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Thread: My economics teacher: Buy treasury bonds!

  1. #1

    Default My economics teacher: Buy treasury bonds!

    My economics professor just told all of us that we should buy treasury bonds. He said they are a good investment.

    HAHAHAHAHA!
    I am the spoon.



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  3. #2

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    He's right. US Government Securities are a good investment.

  4. #3

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    Quote Originally Posted by legion View Post
    He's right. US Government Securities are a good investment.
    They are the most expensive they will ever be and the interest payments are worth less every day. Sounds like a great investment.

  5. #4

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    Quote Originally Posted by The Gold Standard View Post
    They are the most expensive they will ever be and the interest payments are worth less every day. Sounds like a great investment.
    I'm sorry, but I fail to see your point. What interest does gold pay?

  6. #5

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    Quote Originally Posted by legion View Post
    I'm sorry, but I fail to see your point. What interest does gold pay?
    None, but you don't lose your principal either. With treasuries you lose value over time.

  7. #6

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    Quote Originally Posted by The Gold Standard View Post
    None, but you don't lose your principal either. With treasuries you lose value over time.
    When my bonds mature I will get the principal back.

    Bonds are calculated so that the sum of the present value of the coupon payments, and the present value of the principal being paid back are always equal to the "par" value of the bond.

  8. #7

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    Quote Originally Posted by legion View Post
    When my bonds mature I will get the principal back.

    Bonds are calculated so that the sum of the present value of the coupon payments, and the present value of the principal being paid back are always equal to the "par" value of the bond.
    Yes, good for you. How much will the principal buy when you get it back? Not as much as it did when you bought the bond. Even if you add in the pitiful coupon payments.

  9. #8

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    Quote Originally Posted by legion View Post
    I'm sorry, but I fail to see your point. What interest does gold pay?
    None, but it went from around 1100 in 2009 to over 1600 now when you were 70% into US dollars.
    Do something donnay


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  10. #9

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    Quote Originally Posted by legion View Post
    When my bonds mature I will get the principal back.
    What happens to your principal in real terms if interest rates are substantially higher the day you get your principal back?

  11. #10

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    Quote Originally Posted by legion View Post
    He's right. US Government Securities are a good investment.
    We need more guys like you. You give me a chance to load up.
    What I say is for entertainment purposes only!

    Mark 10:45 The Son of Man did not come to be served, but to serve, and to give His life as a ransom for many.

    "If you want to make a lot of money, resist diversification." - Jim Rogers

  12. #11

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    How many double cheese burgers will your investment buy you from the $35.99 Mc Donald's value menu in 10-30 years?

  13. #12

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    Quote Originally Posted by Lafayette View Post
    How many double cheese burgers will your investment buy you from the $35.99 Mc Donald's value menu in 10-30 years?
    Good question.
    I am the spoon.

  14. #13

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    Y'all must consider me really dumb. My entire 401k has been in a long-term treasury fund for over a year now.

    Being dumb, I only got 30% return on my whole pot in the last 12 months.

    Maybe if I hang around I'll learn something.

    When the stock market corrects by a few thousand points some time in the next year or two, and gold is down, I'll really need some help understanding why I should abandon my booming treasuries.
    Last edited by smhbbag; 04-10-2012 at 02:36 AM.
    Rights come from responsibilities. A right is what you need to discharge your obligations.

    We should never talk about rights apart from responsibilities, for rights have no other source..

  15. #14

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    Quote Originally Posted by smhbbag View Post
    Y'all must consider me really dumb. My entire 401k has been in a long-term treasury fund for over a year now.

    Being dumb, I only got 30% return on my whole pot in the last 12 months.

    Maybe if I hang around I'll learn something.

    When the stock market corrects by a few thousand points some time in the next year or two, and gold is down, I'll really need some help understanding why I should abandon my booming treasuries.
    Don't worry, it'll get confiscated. Hopefully you'll learn then.
    I am the spoon.

  16. #15

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    Buying Treasuries is a vote of confidence in the Federal Reserve and PPT. Buying gold is a vote of no confidence.

    Foreign investment into Treasuries is disappearing:

    http://www.zerohedge.com/news/china-...gs-50-one-year

    The Fed is picking up the slack:
    In 2011, the Fed purchased a stunning 61% of Treasury issuance. ...
    http://online.wsj.com/article/SB1000...googlenews_wsj

    Bill Gross is dumping Treasuries in favor of mortgage bonds.

    http://finance.yahoo.com/blogs/daily...115229488.html
    http://www.investmentnews.com/articl...FREE/120319999

    Treasuries are "earning" a negative real rate of interest:

    http://www.zerohedge.com/news/guest-...ritical-metric
    older: http://gata.org/node/10899

    Caveat emptor.
    I compiled a "brief" history of events since October 2008 that are defining the global currency war and the role that gold is playing:

    Tin Foil Hats, Economic Reality and the Total Perspective Vortex

    Also, have you contacted your Congressional Rep and asked them co-sponsor Ron Paul's Rep. Paul Broun Jr.'s HR 1098 77: Free Competition in Currencies Act?

  17. #16

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    It's one thing to use UST as a short-term trading vehicle, but don't be a fool - there is a real risk of getting stuck with them while the value they represent is devalued out from under you.

    PMs of course are a hedge against that risk. Unfortunately PM markets are also jacked to all hell with leveraged speculation, nothing in this market is clean anymore.
    Oligarchy delenda est

    “If you love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that you were our countrymen.” - Samuel Adams

  18. #17

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    Quote Originally Posted by John F Kennedy III View Post
    My economics professor just told all of us that we should buy treasury bonds. He said they are a good investment.

    HAHAHAHAHA!
    Lol. Anyone who knows anything about investing knows that is bull***. And he's a professor? Rofl.
    I'm an adventurer, writer and bitcoin market analyst.

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  19. #18

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    Quote Originally Posted by legion View Post
    When my bonds mature I will get the principal back.

    Bonds are calculated so that the sum of the present value of the coupon payments, and the present value of the principal being paid back are always equal to the "par" value of the bond.
    They are a low-risk investment. You never get good returns on something that has very low risk. High risk, high reward. Government bonds have a higher chance of not beating inflation over time, whereas Fortune 500 companies have higher chances of getting good returns over time. If low-risk automatically means it's a good investment, then by all means, but don't expect to make much off of it. I've had a bond in for over 10 years and it's not even halfway matured.

    However, if you invest in small business or big companies, you have a much higher chance of good returns, and as long as you diversify your portfolio, you should be able to eliminate most of the risk associated with those types of investments. Treasury bonds are just becoming more and more worthless as an investment.
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  20. #19

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    I remember my ECON professor gave me (literally gave me) Atlas Shrugged, saying, "I ordered this and I don't want to read it. You can have it."

    She went to MIT.

    My advice would be to just do your work and ignore your professors stupid ass advice. Don't fight w/ your professor, won't get you anywhere.

    There isn't any reason to debate them in class because the market will prove us correct, everytime.

    You 1 v Professor 0
    "I am, therefore I'll think" - Ayn Rand

  21. #20

    Default

    The real value in treasuries is not their yield but their resale value. They are speculative instruments because they are the primary means in which the Fed inserts reserves into the banking system. If you suspect that the demand for reserves will go up in the banking system you buy t-bills...even if they yield a pathetic 2% interest for a 10 year maturity. Why...because you know however overpriced they are now (and they are big time...we have a bubble) they can become even more overpriced through increased open market transactions.

  22. #21

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    Quote Originally Posted by No Free Beer View Post
    I remember my ECON professor gave me (literally gave me) Atlas Shrugged, saying, "I ordered this and I don't want to read it. You can have it."

    She went to MIT.

    My advice would be to just do your work and ignore your professors stupid ass advice. Don't fight w/ your professor, won't get you anywhere.

    There isn't any reason to debate them in class because the market will prove us correct, everytime.

    You 1 v Professor 0
    Why not debate them in class? Staying silent does even less good. If debating is what class is about, then make it on a subject that actually matters.
    I'm an adventurer, writer and bitcoin market analyst.

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  23. #22

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    For the 1% who have enough wealth to make diversification a good strategy and who have enough cash flow to make regular contributions to their investments then I could see having some in T-bills would make more sense than keeping the equivalent amount in cash.

    For the rest of the 99% who don't have enough cash flow to make regular contributions to a portfolio, the strategy changes.

    I recall Harry Browne's investment strategy for lazy investors, 25% cash, 25% long-term US treasuries, 25% in low fee S&P 500 index fund, 25% gold.

    Each month or so buy whichever asset is the least expensive at that time.

    Supposedly this generates between 10 and 12% year to year.

    Of course this is for 'normal' situations, I don't know if Harry Browne would recommend the same strategy now.

    Thank you Harry Browne, you were my first introduction to Libertarianism and you were also of the same mold as Ron Paul, humble and more interested in promoting the message than yourself.

    Ron Paul: He irritates more idiots in fewer words than any American politician ever.

    NO MORE LIARS! Ron Paul 2012

  24. #23

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    Quote Originally Posted by smhbbag View Post
    Y'all must consider me really dumb. My entire 401k has been in a long-term treasury fund for over a year now.

    Being dumb, I only got 30% return on my whole pot in the last 12 months.

    Maybe if I hang around I'll learn something.

    When the stock market corrects by a few thousand points some time in the next year or two, and gold is down, I'll really need some help understanding why I should abandon my booming treasuries.
    what you are saying is the same thing as...
    its 2005 or 2006 and your telling everyone to buy homes because your homes on fire.
    Then you run into peter schiff, and thinks his crazy because your to up in the moment.
    Rand Benedict Paul.
    Not only did he sell us out, this douche bag did it to his own father! I'm more upset him selling his father out. I don't care who i think is going to win i would never sell my father out. If his willing to sell his father out what else is for sale?

  25. #24

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    He's a "professor" because he can't make it in the real world.

  26. #25

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    Quote Originally Posted by WilliamC View Post
    For the 1% who have enough wealth to make diversification a good strategy and who have enough cash flow to make regular contributions to their investments then I could see having some in T-bills would make more sense than keeping the equivalent amount in cash.

    For the rest of the 99% who don't have enough cash flow to make regular contributions to a portfolio, the strategy changes.

    I recall Harry Browne's investment strategy for lazy investors, 25% cash, 25% long-term US treasuries, 25% in low fee S&P 500 index fund, 25% gold.

    Each month or so buy whichever asset is the least expensive at that time.

    Supposedly this generates between 10 and 12% year to year.

    Of course this is for 'normal' situations, I don't know if Harry Browne would recommend the same strategy now.

    Thank you Harry Browne, you were my first introduction to Libertarianism and you were also of the same mold as Ron Paul, humble and more interested in promoting the message than yourself.


    Harry was the first I read too more than 2 decades ago and Harry is still the ONLY 3rd party candidate to EVER get on the ballot in all 50 states. Here's Harry on firing line fending off 2 jerk off neocons and now of course we can look back and know that Harry was RIGHT
    http://www.youtube.com/watch?v=jK01aLsKw7w

    And I'm sorry but nobody has better election commercials than Harry Browne:
    http://www.youtube.com/watch?v=y-P4pv3288Q

    Enjoy

  27. #26

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    There's a place in one portfolios for bonds, but the yields right now are below inflation, I'd rather buy gold.

    The Federal Reserve bought 61% of all treasuries last year. What more do you need to know?

  28. #27

    Default

    tell your professor he is a morong.
    It was too weird to live, and too rare to die - hunter s. thompson .
    ..this is the darkest timeline..

  29. #28

    Default

    I had a customer who sold all his coins just before the bear market began in 1981 and bought 30 year t-bills at something like 20%. Now THATS when you buy tbills!

    Not now.

  30. #29

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    Then again I have another customer who also sold out in 1981 realizing BIG gains and bought baseball cards from the 1800's that he's also made millions on. Neither one of them are professors.

  31. #30

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    If you think:

    Inflation is a threat
    Interest rates may rise
    The stock market will rise in nominal terms
    International, institutional money will begin to prefer foreign debt to US debt....

    then skip on treasuries.

    I think, however,

    Interest rates are absolutely not going to go up significantly under any near-term circumstances
    The stock market is going to have a major correction downward in the next year or two
    Institutional money will prefer US debt even more relative to the debt of Europe and others.

    Then treasuries are a great buy. I made 20% in a month last year during the European debt crisis. I see more European debt crises coming, so I'm going nowhere. Treasuries are negatively correlated with the DOW, generally. I'm confident the DOW will be lower in a year or two, probably by a large amount. It would be apocalyptic for the Fed to raise interest rates any time in the near future, therefore I don't fear them going up.

    I'm sitting pretty, and y'all are laughing. I made 30% return in the past 12 months, and I expect the next 24 to be even better. I'm 100% in for treasuries. Debt-deflation is the name of the game.

    I'm not advocating something akin to buying at the housing market high. I've been renting since '06, despite having 50+% of a home value saved. We're not at the bottom yet, so I'm holding. I held during last of the boom years, too.
    Rights come from responsibilities. A right is what you need to discharge your obligations.

    We should never talk about rights apart from responsibilities, for rights have no other source..

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