TARGET Dollar Bin - Inflation Indicator
Has anyone noticed that their dollar bin is filled with three dollar items? That's 3x fold increase. Big inflation for bargain bin product area to jump 3.0 times in price.
According to the TIP fund website, the TIP fund has a real yield of 0.09%. This means it pays a dividend (on average) of inflation plus 0.09%. Average weighted maturity is 8.26 years.
On the other hand, as of today an individual TIP bond with a maturity of 8 years has a real yield to maturity of about 0.6%. So I guess that means if you are willing to buy individual bonds (and give up the convenience of the TIP fund) you can make an additional half percent per year.
Just food for thought.
Indeed... The bankers do suck the value of your money right out of your pocketbook and try to disguise their theft by calling it "inflation". Bankers fool a lot of people.
Has anyone else noticed that their ATM has changed from $40 Fast Cash to $100 Fast Cash? That's a 2.5x fold increase in what the banks think you need to have on hand as fast cash. Big inflation in prices to need 2.5 times more money.
EFTs exaggerate all moves--expect a much more Volatile environment with them around than in past years.
That kind of forced selling will be seen in stocks, probably within the next year or two.
This tends to move with interest rates, even though it is not a fixed rate bond portfolio. When the Fed has been buying bonds and driving down long term treasury rates to below 2%, this rallied into the $120s. Once the Fed started talking about tapering its bond purchases (causing long term interest rates to go up), this security has dropped 10%.
So, what would drive the price up again is lower interest rates, which would likely happen now if the economic numbers start looking weak again. Weak numbers might change the Feds tapering plans and long term rates might go back down again.
It doesn't seem too likely at the moment for this to go back to $118. The bond rates below 2% were an abberation, and not that likely to return under normal economic conditions. If you think rates are going up even further, then this is not the best thing to hold.
Looking at the long-term chart, a price of 105 looks to be a decent point to buy in, at least a partial buy. At that price, real yields on the 7-10 year TIPs will be over 1 percent.
From a technical standpoint the price should catch at around $105; let's hope it holds there. I sold earlier @ $118 (thanks ;) to lock in a profit and make a house downpayment, then got back in @ $113 thinking that it had found a bottom. If you were hoping to make a quick profit then get out now. If like most of us, you got in with a fraction of your total investment resources as a hedge against unforeseen, future inflation then put it in your back pocket, be glad you're at least getting a dividend, and be even more glad when inflation soars after the US attacks Syria and the Chinese not only refuse to buy any more treasuries but start selling the ones they have, leading to a collapse of the dollar. Or something like that....
Well, there is an outside chance you could get high CPI numbers and the Fed could cap the yields of government bonds based on some yet unknown emergency. The Fed capped the 10 year treasury at 2.5% during and after WW2. During the late 1940's there was one year with an annual 20% CPI rate to go along with the 2.5% cap.
I am not saying this will happen again, but it could rhyme. It seems inconceivable that the CPI could get that high as it has become so much gov't. controlled nonsense these days, but if the US dollar is threatened, you could get higher inflation than we have known recently. TIPS is a "safe" play on dollar erosion, ultimately. You just need a little faster erosion :)
What would have to happen over the next year or two to drive TIPS back up into the teens? I bought some at $118 ............. how dumb was that !!! Thanks for any intelligent responses :)
Real yields for 10-year TIPs are 0.75% now; 1.35% for 20-year TIPs. TIPs aren't likely to make you rich, but at least they are starting to look a lot more reasonable now.
oops, wrong board, silly me. I think TIPS are where it's at. They're the Bees knees!
Sentiment: Strong Buy
That's all I get for a July distribution for $121/share invested? A lousy 7 cents?! And for that, this MF dropped more than 7% in the last two months?!
The TIP ETF is a scam. I bought the iShares 1-3 Year Credit Bond ETF, symbol CSJ, for less money, about $105/share, I received a July distribution of 9 cents, and guess what, it didn't drop barely at all over the last two months. It's still trading around $105.
The whole point of going out into longer-term bonds is to get a better yield, right? And this MF is supposed to be more desirable because it's inflation protected. So where's the yield?!?!
What a jip.