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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: ild who wrote (255613)8/14/2003 1:53:05 AM
From: Simba  Read Replies (1) of 436258
 
Bill Gross goes through lots of data to show that 2+% real rates on the 30 year tips is great. He looks at long-term average real return for 3 month bills and then add 1.5% risk premium for 30 year bond over the 3 month bill.

Actually the long term average real return for 30 year bonds is about 3% and for stocks between 6 and 7%. This is in the "Stocks for the Long Run" by Jeremy Siegel.

So 2% real is barely OK but nothing to feel elated about considering that 3% is the long term average real return. I don't see how people are going to snap them up for Bill to hope for a capital gain to boot.

I think Gold/Gold funds will be a better bet although highly volatile. Or one can trade the TLT or IEFs.

I have some money in the I-bonds that pays 3% real that I bought in 2000 and it is also tax deferred which is an added benefit for non-IRA savers. I wish I had bought more now but who would have thought Greenie and Bernie will zero out the short term rate. Good I got some gold too.

Simba
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