I'm out of 40% of my position. Made something like 7% in 6 months. I bought it for income, but the income just isn't there. At the rate I was receiving distributions, it would take 5 years to get 7% out of it.
I might get back in after a dip back down to 107-108.
With the election in November, I would caution everyone to believe nothing from anyone in the financial system.
The sorry state of affairs is that lying is a part of the norm now, lying by governments and anyone involved in finance.
Anything can happen after the election. I would not be surprised if all this QE2 talk is just so much bull.
Fantastic Nixon quote!
Here's a glimpse down memory lane to December 2007, the very start of the recession. I consider it anecdotal evidence that supports Greenspan's 1966 quote.
December 7, 2007
Annual Purchase Limit For Savings Bonds Set at $5,000
"The reduction from the $30,000 annual limit in effect for both series since 2003 was made to refocus the savings bond program on its original purpose of making these non-marketable Treasury securities available to individuals with relatively small sums to invest."
In other words...
"The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves." - Alan Greenspan, 1966
Not only have real (inflation adjusted) I-Bond rates fallen from 3.6% in 2000 to today's 0.2% (and 0.0% most likely come November), the government also reduced the amount we can buy by 83%.
Fortunately, I managed to get about 25% of my nest egg horses out of the burning barn before the government closed the barn doors. I had been buying I-Bonds in bulk since 2000.
The future is very concerning though, especially for savers. As you say, "We're all market timers now". No joke there.
"Sold at $111.40.
Will use the proceeds to buy I-Bonds."
This is not financial advice but...
I predicted that I-Bond rates would drop to 0.1% on May 1st. They actually only dropped to 0.2%.
Based on today's rates and using the same analysis I did earlier this year, I would expect I-Bond rates to fall to 0.0% on November 1st.
In fact, I'd even predict negative rates on I-Bonds if the government thought it could get away with it without some sort of public outrage.
Can't you just picture the backlash?
Savings bonds that are guaranteed to lose money? That would take a very brave politician! Pretty sure we don't have any of those these days.
So, if you are looking to buy I-Bonds this year I would suggest that buying them before they reset on November 1st would probably be a good idea. No guarantees though.
Just curious, if you made any changes in your deflation stance or magnitude, knowing another Bernanke intervention is about to enter our world.
I decided to plunge into buying my first home finally after waiting for really long time. I can't take this uncertainty anymore that Bernanke is creating around me. Granted, he could fail at it one more time. But, if he finally succeeds, it can get ugly really quick. What makes it worse is most countries around the world are doing the same thing and end-result is going to be more uncertainty. I figured I can sleep better owning something I can touch/feel rather than paper currency, when a mad economist is out to ruin wealth.
Thank you Markm for your response.
I'm looking for the inflation protection going forward.
By the way you said the other day that I-Bonds could be tax defered if you chose. Arent they automaticly tax defered?