Good enough for me. Super Mario usually gets it right. Mario sees some big gains.
Sentiment: Strong Buy
Not to put any pressure on you Stephen. Lineup of guests includes the Pope & Cosby on the SAME DAY___ I mean, come on, can you see the ratings!!!???? Through the roof!
You plan to hold your bonds to maturity? You are not worried at all about rate risk? Current rate levels are scraping the bottom of the last 100 years. Depression level rates with 5.1% unemployment? Seems risky to assume they can continue much longer. We'll see. Do you hedge your rate risk at all Marenkov?
Maybe 4%. The average of the last 100 years. Doubt we ever see the 15% rates of 1981. 4-6% range seems reasonable with unemployment rate close to 5%.
By "nominal" value, I mean non-inflation (or deflation) adjusted over the 20 years. In the case of the actual bond, You get your $1000 back in 20 years, but who knows what the purchasing power will be compared to now? In the case of TLT, you don't even know the "face value", since it is a dynamic portfolio. Your original $1000 can be higher or lower (I think lower) in nominal terms, and maybe much lower in real purchasing power even when the series of dividemds is factored in. Anyway, just my opinion.
In an important sense, TLT is riskier than holding a 20 yr UST. In the case of the actual bond, you know you will be getting 100% of the face or nominal value in 20 years, no matter what the fluctuations are over the 20 years. So, if rates soar, and in the short run the market vale of the bond falls 25%, at maturity you'll get the original $1000, In the case of TLT, it is a constantly changing portfolio, so in 20 years your $1000 investment will be something different than $1000, higher or lower. If rates rise, lower. Maybe much lower. Is this incorrect?
I like Marenkov's posts, buy I do believe he understates the possible risks of TLT and other 10 year plus UST portfolios. A mere 1% (100 basis point) rise in bond rates could send TLT down 20% at least. This is a risk investors need to be aware of.
Marenkov & others, would like to hear your thoughts on Greenspan's comments on CNBC, especially regarding the need to reduce entitlements.
Former FED chief Greenspan was on CNBC Friday talking about the great need for reduction in entitlement payments. I do beieve a significant number of the current FED board agree.