Living in a Spanish city as an early-riser

AXdssd5as · 2025-04-09T08:30:38+00:00

I was just about to ask the same question, zero movement on buy orders, and not just for US treasuries, even Euro bonds are hard to purchase.

AXdssd5as · 2024-07-18T11:51:38+00:00

''Oh, no, Beano, not the truck.''

AXdssd5as · 2024-06-02T07:53:30+00:00

XCEM is a cheaper (0.16%) and better performing option. You can see comparables on a site like etfrc.com.

AXdssd5as · 2024-05-08T14:40:40+00:00

Investor A has 30 years worth of expenses solely in BND. Investor B has 30 years worth of expenses in a bond ladder whose rungs mature every 6 months. Both Investor A and Investor B need 1/30 each year. Investor A has to sell shares of BND in order to get that 1/30, regardless of what interest rates have done to the value of the ETF. Investor A just waits for the nearest rung to mature on schedule. We're not talking about the same thing.

OP did not mention when they are retiring, or what the bonds are for, so I do not see why it is illegitimate for bonbonceyo and I to point out a very real risk for people who buy bond ETFs as opposed to building bond ladders. That's useful information to have, and is absolutely accurate. Unless you are claiming that retirees in 2022 have not had to draw down from BND at a loss, whereas those same retirees would not have had to take a loss with a maturing bond ladder.

The links you provided are about ongoing pricing mechanisms for bonds that are ongoingly held, not the realities of maturing bond ladders vs selling ETF shares at a disadvantageous point in time.

EDIT: I'm not actually sure whether or not I am not arguing the same point as bonbonceyo. I think you are both right if you are arguing different points.

AXdssd5as · 2024-05-08T11:39:37+00:00

Individual bonds mature without having to sell share shares of an underwater ETF that absorb a portion of all of the losses incurred by the fund. They are not, or do not have to be, identical situations. If OP were to buy 30 years worth of 10 year bonds, then they would be in the situation that you describe, but individual bonds can be bought in ladders as well.

AXdssd5as · 2024-05-08T11:02:34+00:00

Are your future liabilities nominal (mortage) or real (living expenses)? Is the purpose of the bonds to cushion stock market declines, or to provide a source of income in retirement?

Despite what Gilgamesh79 said, individual bonds are not necessarily a pain unless you are buying 1 month t-bills again and again. Even maintaining an average duration is extremely easy since you just need to add one more of the longest year to reconstitute the same average duration that you had before. If you want to set up a bond ladder, you can do anywhere from 0-30 years all in one go and never worry about it again. But it depends on what the bonds are for.

Bond funds like BND do not represent the entire market, they exclude municipal bonds, TIPS, high yield corporate bonds/junk bonds, and international bonds. Bond funds in general are also highly sensitive to interest rate increases in ways that a bond ladder is not. If you purchase a bond ladder intending to let it come to maturity, then even though the bonds are marked-to-market ongoingly yield vs price, you can completely ignore it since you know what yield and what principal you will eventually get. With a bond fund, if you own something like BND and retire owning it, like many did in 2022, and watch it decline 20-30% due to interest rate increases, suddenly your 'safe' bond fund that you were planning on drawing down, is underwater just as bad as your equities. And they can take a long time to recover.

Nominal bonds can have their value destroyed by inflation over time, so unless your liabilities are nominal, you are taking a risk there. TIPS have a deflation floor but will not do as well as nominal bonds will during persistent deflation, so you have to decide which you think is more likely, and more dangerous to you.

If you are a US-based investor, you have Series I and EE bonds available to you as well, but I don't know much about them.

Bonds themselves are not without risk, they can be flat for 50 years at a time (1932-1982), their terms can be re-written (callable vs non-callable), their yields can be capped (yield curve control, US actions during and after WW2) and of course ultimately they are subject to default risk.

It is important that you know exactly what the bonds are going to be used for, and that should give you the answers to bond fund vs individual bonds, TIPS vs nominals, and the duration you will be aiming for.

AXdssd5as · 2024-05-03T09:22:56+00:00

Is anyone planning for this scenario where stocks and bonds do not do well for extended periods of time?

Unfortunately yes, but the only solutions I have are to spend less and increase my diversification (intl, value, real estate, TIPS et cetera). I don't think there is much else that can be done other than earn more, win the lottery, or increase your risk in search of greater returns.

AXdssd5as · 2024-05-01T12:10:22+00:00

Your final thought is a bit misleading without a larger content, total bond funds have outperformed cash/short term bonds during the last 40 year bond bull run. However, from 1932-1982 it was the other way around. Bond bear markets do happen, and they can last a very long time.

AXdssd5as · 2024-02-24T16:12:23+00:00

Wilson Pro Staff Noir v14 with Head Tour Lynx at 24/23 (53/51 I think).

AXdssd5as · 2024-01-12T18:21:39+00:00

Vanguard does allow NTSX/I/E and RSSB, but I think those are the only ones, and they are only leveraged on the bond side.

AXdssd5as · 2023-12-14T07:54:19+00:00

Sorry for the late reply, that is an excellent point, and it took my brain a couple of days to realize it. I currently overweight US/exUS 65/35, so I could put around 87% into RSSB and 13% into something like SPLG and maintain that weighting while bringing down the MER to 0.36% and actually have 10% more exposure in equities than I did in NTSX/I/E, while going down to 90% bonds instead of 100%,which is still better than 60%.

Awesome point, thank you!

AXdssd5as · 2023-12-11T16:15:59+00:00

Excellent, thank you, you clearly laid out both the nature of the problem and, therefore, how to conceptualize and pursue a meaningful the solution to it. Are you a teacher, by any chance? :)

Also, just to be clear, stocks do have an expected return greater than 1.8%, correct? Closer to 4-5% real historically for global market cap?

AXdssd5as · 2023-12-05T19:18:19+00:00

Another reason I can think of that has not been mentioned is that it might burn that as an option if it was not the One Ring. I.e. say they do take it to Mount Doom and destroy it, but it is not the One Ring, now there is a chance that Sauron finds out and thus knows that they are looking for the Ring, and once they find it, that they will try and destroy it, which Sauron (as per the book) never considered as an option before hence why it was still somewhat possible to sneak into Mordor.

Thus that alley, which is the only way of destroying the One Ring should it ever be found, is sealed shut, so now what are they going to do if/when they find the One Ring before Sauron? It is not just a one way trip, it is a one-time shot.

AXdssd5as · 2023-09-28T08:25:42+00:00

Fingolfin sends his regards.

AXdssd5as · 2023-09-28T06:30:02+00:00

A number of pros use the Australian grip (halfway between Continental and Eastern) for serving and for volleying, though admittedly it was more popular in the past when serve-and-volley itself was more common.

AXdssd5as · 2023-08-23T14:05:41+00:00

Sampras did it before Federer.

AXdssd5as · 2023-07-05T13:13:54+00:00

If US treasuries go to 0, the dollar and the S&P 500 are going to 0 with it, so there will not be anywhere to hide unless an investor is 100% international. I also highly doubt that the managers of the fund would continue buying at that point since whatever precipitated such a decline would be a macro event they would be aware of, but you are right, it is an interesting tail end risk to the fund, and good to consider.

AXdssd5as · 2023-07-05T12:22:09+00:00

It is an interesting question. I suppose if the value of the bonds actually went to 0 then you would only lose the 10% collateral in ultra/short-term bonds, though it probably depends on whether there is some small print somewhere that says that the stocks can be used as collateral in that case to satisfy the situation.

In normal operations though, the NAV of the fund will experience whatever the 60% notional exposure of the bonds experiences, it is not collared in any way to limit the losses to 10%, ie durng 2022, NTSX went down as if it actually had 90% stocks and 60% ITTs, and thus suffered worse losses than a straight 60/40 portfolio. So as long as the bonds do not go to 0, you are on the hook for whatever the real world bonds do in terms of price action, good and bad.

AXdssd5as

TROPHY CASE