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I wonder how long TLT will be a good hedge, as real yields are already negative. TLT performed very well during the last years, but there is very little room for yields to go lower. And what could be an alternative to it? Are you already thinking how you would modify your strategies? thank you
Call me crazy, but I think interest rates will never rise again and will only go lower perhaps forever. It wouldn’t surprise me if the 30 year yield is minus 2 percent by the end of 2022 and minus 5% by the end of the decade. It’s just numbers.
I believe that the stock market has become entrapped in almost everyone’s lives now than it was as late as the mid 90’s. The shift to 401ks is the reason and we can’t let those balances collapse.
If rates rise, the stock market will fall. We can’t have that happen. Only stocks are allowed to rise forever. Thus rates must fall forever. The FED is in too deep.
If rates fell to 0%, I think TLT would rise another 30% or so from today’s levels. TMF almost 80%.
This is just my opinion. Would be very interested to hear LI take on it.
Fundamentals like yield for treasuries P/E for stocks or production cost for Gold don’t make a big difference anymore. There is so much money floating around, that any asset begins to rise once the money begins to flow in it. By having stocks gold and treasuries you can be nearly 100% sure that one of them is rising as money has always to go somewhere.
Some questions for the next five years?
– Will inflation rise? If no assets rise.
– Will the US government keep printing money? If yes assets rise.
– Will the government keep servicing debt? If yes assets rise.My Crystal ball says assets rise until something drastically changes. Like Hyperinflation, a recession or the government stops servicing debt. They won’t stop printing money they have no choice. How long will this incredible bull market last no one knows.
Cheers,
MV
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