- "I was 21 years old in 1981, so, for all of my adult life I have lived in a world of declining interest rates," writes Jim O'Shaughnessy. "It's these very long-term trends that tend to become ingrained in our brain and determine how we think about certain investments."
- O'Shaughnessy likes to look at the very long-term and he goes back to 1900 for this one: Prior to December 2008, the 20-year Treasury had not even once provided an annualized real 4%-plus return over a rolling 40-year period. The financial crisis and QE changed all of that and likely reinforced the appeal of Treasurys at exactly the wrong time.
- 40 years too long? It's even worse for 20-year periods where - between 1900 and June 2013 - real returns on the 20-year Treasury are negative 48% of the time! And that's under normal conditions. After the outperformance of the past few years and with the long bond at less than 4%, the chances of making money over the next 20 years are about zero, and the chances of losing money - perhaps a lot of it - are quite high.
- Long-duration Treasury ETFs: TLH, TLT, IEF, DTYL, DLBL, ILTB, TENZ, ITE, TLO, EDV, VGIT, VGLT, TMF, TYD, LBND, UBT, UST, TMV, TYO, DSTJ, DSXJ, SBND, PST, TBT, DTYS, DLBS, TBF, TTT, TYNS, TYBS, TBX.
Generational selling opportunity for long bond
Aug 18 2013, 23:16 ET