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iShares TIPS Bond Message Board

  • markm0722 markm0722 May 6, 2011 10:23 PM Flag

    From Barron's Today

    “I struggle with why someone would accept a negative real return on their money,” Tom Atteberry, manager of the FPA New Income Fund (FPNIX), said in the piece. “If you look at history, owning a 5-year Treasury, my real return should be somewhere in the 2% to 2.5% range.”

    He is speaking of the 5-year TIPS. I struggle with that too. We differ on the history lesson though.

    If you truly look at history then you can see that the era of making easy money ended in 2000. We've been in a bear market for the last decade and I don't think the next decade will be any better. I could list off quite a few facts to support my opinion. The easiest being job creation.

    Today's headline employment report was apparently a reason to celebrate. The report is made up of two surveys and they did not agree though. The establishment survey said 244,000 jobs were created. The household survey said that 190,000 jobs were destroyed.

    Look for yourself at the "Employed" in the following table. It shrank by 190,000.

    http://www.bls.gov/news.release/empsit.a.htm

    If the goal in a bull market is to make more money than the next person, then the goal in a bear market should be to lose less money than the next person.

    Hindsight may show that losing a bit of money each year is better than losing a whole lot of money all at once. Stocks have doubled off the bottom set in 2009. Anyone who thinks stocks are now 100% safe again probably thinks that we'll never have another recession.

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    • On May 6th, I said...

      "Today's headline employment report was apparently a reason to celebrate. The report is made up of two surveys and they did not agree though. The establishment survey said 244,000 jobs were created. The household survey said that 190,000 jobs were destroyed."

      I think history will show the household survey was the more important survey to be looking at. Silver prices are down 29% since their peak in late April. Meanwhile, housing prices continue to fall.

      Hunker down. In my opinion, the storm isn't over yet. We might simply be in the eye of the hurricane.

    • You are by far the best poster on Yahoo board, well, more accurately, I share your view completely and appreciate your statistical data to support your view.

      I am also the minority to think we are in a bear market. Sure, the US stock market shot up since 2009 bottom but if you adjust the dollar value decline, it merely corrected its oversold condition. I am quite disappointed that after flooding the market with easy money (QEs) to the point we had to risk AAA rating, all we see is very little job growth :-( Again, as you pointed out in your early post, other than precious metal and oil, I see no sign of inflation.

      Hopefully, USD will be stabilized around this level for the foreign investors to start feeling comfortable again to invest in the U.S. ...

      • 1 Reply to clair_hayashi
      • "You are by far the best poster on Yahoo board, well, more accurately, I share your view completely and appreciate your statistical data to support your view."

        Forgive me for saying this, but I think you might be a bit biased here. I think you tipped your hand when you said that you share my view completely. Hahaha! ;)

        In all seriousness, I have a lot to say about employment. My girlfriend has been unemployed for over two years now. She worked in human resources and is back in school training to enter the medical field.

        If you really want scary, search for my "37.9 Million Missing Jobs" post on my "Illusion of Prosperity" blog. I wrote it back in April. You can't miss it if you Google it.

        Here's how I came up with that number. I took the exponential employment trend that was in place from 1939 to 2000 and simply extrapolated it forward. As of April, we are 37.9 million jobs below trend.

        Since we only have 14 million or so unemployed, it is virtually impossible for us to ever return to that historical long-term trend. It just isn't possible. If we cannot return to that long-term trend, then what other long-term trends are at risk? I would say the stock markets and housing markets are clear contenders. If nothing else, both have performed poorly since that employment trend failed, and rightly so.

        Want even scarier? I put a second exponential employment trend that started in 2000 on that chart. We are currently well below that pathetic trend line too. In other words, we can't even seem to get back to the horrible employment trend that started in 2000, much less the long-term one.

        So yeah, I'm bearish long-term. No doubt about it. All exponential trends are doomed to fail at some point. I can prove that at least one has failed (employment). I can point to more than a few others as being at serious risk of failure too. Sigh.

 
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