Challenging ShinyThing assumptions.

[Mecisteus]

I'd agree with Ironmac, of you think stocks are right then you should go stocks all the way. If you think now is not a good time to buy stocks, you should stay fully away. Why go halfway neither here nor there?

Neither 100% nor 0% stocks is wise.

 

[revhappy]

Let's replace bonds with cash. Bonds these days are a huge bubble and can implode worse than stocks. So you must be stocks + cash.

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[limster]

Let's replace bonds with cash. Bonds these days are a huge bubble and can implode worse than stocks. So you must be stocks + cash.

You are willing to buy shares of a company but not its bonds?

 

[revhappy]

You are willing to buy shares of a company but not its bonds?

Yes, for example I can buy nestle stocks but nestle bonds were trading at negative interest rate.

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[limster]

Yes, for example I can buy nestle stocks but nestle bonds were trading at negative interest rate.

can you give me the bond name so i can check whether the yield is really negative?

If i look at their retail bond: http://www.londonstockexchange.com/...ds/company-summary/XS0860561942ZZGBPRCNT.html it's gross redemption yield is 1.348%

 

[revhappy]

can you give me the bond name so i can check whether the yield is really negative?

If i look at their retail bond: http://www.londonstockexchange.com/...ds/company-summary/XS0860561942ZZGBPRCNT.html it's gross redemption yield is 1.348%

It is not negative now, but they were negative:
https://www.reuters.com/article/bon...into-negative-territory-idUSL5N0VR3D420150217

 

[limster]

It is not negative now, but they were negative:
https://www.reuters.com/article/bon...into-negative-territory-idUSL5N0VR3D420150217

you do know you are quoting a 2015 news article?

I thot you said they are a huge bubble these days. If 2015 was a bubble then now the bubble has deflated? So if yield is positive, are you saying that Nestle bond riskier than Nestle share?

 

[Shiny Things]

Is it possible to do a monte carlo scenario of someone only starting to buy right after a crash, holding it for 10 years, selling it and going 100% bonds until the next crash and the market has gone up 10%?

Do it yourself; that's why I put the code up there. Make sure you define "crash" carefully.

 

[revhappy]

you do know you are quoting a 2015 news article?

I thot you said they are a huge bubble these days. If 2015 was a bubble then now the bubble has deflated? So if yield is positive, are you saying that Nestle bond riskier than Nestle share?

When I said bonds are riskier than stocks it was a general statment. You asked me to give an example of company where I will buy stock but not bond, so I gave you example of nestle.

Bonds come in many varieties, long duration, short duration, high yeild, sovereign etc In general now with rates set to rise from extraordinarily low levels from crisis times, bonds are set to fall. But stocks may not fall as the initial rate hikes will be stimulatory for the economy and the companies earnings, especially banks. Let me know if I am wrong.

 

[Shiny Things]

Let's replace bonds with cash. Bonds these days are a huge bubble and can implode worse than stocks. So you must be stocks + cash.

Which bonds are a "bubble" exactly - dollar bonds, EM, govvies, corporates, high yield? What's going to be the driver for a significant backup in yields?

I'm not ripping on you specifically mate, I'm just trying to point out that generalisations like "bonds are a bubble" aren't useful.

 

[Shiny Things]

Bonds come in many varieties, long duration, short duration, high yeild, sovereign etc In general now with rates set to rise from extraordinarily low levels from crisis times, bonds are set to fall.

This is not necessarily true. To be fair, I thought the same way a few years back! I was convinced that once the Fed started to hike, the longer end of the curve (10s and 30s) would drift toward higher yields... but that's not what happened. Since the Fed started hiking in December 2015, US 10s have gone from 2.2% to 1.4% to... 2.2%.

What ended up happening was that the US curve flattened sharply; front-end yields drifted higher as the Fed hiked, but the back end stayed rangebound because bond traders were confident that the terminal rate (the rate when the Fed stops hiking) would be somewhere in the high-2s / low-3s.

If the US economy really starts to rally, and people move their expectations of the terminal rate higher, then we might see bond yields drop. But at the moment, I really don't think there's a lot of scope for (US) bond markets to collapse

(Japanese and European bonds are another matter.)

 

[revhappy]

This is not necessarily true. To be fair, I thought the same way a few years back! I was convinced that once the Fed started to hike, the longer end of the curve (10s and 30s) would drift toward higher yields... but that's not what happened. Since the Fed started hiking in December 2015, US 10s have gone from 2.2% to 1.4% to... 2.2%.

What ended up happening was that the US curve flattened sharply; front-end yields drifted higher as the Fed hiked, but the back end stayed rangebound because bond traders were confident that the terminal rate (the rate when the Fed stops hiking) would be somewhere in the high-2s / low-3s.

If the US economy really starts to rally, and people move their expectations of the terminal rate higher, then we might see bond yields drop. But at the moment, I really don't think there's a lot of scope for (US) bond markets to collapse

(Japanese and European bonds are another matter.)

Thanks, that makes sense.

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[Purplestars]

Neither 100% nor 0% stocks is wise.

Why not? The only other reason I can see for going bonds is to diversify your asset classes, but there are other ways to do that.

 

[InterestingStuff]

nobody likes us debt or equity now
so the alternative is bitcoin or gold
pick your poison

 

[revhappy]

nobody likes us debt or equity now
so the alternative is bitcoin or gold
pick your poison

You must change your nick to goldstuff, all your posts have the word gold in them.

Sent from Xiaomi REDMI NOTE 4 using GAGT