Sid wrote:>>Another macro play that, however, could turn out to be a terrible mistake, depending upon how things evolve, is long dated zero coupon treasury bonds. This idea seems to contradict the currency collapse scenario in the previous paragraph, and maybe the long bond market will collapse along with everything else. But there were two clear examples in history—the US in the 1930-40s and Japan in the 1990s until recently--when a very weak economy resulted in long term government bonds priced to yield under 1%.<<
Sid,
Due to my respect for your take on things, I reviewed what you wrote a couple of years ago, about long-dated zero coupon bonds.
I believe that the reason Japan saw long bonds go to 1% in recent decades (and the U.S. back in the 30s) made sense, given their almost zero inflation rate.
The U.S., on the other hand, is in terrible shape regarding real inflation(as opposed to govt. reported), and I think long term bond market is very vulnerable here.
Accordingly, I have bought puts in the TLT etf, betting that that etf comes down from $90~ into the $60s in the next year or two, as long term rates soar to price in higher inflation expectations.
I mean, would you lend money to someone today for 20 years fixed at 4.4%?(the current yield on the TLT)
That can't last.
But, that said, your comments give me slight pause, since you probably know more about this than me.
Any comment you'd make would be much appreciated.
Regards. |
