puttster

TIP ETF: A High Dividend Stock and Inflation Hedge?

You say the good reason to buy TIP is because interest rates are going up? Worst logic I have seen today.

A Tip on TIPS

Advisors recommending TIPs always talk about the inflation protection but leave a hole where their discussion about interest rates should be.

Statements like "TIPS are anticipating no inflation for at least 7 years" is plain misleading. TIPS might be anticipating 10% inflation - and 10% interest rates, too. In which case they could easily be overpriced.

A Tip on TIPS

A year ago the "market participants" staked billions that the DJI was worth 13,000. That oil was worth $80... oops, no, $147.. oops we mean $38... How did that work out for you?


On Dec 31 04:18 AM Dr Feelgood wrote:

> Who should we believe: the writer who simply states his opinion on
> the likely course of inflation, or market participants who stake
> billions on the outcome? I prefer people who put their money where
> there mouths are, as opposed to those who simply talk. Last time
> I talked to my bank manager he told me he liked what I said but he
> can't credit my account with it.

Pros and Cons of Bond ETFs

Tips should not be pushed as a cure-all. Say inflation and interest rates go up by 5%. Yes your bond will go up by 5% for the inflation but will go down by 50% (5% x duration) because of the interest it pays. TIPS will still leave you exposed 90% to the problem. Not much of a hedge!

Understanding Government Debt: The Treasury's Indispensable Role

Bad example saying the WWII debt did not lead to inflation. Inflation was Truman's biggest hurdle after the war. The tasks of restraining consumer spending while convincing labor and businesses to hold down wage and price increases became insurmountable for him. In 1945 and 1946 he tried to control the economy through price freezes. Despite those efforts, by August inflation was at 25% and the nation was near paralysis from a wave of strikes for higher wages.

I liked the article till I got to your statistician's trick of using a 20-year infalation average to make a point. Tricks like that impune the truth so now I don't know what to believe.

TIPS: Nominal Yield, Risky Real After-Tax Return

Inflation has been a nothing event for twenty years. Interest rates have been driving the train. TIPs and treasuries are equally exposed to changes in interest rates. Why not expect them to act the same?

Runaway Inflation: Do TIPS Really Help?

Inflation and interest rates rise together. Let's say they both go up 1%. The market value of your TIP will drop by its duration, ie., 6%. Another 1% increase in CPI and your investment drops another 6%. Am I wrong about this? That does not seem like protection to me.

Global Price Increases Offer Several Investing Solutions for Inflation

Awesome DavyY,that was awesome!! Best insight I have seen in months.