.
What effect did the flight from the euro, and to a lesser degree the yen have on purchases of US debt?
What effect will the Federal debt bubble have on interest rates going forward?
And finally is the program of the Federal Reserve purchasing the majority of US government debt a reasonable long term statagy.

I believed that Bill Gross made some very logical arguments concerning the inevitable effects of the current policy of forcing interest rates lower by artificial means, and that eventually it will cause interest rates to rise as is always the case when the inflation caused by money creation asserts itself.
The timing of exactly when that will happen is determined by multiple factors and may not happen for several years to come.
The housing bubble went on for decades before it finally succumbed to the reality of economics.
Some people like to think that the current policy of government spending / borrowing is a viable and sustainable. I do not. I believe that the current rate of increase in borrowing will cause compounding problems going forward, including higher interest rates and inflation.
I am happy you take comfort in the fact that it has not happened in the past 14mos, but I feel your time horizon is a little short.
In fact I hope I am completely wrong about my assessment of the entire scenario and that in the not too distant future we discover that Bernankie, Geitner, and the wizards of Wall St. were actually geniuses and had everyone's best interest at heart, and that we all return to a strong vibrant economy and good times for all.
Although in all truthfulness I cannot say that I believe that to be the case. I believe we are on a disastrous course of economic policy that will cause the overall economy to continue to deteriorate until the only options left for ourselves and the other ravaged economies of the world is to blame our fate on other nations and go to war in an attempt to steal what we cannot earn.
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Old 08-08-2012, 11:33 AM
 
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qe2 forced rates higher while it was going on ,that was my argument in the above when you said i dont understand the bond market.


if the printing of money was looked at as inflationary by the bond market with the worriers of qe2 then it only stood to reason the stopping of it was deflationary in that regard.

unlike every one else i had said i believed rates would fall when qe2 ended and thats just what happened.


bond investors around the world bid rates higher during qe2 out of fear of the unknown.


rates fell after it ended like a sigh of relief.

so what do i see ahead? short term i see drops in the rates on the 30 year bond as we worsen . i wouldnt be surprised to see the 30 year squeak out another 20-30% in capital gains over the next year or 2.

to many short to intermediate term problems and with rates already at zero there is nothing the fed can do to create demand for loans ,spending and housing.

longer term everything seems to work out and recover.

Last edited by mathjak107; 08-08-2012 at 11:43 AM..
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Old 08-08-2012, 01:25 PM
 
Location: San Diego California
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Quote:
Originally Posted by mathjak107 View Post
qe2 forced rates higher while it was going on ,that was my argument in the above when you said i dont understand the bond market.


if the printing of money was looked at as inflationary by the bond market with the worriers of qe2 then it only stood to reason the stopping of it was deflationary in that regard.

unlike every one else i had said i believed rates would fall when qe2 ended and thats just what happened.


bond investors around the world bid rates higher during qe2 out of fear of the unknown.


rates fell after it ended like a sigh of relief.

so what do i see ahead? short term i see drops in the rates on the 30 year bond as we worsen . i wouldnt be surprised to see the 30 year squeak out another 20-30% in capital gains over the next year or 2.

to many short to intermediate term problems and with rates already at zero there is nothing the fed can do to create demand for loans ,spending and housing.

longer term everything seems to work out and recover.
But the Fed does indirectly create demand for loans by creating inflation.
By being the purchaser of last resort for ever increasing government debt, the Fed is enabling the government to push ever more money supply into the economy by way of government spending.
That inflation is forcing people to consider inflation hedges like purchasing income real estate using leverage to offset inflation.
At the point where inflation reaches parity with real estate values, market forces will drive interest rates as
real estate values bottom out and begin to rise with demand.
In some markets we are already seeing this start to happen.
The problem is that the only people able to move from cash to real estate to prevent the devaluation of cash are the semi wealthy and above who are still able to afford the down payments and meet the more stringent qualifications lenders require today. The average working people who may have experienced problems with their credit are for the most part, shut out, and are relegated to the class of renters.
With wages stagnant and inflation cutting into purchasing power explain to me the scenario in which things work out and recover.
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Old 08-08-2012, 01:46 PM
 
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I disagree, the fed can not increase demand for loans . Thats the problem. They can offer loans at rates as low as they want and it may not help,like now.

In fact inflation in the 70's was awful for taking loans. 18% morgages and 16% prime rates brought lending to a trickle.


what may work is a period of low inflation and prosperity allowing folks to say buy a home. then inflation rises all owing cheaper dollars to pay that loan. then stops, prosperity comes again and lower inflation lets new buyers in and the cycle repeats.

just plain old rising inflation is horrible ,real estate sucked during the 70's and 80's. stocks sucked during the high inflation days.

it wasnt until inflation dropped that assets rose again.

Last edited by mathjak107; 08-08-2012 at 01:58 PM..
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