The trend

DOUG  By Guest Blogger Doug Rowat
.

During the bull-market years of the 2000s, Bay Street investment firms were freely throwing money around to win business. Sometimes literally.

I remember visiting the Sprott Asset Management office near King and Bay during the mid-2000s commodity boom. Priceless artwork lined the walls (like, Van Gogh priceless) and a massive pure-gold coin sat perched in the lobby. Incredibly, it weighed 100 kg and had a face value of $1 million, but even more spectacularly, it had a bullion value of probably closer to $4 million.

Such were the Bay Street extravagances in those days.

And about the money being thrown at me? When I arrived at their office, they handed me a 1-ounce silver coin. Just for visiting. My colleague, who was a Bay Street veteran, said that he already had five of them. I still have mine:

Around this time, there was also a rumour that Eric Sprott had hosted a Bay Street event wearing a T-Shirt emblazed with Bonds Are For Losers. I don’t know if this was actually true, but it certainly fit with the bullish excesses of Bay Street at the time.

Though the T-shirt’s sentiment was infinitely less accurate once the financial crisis hit less than a year later, there was definitely—and still is—a kernel of truth to it.

Make no mistake, your portfolio needs bonds. They offer stability and guard against the unexpected (Covid—to highlight a perfect and very recent example). And if we were all dispassionate investors we could do without bonds, but we bring—especially new investors—our irrational fears and biases to every investment decision that we make. Though the returns for bonds over the long term are inferior to equities, the ability of bonds to control volatility (and therefore our emotions) is invaluable. It does no good to hold only equities if you sell them at every hint of trouble.

So are bonds for losers? Definitely not. However, they certainly aren’t for winners either. Take it from one of the biggest financial-market winners of all time, Warren Buffett. He had this to say in his latest Berkshire Hathaway shareholder newsletter:

Bonds are not the place to be these days… In certain large and important countries, such as Germany and Japan, investors earn a negative return on trillions of dollars of sovereign debt. Fixed income investors worldwide—whether pension funds, insurance companies or retirees—face a bleak future.

In terms of having negative (or at least near-zero) bond yields, Japan and Germany aren’t alone. They’re joined by France, the Netherlands, Switzerland, Sweden, Spain and Portugal, which all have, for example, flat-to-negative yields on their 10-year benchmarks.

While the recent rise in US bond yields gives some hope to yield investors, over the long term, it’s a losing battle. The chart below indicates the steadily diminishing returns for US bonds over the decades. Buffett also highlighted in his newsletter that the yield on the US 10-year Treasury was actually 15.8% in 1981! Those days are ancient history. Bond yields have plummeted more than 90% since.

The steadily diminishing return of US bonds

Source: Bloomberg; Turner Investments

And while there are a multitude of reasons for the long-term decline in bond yields, perhaps the biggest factor is simply an ageing population. Older investors, understandably, gravitate towards safer investments and the below chart shows the inexorable trend that bond investors are presently up against. This trend isn’t changing.

The lesson of these charts is simple: investors (of any age) need equity exposure in addition to fixed income. Your long-term results will almost certainly disappoint otherwise.

Long term US government bond yields (red line, RHS) vs US population age 55 and older (blue line LHS)

Source: Federal Reserve Economic Data

Naturally, as we struggle through a global recession, investment firms no longer throw money at me just for walking through the door. Those days are over.

But realizing meaningful returns from bond-only portfolios? Those days are over too.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

 

113 comments ↓

#1 money printer goes brrrr... on 03.06.21 at 8:46 am

solution? RAISE rate to 3% and STOP PRINTING MONEY.
the excesses all stem from CENTRAL BANK POLICIES.
get rid of central banks if they can’t control themselves and can’t do their jobs.

Greenspan panicked in 1998 and cut rates setting off the Nasdaq bubble and collapse that followed. The Greenspan Put they called it. He’s never going to allow the markets to fail. Then to solve the problem of the next depression, he took rates to 1% setting off the housing bubble.

Which Bernanke didn’t think exist … no excesses there my friends. no housing bubble, i testified on Capitol Hill, so i have to be right… Until that all blew up and HE panicked and took rates to 1/4% and flooded the markets with money… to save us from the next depression…

Old Yeller refused to raise rates after, allowing Wall Street companies to borrow at cheap rates, leveraging their balance sheets to benefit the company management and directors. nice big payouts of lots of people. and yet, this left their companies completely naked in 2020 when covid hit. no buffer.

Now, all these company directors get paid, by the taxpayer… they come hand in cap, to Powell begging for money that they blew on stock purchases to make themselves look good. And Powell does it… to save us from the next depression … yet again.

now we keep zombie companies alive ’cause heaven help any politician that doesn’t do anything and everything to save everyone from a recession. can’t have those any more. or depressions..

and the game goes round and round and round.

money printer goes brrrrr….

brrrr….. print print print..

#2 RowatNation aka Prince Polo on 03.06.21 at 8:49 am

Mr Rowat – may I suggest it’s time to spice up the bond marketing? I propose Turner Investments be the first to market “Stabilizer ETFs” – simply bond ETFs wrapped in a new title. They are dampeners on volatility and also potentially, marriage savers. OK – you now have two ideas to market: Marriage Endurance ETFs + Portfolio Stabilizer ETFs. I await my 0.05% royalty in perpetuity and a bunch of free slagging from the peanut gallery.

#3 Franco on 03.06.21 at 9:34 am

So what are we head for, if the good ole days of fast money making are over?

#4 John on 03.06.21 at 9:44 am

Isn’t the bond market the one that backs the mortgage industry? If bonds are phased out (reading into the article a bit) then where would mortgages get their supply from? I can see mortgage financing becoming tighter or more difficult to secure if bonds begin to disappear. If this happens which may offer it’s own type of correction to current happenings in housing.

#5 T-Rev on 03.06.21 at 9:50 am

Hi Doug,

Timely article for me personally. I’ve got a portion of my portfolio that I want to set aside as savings as opposed to investment as it’s for near-term use (1-2 year horizon); I’m contemplating a midlife career change and want some powder dry to help the transition. I don’t want to put in in equities, in case we get a bear market when I need it. I also don’t want it locked into GICs because they’re illiquid and rates are pitiful.

Canadian bond ETFs are paying close to 3pct yield right now and are instantly liquid. What are your thoughts on using bond funds as a savings vehicle in such situations?

Thanks, and enjoy the weekend. It’s Harley weather in Alberta today, first ride of the year coming up.

#6 Regjeg on 03.06.21 at 10:01 am

The time has come to allow a one-time downsizer contribution of proceeds from the sale of a PR to a TFSA. Bring it in this spring with requisite caps and restrictions.
Get on it, Chrystia!

#7 D.D. Corkum on 03.06.21 at 10:40 am

Bonds’ usefulness depends on a negative correlation to equity prices.

It seems that with yields so close to zero, this correlation factor is at best also near zero; or at worst, actually becoming a ‘positive’ correlation.

The long-bond thesis says, “yields will continue dropping over the next decade, just like that past few decades, so they continue to hedge emotions/equity.”

But is this true? The lower yields permanently go, the sooner these near-zero effects should appear during every downturn.

How long until these near-zero effects occur in every recession? (Already?)

How long until these near-zero effects occur in every minor correction or hiccup? (A decade?)

How long until these near-zero effects occur in every normal day-to-day market movement? (20 years?)

At at which of the above three milestones do bonds no longer help us counter our emotions?

#8 KNOW IT ALL on 03.06.21 at 11:11 am

“Though the returns for bonds over the long term are inferior to equities, the ability of bonds to control volatility (and therefore our emotions) is invaluable.”

So what your saying then in other words is that bonds are only to satisfy the stomach of “weak hands” investors?

My portfolio = 100% Equities……

Diamond Hands all the way bruh.

Scarred money dont make money.

#9 Mike on 03.06.21 at 11:19 am

Naturally, as we struggle through a global recession, investment firms no longer throw money at me just for walking through the door.

…………………………………………….

Maybe do some squats a BLF and wear yoga pants like my son’s Grade 6 teacher?

#10 crowdedelevatorfartz on 03.06.21 at 11:23 am

@#6 Regjeg
“Get on it, Chrystia!”

+++++

You are kidding of course.
Our Manic Leader and his multi lingual journalist who dabbles in Finance cant wait to show the world how its done.
This budget will be full of Billion dollar toss aways…… Promises of a better society wrapped in National Child Care, National Pharma care, Universal Basic Income, clean air, clean water, and poof …..little Canada solved all the worlds problems on the beleaguered tax payers backs…… and our dollar will be toast…

#11 Damifino on 03.06.21 at 11:24 am

Financial Post Article today: “People are starting to get nervous about Canada’s housing market again.”

“Weasel words” shown in bold:


Canada’s housing market risks entering a speculative phase that could trigger new measures from regulators, economists at the nation’s largest banks are warning. […] Recently, signs have begun to emerge of speculators driving some of the demand, along with other buyers worried they’ll miss out on the boom. That’s raised worries prices could be moving up by too much and too fast.

#12 Dogman01 on 03.06.21 at 11:35 am

Buffet’s pronouncement on bonds confirmation.

Bond s do have a place for your “dry powder”, somewhere gains can go awaiting the next mini panic.
Through 2020 I used ZTL Bond ETF as it did spike when equities floundered. – Yes it is timing the market, but it is more of a macro timing.

When equities a bit too frothy move a bit of Gains to ZTL, equities in the dumps then move some ZTL to equities.

My father had a 9% provincial bond once…but as GenX I never understood Bonds at sub 4%, than again I did not understand; as rates drop existing Bonds go up, but now that I understand that and Interest rates won’t go lower because they can’t, zero is zero …..it is free money for the borrower and unrewarded risk for the lender.

Being pushed up the risk curve as I grow older. Hmmm.

For near term cash and Dry powder things like HFR look like a stable boring parking lot.

#13 Linda on 03.06.21 at 11:36 am

I get the bond stability factor. However, one of the points made by this blog & many other investment advice forums is that earning low or negative interest in HISA or other savings venues is the way to run out of money later in life. So if bonds worldwide are producing negative returns, isn’t that reason to reduce the percentage of bond holdings in the portfolio? Should investors consider say a 30/70 or even a 20/80 split between bonds & equities to reflect those negative bond returns? Is the 40/60 B&D portfolio up for a revamp of what B&D should be? If an aging world population is indeed the driver of bond negative returns, seems like a revamp of ‘the rules’ might be in order.

#14 crowdedelevatorfartz on 03.06.21 at 11:45 am

Speaking of negative returns.

I read a suggestion from the Canadian Taxpayers Federation that we should mail the “free” postcard that Canada Post is sending everyone to PM Justin Trudeau.

PM Justin Trudeau
220 – 1100 Cremazie East
Montreal, QC
H2P 2×2

#15 Sail Away on 03.06.21 at 11:56 am

“….investment firms no longer throw money at me just for walking through the door. Those days are over.”

———–

Damn political correctness.

I did not know you moonlighted as a Chippendale before settling on the finance thing, though.

#16 Doug Rowat on 03.06.21 at 11:57 am

#5 T-Rev on 03.06.21 at 9:50 am
Hi Doug,

Timely article for me personally. I’ve got a portion of my portfolio that I want to set aside as savings as opposed to investment as it’s for near-term use (1-2 year horizon)…

—-

If it must be held absolutely risk-free then there are few options. But up to a 2-year time horizon is on the edge of medium term and a long time to keep ‘dry powder’.

Remember: reducing exposure to equity markets for 2 years at this point in the market cycle is itself a risk.

—Doug

#17 Flop... on 03.06.21 at 12:09 pm

Saturday = chart day.

Which one will I go with?

Been a bit of chatter about this topic on here lately, so I’ll go with this one…

M46BC

“Visualizing the Massive Gender Pay Gap Across U.S. Industries.

The gender pay gap is real, and it exists in every industry across the economy according to our latest visualization. But just how much more money do men make than women? The exact size of the wage gap depends on the industry.

* Women make less money than men across several different industries in the U.S. economy, including educational services, health care, and food services.

* The single industry with the largest gender pay gap is finance and insurance, where on average men take home $33,000 more than women every year.

* Across the entire U.S. economy, median male earnings were $45,893 compared to $32,436 for women. In other words, women’s earnings are only 70.7% of men’s.”

https://howmuch.net/articles/men-vs-women-comparing-income-by-industry

#18 Sail Away on 03.06.21 at 12:10 pm

#5 T-Rev on 03.06.21 at 9:50 am

Re: short term cash

————

T, it’s quite possible bond ETFs will depreciate for awhile as yields increase. For 1-2 year needs, I’d personally look at a HISA fund like PSA.TO that pays 1.9% without the same level of uncertainty.

#19 Doug Rowat on 03.06.21 at 12:19 pm

#7 D.D. Corkum on 03.06.21 at 10:40 am

Bonds’ usefulness depends on a negative correlation to equity prices.

—-

The long-term correlation between bonds and equities, at least US bonds and equities, is low not actually negative.

But as long as we can count on that ‘rolling correlation’ to be sharply negative at times then bonds are going to have usefulness for a long time to come. US Treasury prices were up sharply when equities plunged 35%+ from peak to trough last year, for example.

Times of extreme equity-market stress are when our bad investment decisions are made.

—Doug

#20 Ponzius Pilatus on 03.06.21 at 12:24 pm

#1 money printer goes brrrr.
———————————
Told you money printers go ka-ching.
I know, I have one in the basement.
Albertans who venture outside in winter say brrr.

#21 DON on 03.06.21 at 12:42 pm

#132 Nonplused on 03.06.21 at 1:37 am
#114 DON on 03.05.21 at 8:07 pm
#94 Nonplused on 03.05.21 at 6:50 pm
#22 DON on 03.05.21 at 2:38 pm

“Hard to leave a spontaneous life if you are a responsible dog owner.”

Define “spontaneous” because I doubt it’s for me anyway.

We do most of our recreating in an RV and our dog seems to quite enjoy it. What’s not to like? 3 walks a day, hikes sometimes, new smells, leftover bbq.

******************

You are a responsible dog owner…you take your RV. Should have said young and spontaneous.

——————————-

If you have kids for whatever mistake you made but now you have to deal with them, a dog isn’t much extra. (I recommend for men a vasectomy for your 18th birthday. Hopefully nothing happened earlier, it is a real joy kill.) Heck the dog entertains the kid and provides you time for a cigar and a scotch. And then the kid wants to come back and start the fire for smokies and smores. He’ll even chop the wood. And the dog just sits there hoping somebody couldn’t finish 2 smokies.

For those of us that are already tied down with kids and wives and RV’s, dogs don’t change much and add joy to an otherwise desperate life.

My son had a hedgehog for many years too. We took it camping too. Why not? RV. We won’t be doing that again though. Not nearly as fun as a dog it turns out.

*************
LOL

Yup…if you have kids one more consideration won’t break the energy bank.

I have a dog that is getting older and does limited driving. Have to find respite care when we go on road trips. I am willing to take him with us…but I am not willing to approach the conversation with my better half.

The young…Denise the Menace’s dog is a handful ans he comes everywhere. He’s the third kid.

I’m the one hoping for an uneaten hot dog.

#22 AlMac on 03.06.21 at 12:45 pm

Doug
For your clients that have defined benefit pensions, do you advise generally to designate the pension as a fixed income asset within their investment strategy or put it aside. Thanks as always for these informative weekend posts.

#23 Dogman01 on 03.06.21 at 12:46 pm

Remember: reducing exposure to equity markets for 2 years at this point in the market cycle is itself a risk.
—Doug
——————
Economics 101 Class – Opportunity costs, to this day I hate being aware of this concept , as even when you winning with A …you could have done better with your resources choosing B.

In the immortal words of Rush:

“If you choose not to decide, you still have made a choice”

#24 DON on 03.06.21 at 12:46 pm

#14 crowdedelevatorfartz on 03.06.21 at 11:45 am
Speaking of negative returns.

I read a suggestion from the Canadian Taxpayers Federation that we should mail the “free” postcard that Canada Post is sending everyone to PM Justin Trudeau.

PM Justin Trudeau
220 – 1100 Cremazie East
Montreal, QC
H2P 2×2

******************

It is eye opening to see who supports the ‘Canadian Taxpayers Association’

They appear to be speakung on behalf of the little tax payer..

#25 Don Guillermo on 03.06.21 at 12:57 pm

#14 crowdedelevatorfartz on 03.06.21 at 11:45 am
Speaking of negative returns.

I read a suggestion from the Canadian Taxpayers Federation that we should mail the “free” postcard that Canada Post is sending everyone to PM Justin Trudeau.

PM Justin Trudeau
220 – 1100 Cremazie East
Montreal, QC
H2P 2×2
*************************************
Finally, Liberals putting taxpayer money to work for us.

https://divergemedia.ca/2021/03/02/resign-lets-send-our-prepaid-postcards-to-trudeau/

#26 Comments! on 03.06.21 at 1:04 pm

20 years of suppressing bond yields in order to prop up phoney stock markets and rigged commodities. Savers have been despised and will continue to be abused under the likes of Jerome Powell and all central banks. They need to be stopped once and for all. My 82 year old mother shouldn’t have to have a dime of her life’s savings in the stock markets and still be able to collect an interest rate comfortably above the rate of inflation. Crazy and unthinkable, I know.

Yes boys and girls, stock markets around the world that require $30 trillion of continuous “stimulus” (a fancy word for criminal welfare of cosmic proportions) and 0% and negative interest rates for years on end, are actually healthy and viable. We exist in a world of “free” markets. The Easter Bunny and Santa Claus are real too.

#27 Faron on 03.06.21 at 1:07 pm

#137 Comments! on 03.06.21 at 12:40 pm

#130 Faron on 03.06.21 at 1:17 am
#112 Comments! on 03.05.21 at 8:01 pm

Oh, look. I did some research aaaaand you’re wrong. Again.

The Federal Reserve System is not “owned” by anyone. The Federal Reserve was created in 1913 by the Federal Reserve Act to serve as the nation’s central bank. The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress.

https://www.federalreserve.gov/faqs/about_14986.htm

SMH

#28 jim on 03.06.21 at 1:11 pm

Should you treat a government pension as your bond portion of your overall portfolio.

#29 Faron on 03.06.21 at 1:25 pm

#1 money printer goes brrrr… on 03.06.21 at 8:46 am

Old Yeller refused to raise rates after, allowing Wall Street companies to borrow at cheap rates,

Yellen raised rates five times bringing overnight to 1.5% by the time she departed. Powell cut to accommodate fed bond sales. Yes, it’s a mess but your whole “abolish the CBs” thing is libertarian fantasy land junk.

#30 moeny printer go brrr on 03.06.21 at 1:25 pm

#20 Ponzius Pilatus on 03.06.21 at 12:24 pm
______________________

ka-ching
brrr…

same thing

https://brrr.money/

raise rates to 3%
stop printing money

#31 mark on 03.06.21 at 1:56 pm

I believe lots of bonds brings lots of pain and no return.
For 40% to be in bond fixed income just does not make sense unless your sitting on millions and the low fixed income return from bonds does not hurt you, for most it will significantly reduce returns in a lower for longer term expected rate of return for the projected returns going forward for the stock market, USA in particular is heading for a lot of pain in a few years with returns in the 3 percent range based on current valuations, no one has a crystal ball but most can figure that out.

Why not use a barbell approach and reduce bond weightings to a short term bond fund and also a very long term bond fund countering the risk and then Double the weight percent of Preferred or Riets that pay close to 5 percent to prop up fix income steam.

For example 10% short term less 3 year bond fund.
10% long term 10+ year bond fund.
20% preferred or Reit index ETF.

#32 Planetgoofy on 03.06.21 at 2:10 pm

#24 DON on 03.06.21 at 12:46 pm
It is eye opening to see who supports the ‘Canadian Taxpayers Association’
They appear to be speakung on behalf of the little tax payer..
—————
Why? Who should they speak for? The big banks? The wealthy that can move money too offshore entities?
There are 1000s of taxes and many more being implimented. Your all tax slaves. Take home speculation, vacancy, PTT and now maybe a home equity tax!!???
Its modern day enslavement. You are the slave. Most have no idea how bad it really is. 100% chance we blow up as the debt is unsustainable….Get your hard hat.

#33 Roial1 on 03.06.21 at 2:13 pm

#9 Mike on 03.06.21 at 11:19 am

Maybe do some squats a BLF and wear yoga pants like my son’s Grade 6 teacher?

Hope your wife it not acquainted with your blog name.
If she does, you could be in for a whole load of dung.
Not to mention many dinners of “cold shoulder”

#34 Ustabe on 03.06.21 at 2:39 pm

https://nationalpost.com/news/politics/as-tensions-rise-in-conservative-caucus-erin-otooles-leadership-put-to-the-test

Erin O’Toole: “Don’t read what the Toronto Star and what some of the people who don’t want us to win say…”

[Abacus Data CEO David Coletto] Erin O’Toole’s negatives keep rising in our tracking. (twitter.com)

Will the Conservative party reopen its abortion policy debate? Social conservatives are trying (thestar.com)

For your consideration…and now back to bonds.

#35 DON on 03.06.21 at 2:39 pm

#32 Planetgoofy on 03.06.21 at 2:10 pm
#24 DON on 03.06.21 at 12:46 pm
It is eye opening to see who supports the ‘Canadian Taxpayers Association’
They appear to be speakung on behalf of the little tax payer..
—————
Why? Who should they speak for? The big banks? The wealthy that can move money too offshore entities?
There are 1000s of taxes and many more being implimented. Your all tax slaves. Take home speculation, vacancy, PTT and now maybe a home equity tax!!???
Its modern day enslavement. You are the slave. Most have no idea how bad it really is. 100% chance we blow up as the debt is unsustainable….Get your hard hat.

*****************
I Hould have finished the last sentence…as messages can get hijacked…hence the who funds them.

#36 Canada bonds are junk on 03.06.21 at 2:42 pm

Why would anyone buy anything directly controlled and manipulated by a central bankster , the BoC ?

Remember “the magic of compound interest” ? How did that work for savers ? Monetary policy is/has ruined a generation of savers forcing people into risk to find yield or chase stocks and RE… Which bubble created by monetary tinkering do you put your money ? RE ? Stocks ? Bonds ?

Do people realize a bitcoin transaction goes from one party directly to the other ? No intermediary , No banksters. Digital assets like Bitcoin are revoulutionizing finance and taking back our power from the central banksters thankfully.

#37 DON on 03.06.21 at 2:43 pm

‘should have’

fat fingers

#38 The other Doug, in London, ON on 03.06.21 at 2:54 pm

I don’t ever recall reading that bonds are for losers, but I do remember back in 2006 or 2007 reading an article that questioned the logic of owning too many bonds. It said that the traditional measure is your age is the percentage of your investments that should be in fixed income assets, but with the return on equities being so much higher that percentage in fixed income should by lower. I got thinking there’s some truth to that idea, but the fact that someone says such a thing suggests an overconfidence in equities. Bit by bit I took some profits from my equity mutual funds and put more into bond funds. Then 2008 and early 2009 came along and I was so glad to have made the move because then I reversed the flow, cashing in the bond funds and moving back into equities that were on sale.

Remember that song by Metric with the words Help I’m alive my heart keeps beating like a hammer? It was getting a lot of radio play on London station FM96 in early 2009. Well my heart was beating like a hammer when I was so excited to scoop up some dirt cheap equity funds back then. Bonds are anything but for losers when equities go on sale, like they did in early 2009 or a year ago.

#39 Remember Walter on 03.06.21 at 3:00 pm

Bonds are useless. Just pick dividend stocks or preferred shares but bonds are trash…no up side and negative real interest rates. I get they are countercyclical but that is not worth the lost opportunity cost of holding them

#40 Ed on 03.06.21 at 3:04 pm

PSA.TO yields .62% currently…road to ruin assured.

#41 Planetgoofy on 03.06.21 at 3:06 pm

#35 DON on 03.06.21 at 2:39 pm
—————————————
No we are the tax slaves that fund EVERYTHING. Its all us Don.
They use our taxes to promote their phoney “Good deeds”
Then we have to fund originations that fight back. Against taxes, Rights, freedom of speech ect albeit not very much. Tea in the harbor sad.
Now they actually don’t need us. That is the next move.
Ya know what’s flying off the shelves for the wealthy? Bunkers.

#42 McSteve on 03.06.21 at 3:13 pm

When yields hit near 0%, I knew my bond ETFs were almost fully priced. Now that we might be coming out of this COVID-19 mess, it there any reason to hold a Bond ETF at all? In the short term, how could it be better than cash, Doug? I’m only holding 12% bonds now…holding 10% cash….at least it depreciates slowly.

#43 theoryAndPractice on 03.06.21 at 3:14 pm

Doug, going forward expected raising interest rates and inflation, how would you allocate percentage of bonds in a B&D portfolio, and what would be the breakdowns type of bonds ETF’s you would choose? I’m not asking the specific names rather allocations/types of bonds vs overall portfolio in your mind that makes sense?

#44 Sail Away on 03.06.21 at 3:18 pm

#21 DON on 03.06.21 at 12:42 pm

I have a dog that is getting older and does limited driving.

————

I barely ever let my dogs drive. They’re just too distractable.

#45 Sail Away on 03.06.21 at 3:21 pm

#40 Ed on 03.06.21 at 3:04 pm

PSA.TO yields .62% currently…road to ruin assured.

————

Well, the context was maintaining full liquidity in the next year or so. Either this, cash, or uncertainty.

#46 crowdedelevatorfartz on 03.06.21 at 3:35 pm

@#34 Ustabe
Yep.
So far O’Toole has been cringeworthy.
The Conservative leadership choices of the past few years have all had the charisma of a grandfather clock running slow.
Another 4-5 years of Trudeau’s ( Butz’s) lunatic social experiment expenditures should truly and surely send us into financial purgatory….but what the Hell.
Its worked in Cape Breton for decades.

#47 Property Accountant on 03.06.21 at 3:36 pm

Re: #1 money printer goes brrrr…

Hi Doug, aging population is one cause (which can be offset by immigration policies) but in my opinion and few other ones on this blog site – mass money printing used for quantitavive easing (bonds buying) is the main cause of suppressed yields.

Can you point me one rational investor who chooses to invest in negative German bonds, or explain rationale behind Greece bonds yielding less than USA bonds, same term?

Bond market has been destroyed by Central Banks (ECB, BOJ and 100 more).

BOJ started buying stocks recently and playing on Nikkei. Those guys are always first, trying new techniques as their ZERO RATE policy for last 20 years did not work too good.

#48 willworkforpickles on 03.06.21 at 3:39 pm

The more the less affluent of society clamour for the rich to pay more taxes (to be channelled toward paying down un-payable runaway gov. debt creation) the less the rich ultimately pay as those increases if and when implemented are fully channelled through the ranks of the less affluent (the masses) via rising prices where the poor end up paying themselves.
Better to let the rich spur economic growth by not raising their taxes than hampering them from doing so only forcing them to raise the cost of goods to offset higher revenue increases.
Raising the taxes of the rich to supplant any real solution as runaway gov. debt creation continues unabated is insanity as it works against future growth and just brings more unemployment.
This government has never known real solutions…or ever had a plan B to sustain real growth in the event of and aftermath of a crises .

#49 Dolce Vita on 03.06.21 at 3:41 pm

Emotion in bonds as well, rare, but here it is:

“Italy raises €8.5bn in Europe’s biggest-ever green bond debut”

https://www.ft.com/content/2b1d7d2f-2755-474b-8696-2607de4366d4

The bond, which matures in 2045, was issued with a yield of 1.547%. Spread 0.12 lower vs. normal 0.15. Italy is the first riskier southern-European government to tap the green market.

Also, Bund spread fell to a six-year low of less than 0.9. “Greenium” spread for these type of bonds around 0.04 to 0.05.

€80bn in orders for €8.5bn of debt.

Saida Eggerstedt, head of sustainable credit at Schroders, which invested in the bond, said the details provided on projects including low-carbon transport, power generation, and biodiversity were “really impressive”.

——————

It’s ALL ABOUT Mario Draghi, Italia’s new PM (yet another one).

Sometimes emotion and trustworthiness counts for a lot even with yields up, value down and vice versa, bonds.

Who knew?

———–

More on the issue…

“Italy’s Green Bond Demand Smashes Peers in Debut Offering”

https://www.bloomberg.com/news/articles/2021-03-03/italy-goes-green-for-the-first-time-with-inaugural-bond-sale

#50 DON on 03.06.21 at 3:55 pm

#41 Planetgoofy on 03.06.21 at 3:06 pm
#35 DON on 03.06.21 at 2:39 pm
—————————————
No we are the tax slaves that fund EVERYTHING. Its all us Don.
They use our taxes to promote their phoney “Good deeds”
Then we have to fund originations that fight back. Against taxes, Rights, freedom of speech ect albeit not very much. Tea in the harbor sad.
Now they actually don’t need us. That is the next move.
Ya know what’s flying off the shelves for the wealthy? Bunkers

**************

Tell me who funds the Canadian TaxPayers group that speaks on ‘our’ behalf. Then we have the basis for a sound analysis and conversation. Are you a card carrying member of the association?

Who funds them?

Same with the Fraser Institute..
who funds them.

A group of taxpayers on facebook is much more credible. Look beyond the paint.

#51 TurnerNation on 03.06.21 at 4:00 pm

History. Business. We know that in WW2 IBM help keep the Camp ledgers. While Bayer (now Bayer Monsanto) supplied the chemicals.
As noted, the Blockchain is us. We are the internet of things. Our DNA is the new profit centre. Yep we are being farmed.

How’s this current WW3 looking? Every inch of earth and it inhabitants is saturated with Monsanto pesticides.
And IBM?

THIS is why we’ve not seen Blockchain used for anything is our daily lives really. It was put in place for the New System, imo. No going back now:

https://cointelegraph.com/news/new-york-governor-cuomo-reveals-covid-19-pilot-built-on-ibm-blockchain

“New York governor Cuomo reveals COVID-19 pilot built on IBM blockchain
Blockchain could play a crucial role in COVID-19 vaccination management as the globe starts to emerge from the crisis.”

…………………

– The purges continue, not only elected reps but private leaders:

CPP Investments CEO resigns after travelling for Covid-19 vaccine
John Graham has replaced Mark Machin following events that “unfolded very quickly”

Great Canadian Gaming CEO resigns after accusations of …www.alaskahighwaynews.ca › great-canadian-gaming-c…
Jan. 25, 2021 — (TSX:GC) has resigned from his job after he and his wife were accused of travelling from B.C. to the Yukon to jump the coronavirus vaccination .

———-
When your city spends all its money on the Poverty Industry Complex…coming soon?
The trend in many US cities is toward de-criminalization of theft under say $800.
This will drive people, more, toward online shopping…which appears to be a goal of the shutdowns:

“Pharmacy giant Walgreens has closed its 10th store in the San Francisco area, prompting residents to blame rampant shoplifting caused by the city’s soft-on-crime policies.

The store is set to permanently shut its doors on March 17, and the move has drawn an online petition against the closure, which accrued over 200 signatures at the time of publishing. The closure is the third since mid-October 2020, and those living in the area reported brazen thefts at Walgreens pharmacies throughout their hometowns.
http://www.washingtonexaminer.com

#52 willworkforpickles on 03.06.21 at 4:02 pm

DELETED

#53 Doug Rowat on 03.06.21 at 4:04 pm

#43 theoryAndPractice on 03.06.21 at 3:14 pm

Doug, going forward expected raising interest rates and inflation, how would you allocate percentage of bonds in a B&D portfolio, and what would be the breakdowns type of bonds ETF’s you would choose?

—-

You’re like the buddy who crashes at your place for free, eats your food, but who still wants a ride to the airport.

—Doug

#54 Dolce Vita on 03.06.21 at 4:06 pm

GRAZIE well healed “dip buyers” yesterday:

https://i.imgur.com/muYiBmD.png

Not shown is my US Death stock. Comatose. -$0.11.

[still way up, +21.79%, since I bought it as a part of my Pandemic no brainer single stock picks AND as a response to the “Give Me Liberty, or Give Me Death” Tweets last year by American’s on Twitter aghast at Italia’s lockdown and me TRYING, w/o success to warn them]

Come on America, you know, “????? and taxes”, the 2 maxims of life. So on Monday, buy into my -$0.11 dip…please. All will be forgiven.

Small potatoes, meagre investments me needs that win…well, more of it.

———————

1. Diversified.
2. ETF Boring is Good.
3. “Set if and forget it”.

Good advice from this Blog (and today as well).

#55 Dolce Vita on 03.06.21 at 4:16 pm

#53 Doug Rowat

You’re like the buddy who crashes at your place for free, eats your food, but who still wants a ride to the airport.

—Doug

——————-

THAT was good.

#56 Doug Rowat on 03.06.21 at 4:21 pm

#44 Property Accountant on 03.06.21 at 3:36 pm
Re: #1 money printer goes brrrr…

Hi Doug, aging population is one cause (which can be offset by immigration policies) but in my opinion and few other ones on this blog site – mass money printing used for quantitavive easing (bonds buying) is the main cause of suppressed yields.

—-

Quantitative easing is definitely a factor, but it hasn’t been going on for 40 years at least not to the same degree.

Regardless, the point is not the source of the decline in yields, but simply the fact that it’s a 40-year trend. Do you want to fight that?

—Doug

#57 Pasha on 03.06.21 at 4:25 pm

Crowdie, its already always been postage-free to mail a letter to any MP in Ottawa.

#58 Stone on 03.06.21 at 4:44 pm

#53 Doug Rowat on 03.06.21 at 4:04 pm
#43 theoryAndPractice on 03.06.21 at 3:14 pm

Doug, going forward expected raising interest rates and inflation, how would you allocate percentage of bonds in a B&D portfolio, and what would be the breakdowns type of bonds ETF’s you would choose?

—-

You’re like the buddy who crashes at your place for free, eats your food, but who still wants a ride to the airport.

—Doug

———

That’s a pretty good slag. Worthy of being printed and put on the fridge door. When you’re having a bad day, go over and look at it. Also, at the same time, make sure your mouth is full of milk so you can snort it out of your nose.

#59 crowdedelevatorfartz on 03.06.21 at 4:47 pm

@#50 DON
“who funds them”
++++

Well I can be certain it isn’t WE Charity and SNC Lavalin …. although judging by the amount of tax payer dollars they have hoovered up over the years…… perhaps they should fund them.

#60 Ponzius Pilatus on 03.06.21 at 4:55 pm

#24 DON on 03.06.21 at 12:46 pm
#14 crowdedelevatorfartz on 03.06.21 at 11:45 am
Speaking of negative returns.

I read a suggestion from the Canadian Taxpayers Federation that we should mail the “free” postcard that Canada Post is sending everyone to PM Justin Trudeau.

PM Justin Trudeau
220 – 1100 Cremazie East
Montreal, QC
H2P 2×2

******************
It is eye opening to see who supports the ‘Canadian Taxpayers Association’
They appear to be speakung on behalf of the little tax payer..
————–
Yeah, the toothless CTA.
I’m sure the PM is shaking in his socks.
Had a buddy once who was an excecutive in the CTA.
Often met at Jolly Taxpayer pub at HOWE street.
Got drunk and laughed at the irony.

#61 Finally on 03.06.21 at 5:06 pm

#55 Dolce Vita on 03.06.21 at 4:16 pm
#53 Doug Rowat

You’re like the buddy who crashes at your place for free, eats your food, but who still wants a ride to the airport.

—Doug

——————-

THAT was good

———————-

Agree! It’s about time Doug/Ryan/Garth reply like that

#62 Penny Henny on 03.06.21 at 5:06 pm

#16 Doug Rowat on 03.06.21 at 11:57 am
#5 T-Rev on 03.06.21 at 9:50 am
Hi Doug,

Timely article for me personally. I’ve got a portion of my portfolio that I want to set aside as savings as opposed to investment as it’s for near-term use (1-2 year horizon)…

—-

If it must be held absolutely risk-free then there are few options. But up to a 2-year time horizon is on the edge of medium term and a long time to keep ‘dry powder’.

Remember: reducing exposure to equity markets for 2 years at this point in the market cycle is itself a risk.

—Doug
//////////////

That last statement you made sure sounds a lot like FOMO, Doug.

#63 Penny Henny on 03.06.21 at 5:20 pm

#44 Sail Away on 03.06.21 at 3:18 pm
#21 DON on 03.06.21 at 12:42 pm

I have a dog that is getting older and does limited driving.

————

I barely ever let my dogs drive. They’re just too distractable.

///////////

SQUIRREL!!

#64 S.Bby on 03.06.21 at 5:23 pm

PSA.TO

This is blocked for online trading by TD Web Broker online. I tried to buy it online once and they won’t let me make a trade. I never did pursue it further.

#65 Reximus on 03.06.21 at 5:59 pm

#36 Canada bonds are junk

people like you are proof bitcoin is the Qanon of money…bitcoin like Q couldnt exist without internet echoes of nonsense like yours

#66 Nonplused on 03.06.21 at 6:01 pm

#17 Flop… on 03.06.21 at 12:09 pm

For every study there is a counter study:

https://fee.org/articles/harvard-study-gender-pay-gap-explained-entirely-by-work-choices-of-men-and-women

This one claims that when corrected for hours worked, overtime, and same job to same job the gender pay gap largely evaporates. A quote:

“What do you think of when you hear the phrase “gender pay gap”? Perhaps you think of a man and woman who work exactly the same job at exactly the same place, but he gets paid more than she does. This sort of discrimination has been illegal in the United States since the passage of the Equal Pay Act in 1963.”

The fact is that women tend to work shorter hours, shun overtime, take time off to raise kids, and shun certain types of jobs. So you can’t just take men’s average annual earnings and compare them to women’s annual earnings. You have to look at the average hourly wage for the same job, for which it is illegal to discriminate base on sex or any other reason.

So yes, it is a fact that women on average make only 80% as much as men do. They are also only working 80% as much. There isn’t anything the government is going to be able to do to correct that, if we assume it needs correcting, which it doesn’t because women should be free to chose to work however much they want.

#67 TurnerNation on 03.06.21 at 6:11 pm

Weekend fun post. I can see the future.

January 2025: your weekly ‘health’ update.
Good morning global citizens of Kanada.
Total CV deaths worldwide to date 6,666,666.
This month’s variants: Bolivian, Sudanese.

– Pre-register now for your CV-26 needle.
– We are pleased to report, all arenas and sports stadiums now are converted into full-time needle centres. Refer to online listings to catch your local virtual team sport in action.

– Hurry, we still have a few spots left for the CV-25 jab.
Book today do not be di$appointed.
– Once again we ask you to #$tayhome and shelter in place to stop the spread.
– This year’s UBI increase will be 1.2%.

#68 Stone on 03.06.21 at 6:14 pm

#62 Penny Henny on 03.06.21 at 5:06 pm
#16 Doug Rowat on 03.06.21 at 11:57 am
#5 T-Rev on 03.06.21 at 9:50 am
Hi Doug,

Timely article for me personally. I’ve got a portion of my portfolio that I want to set aside as savings as opposed to investment as it’s for near-term use (1-2 year horizon)…

—-

If it must be held absolutely risk-free then there are few options. But up to a 2-year time horizon is on the edge of medium term and a long time to keep ‘dry powder’.

Remember: reducing exposure to equity markets for 2 years at this point in the market cycle is itself a risk.

—Doug
//////////////

That last statement you made sure sounds a lot like FOMO, Doug.

———

That one needs to go up on the fridge too.

#69 Flop... on 03.06.21 at 6:38 pm

Currently running with this portfolio.

70% Equities.

29.99% Bonds.

2 tanks of petrol.

The petrol will probably take me further than the bonds…

M46BC

#70 S.Bby on 03.06.21 at 6:43 pm

Covid may become endemic…

https://globalnews.ca/news/7675174/coronavirus-pandemic-end7675174/

#71 printing press go brrr on 03.06.21 at 6:46 pm

#29 Faron on 03.06.21 at 1:25

Yellen raised rates five times bringing overnight to 1.5% by the time she departed. Powell cut to accommodate fed bond sales. Yes, it’s a mess but your whole “abolish the CBs” thing is libertarian fantasy land junk.
___________________

Real fed funds was negative during her term. Get over it. She didn’t raise rates. 1.5% fed funds with CPI at 3% ?? Please. 2% CPI today and 0.08% fed funds today??

Pathetic. Typical socialist, taking from the future of our kids and grandkids so you don’t have to pay for your mistakes. Take take take. That’s all socialist do. Be a man and responsible for your actions.

Central banks that are responsible for every crisis in the last 20+ years are going to be trusted to solve those problems?? They’ve allowed government spending beyond its means.

Print print print. Take from the future to save yourself. Can’t even be responsible for your own actions. Socialism at its worst.

Raise rates to 3%
Stop printing money.

#72 Stealth on 03.06.21 at 6:52 pm

Good evening,

Clarifying question:
Seem that the article mainly references us and other non us international bonds. Is the article also fully applicable to Canadian bonds ?

What I am trying to ascertain is what is the hypothetical “loser level” of Canadian bonds vs US vs non-us-international.
For example: are all bonds loser bonds (as referenced not explicitly) but somehow Canadian bonds are not because we are special .

Hope that makes some sense, if it doesn’t no need to reply.

Thank you

#73 VGRO and chill on 03.06.21 at 7:01 pm

Bonds pay crap because things aren’t growing like they used to. This is the elephant in the room. If there is a 40 year trend being mentioned – clearly we should discuss the causes of it, no?

The US GDP hasn’t hit 5% since the early 1980’s. It used to oscillate but get to 5, even 7%. Now we are at around 2%. So governments can’t issue bonds that pay good cash, because they don’t expect the economy to grow rapidly to create the tax revenue to pay back that bond plus its interest.

Why is stuff not growing so much anymore? Could it be that we are pushing against some natural limits? There is a systematic problem brewing? I don’t know, but the reason for bonds paying poorly is more concerning to me than the bonds paying poorly.

#74 Ponzius Pilatus on 03.06.21 at 7:02 pm

Made the mistake to lecture my Millenials about Buffet, value investments, bonds and diversified portfolio.
Got laughed out of the living room.
Called me a Dinosaur.
Cryptos and RobinHood was mentioned.
Gotta keep an eye on them.

#75 Sail Away on 03.06.21 at 7:09 pm

The frequency of 69 comments being available to view on this site is statistically improbable. Just sayin.

On that note, if you ever need a 4-digit combination for something, it’s worth trying 2469 or 6924. This has gotten me gas from locked pumps, through gated roads, and into construction trailers.

#76 tkid on 03.06.21 at 7:11 pm

Doug, I am starting to hear the phrase “inflationary depression”. What is it, and can you refer any good reference materials on it?

#77 Brian Ripley on 03.06.21 at 7:17 pm

“Regardless, the point is not the source of the decline in yields, but simply the fact that it’s a 40-year trend. Do you want to fight that?” Doug

No, and real rates have been in a 600 year down trend: http://www.chpc.biz/history-readings/suprasecular-decline

“By the late 2020s, global short term real rates will have reached permanently negative territory. By the second half of this century, global long-term real rates will have followed.” said Paul Schmelzing, JAN 2020, Bank of England Staff Working Paper No. 845

My charts of real (rate less CPI) Canadian bond yields:
http://www.chpc.biz/real-interest-rates.html
http://www.chpc.biz/real-10yr-rate.html
http://www.chpc.biz/interest-rate-spread.html

Downtrends aplenty.

On my yield curve chart:
http://www.chpc.biz/yield-curve.html
Nominal rates for 2s, 10s and 30s are all positive under 2% after 8 months of the 10yr less 2yr inverting for 8 months in 2019-2020.

The previous inversion of only 3 months in May, June and July 2007, was followed by the TSX Real Estate Index tipping over into plungeville. Today it’s heading in the same direction (FEB data).

#78 Ponzius Pilatus on 03.06.21 at 7:22 pm

In the early 80s when interests went thru the roof, my Father in Law got 15% on his 5 year Canada Savings Bonds.
Lucky fella.

#79 Flop... on 03.06.21 at 7:31 pm

I feel another Flopperism coming on.

So there is ‘quit’ in Equities, but no quit in broken bonds?

Go figure.

What if Brokeback Mountain was really a movie about a guy that had too many bonds in his portfolio?

I wish I knew how to quit you…

M46BC

https://m.youtube.com/watch?v=jwlYo8EYTWI

#80 Ponzius Pilatus on 03.06.21 at 7:33 pm

#75 Sail Away on 03.06.21 at 7:09 pm
The frequency of 69 comments being available to view on this site is statistically improbable. Just sayin.

On that note, if you ever need a 4-digit combination for something, it’s worth trying 2469 or 6924. This has gotten me gas from locked pumps, through gated roads, and into construction trailers.
—————-
Fortunately for the people around you, it does not get you out of the loony bin.

#81 Steerage snark on 03.06.21 at 7:43 pm

#76 tkid on 03.06.21 at 7:11 pm
Doug, I am starting to hear the phrase “inflationary depression”. What is it, and can you refer any good reference materials on it?

You’ll have fill his beer fridge first…..

#82 Faron on 03.06.21 at 7:48 pm

#71 printing press go brrr on 03.06.21 at 6:46 pm

She didn’t raise rates.

JFC. Can’t argue with stupid.

#83 Nonplused on 03.06.21 at 7:49 pm

#91 Jem on 03.05.21 at 6:28 pm
Question: who still has toilet paper in the closet that was bought last year? Anyone else wondering how the rush to stockpile toilet paper made the hyperspace jump to housing?
This wasn’t by accident. I think its a consequence of the brain’s ancient alarm system, which was triggered when the pandemic arrived, government’s response, govt cash flowing so that people think its desperate times, continuing pandemic restrictions, and media. Human beings in the pandemic are operating from ancient brains. Our decision making this past year and bias for action and control is a result of the primitive brain taking the driver’s seat for so many people. I suggest if the ancient brain is kicking in for you, be good to yourself, buy toilet paper, books, soap, chocolate, booze, coffee beans- the cheaper stuff your ancient brain craves for security. Just make sure you are buying low dollar amounts, eg in the tens – and not in the hundreds of thousands.

————————————

Since Texas, I’m spending most of my spare time thinking about what sort of backup generation options would be best at the lowest cost.

Some of those folks who didn’t lose power but were on variable plans saw power bills in the 1000’s of dollars. It seems that even if you still had power, if you didn’t have a locked in rate it would have been better to turn off your mains and run your generator. It would have paid for itself in 2 days.

Folks, wind only works at full capacity between 30 and 50 mph. Solar only works when the sun is shining. The previous policy has been to rely on old fossil fuel generators to balance the difference but they are increasingly shutting down for good. That means you have to do your own load balancing in weather events with your own generator. Wired in safely of course. A “suicide cord” (male on both ends) is not a good idea.

And ya, I still have toilet paper in the house. I won’t ever not again unless I really can’t afford it. A stock of toilet paper is worth more than dinner and a movie now if you can only afford one or the other. 2 is the new 1.

#84 Faron on 03.06.21 at 7:58 pm

Hi Doug. Thanks for the post today. Question: your take seems at odds with Garth’s (and mine) that we could well be headed for steady rate increases. Doesn’t that imply that eventually we’ll see meaningful coupon on bonds? Or will capital depreciation offset that for the forseeable future?

I’ll add among the virtues of holding bonds is that they serve as a store of value for rebalancing when equities dive. That’s a key component of any hedge of I understand correctly.

Cheers

#85 Flop... on 03.06.21 at 8:05 pm

As documented here before, I’ve got little puddles of money all over the place.

To keep things simple, I refer to them as my Northern Hemisphere Portfolio and my Southern Hemisphere Portfolio.

I’ve got Southern Brass, but sucking in this evergreen air is getting expensive.

At the current investment amounts, return rate and taxation levels, I estimate I will be able to retire in the year 2081, at the ripe old age of 106.

Then I had brain wave, some people would say I need to invest more, I say I just need more hemispheres.

NASA, Musk, couple of chimpanzees, I don’t care, get up there and colonize Mars, my retirement is counting on it.

Maybe in 20 or so years I drop in and see The Nice Martian At The Bank ([email protected]) open up an account in each hemisphere and I would have doubled my chances of retiring.

Martian Credit Union might even pay 6% for just having my money in the bank like the old days.

I don’t mind the desert scenery for a couple of weeks in the winter, maybe one day I’ll go full time…

M46BC

#86 crowdedelevatorfartz on 03.06.21 at 8:36 pm

@#69 Flop
“2 tanks of petrol.

The petrol will probably take me further than the bonds…”

*****

Well, after filling up two company trucks today at $1.49.9 per liter for Regular……
I’m inclined to agree with you.

Next stop, Govt car insurance at $3000.00 a year per company vehicle.

#87 crowdedelevatorfartz on 03.06.21 at 8:41 pm

@#60 Ponzie’s Pub Pint
“Often met at Jolly Taxpayer pub at HOWE street.
Got drunk and laughed at the irony.”

++++

I swilled many a pint at the Taxpayer in the 80’s and 90’s .
Knew the owner, bartenders, waitresses , etc by name.
Great , dingy, smoky, grubby, pub.
A shame it was replaced by another anonymous residential tower.

#88 crowdedelevatorfartz on 03.06.21 at 8:47 pm

@#57 Pasha
“Crowdie, its already always been postage-free to mail a letter to any MP in Ottawa.”
++++

I’m well aware of the free mail to MP’s

I just prefer to use the Liberal PR post card campaign as a chance to thumb our collective noses at “PM Pompous” and his lickspittle minions who came up with this time/cash/paper wasting exercise.

When was the last time anyone mailed a postcard?

Lets call it what it is.
A veiled Liberal “feel good” election stunt.

#89 kommykim on 03.06.21 at 9:09 pm

RE: #5 T-Rev on 03.06.21 at 9:50 am
Canadian bond ETFs are paying close to 3pct yield right now and are instantly liquid. What are your thoughts on using bond funds as a savings vehicle in such situations?

========================================

Look at the Yield To Maturity (YTM) of the bond ETF. You’ll see it’s much lower than the average coupon %. It’s what you’ll really receive over the long term.

#90 The Woosh on 03.06.21 at 9:30 pm

#53 Doug Rowat on 03.06.21 at 4:04 pm
#43 theoryAndPractice on 03.06.21 at 3:14 pm

Doug, going forward expected raising interest rates and inflation, how would you allocate percentage of bonds in a B&D portfolio, and what would be the breakdowns type of bonds ETF’s you would choose?

—-

You’re like the buddy who crashes at your place for free, eats your food, but who still wants a ride to the airport.

—Doug

—————————————————

BRAVO!!! Most excellent reply. Keep up the good work. Made my Saturday!

#91 Sail Away on 03.06.21 at 9:44 pm

#83 Nonplused on 03.06.21 at 7:49 pm

Re: emergency preparation

———-

NP, if you break it down to the absolute basics, if you are able to subsist completely off grid for 2 weeks, that covers virtually any emergency beyond total apocalypse.

So…

Lights- get a 12 v. deep cycle battery and a couple of good LED camp lights. Keep the battery on trickle charger. This will run those lights for months.

Food- camp stove and propane, enough pasta/rice/canned stuff. Honestly, most of us have enough fat reserves for 2 weeks with nothing.

Heat- lots of ways to go here

That’s all. Most people I know who go the generator route pay $10k or more and end up with a generator they never use. The above will get you through. Which, for a rare emergency, is all that’s needed.

#92 Planetgoofy on 03.06.21 at 10:07 pm

#50 DON on 03.06.21 at 3:55 pm
————–
Taxes fund everything.
Stop pissing around..
Ive paid millions in my life time. Most is waisted beyond belief.
Your splitting hairs.
The paints lead based you cant see through it.
We have idiots thay arnt accountable to anything but being re-elected.
The systems done Don. It dont mater.
Signing off got to Polish the bunker.

#93 Tkid on 03.06.21 at 10:10 pm

#81 Steerage snark on 03.06.21 at 7:43 pm

#76 tkid on 03.06.21 at 7:11 pm
Doug, I am starting to hear the phrase “inflationary depression”. What is it, and can you refer any good reference materials on it?

You’ll have fill his beer fridge first…..

Noted. Where should I send ’em?

#94 Faron on 03.06.21 at 10:35 pm

#91 Sail Away on 03.06.21 at 9:44 pm

#83 Nonplused on 03.06.21 at 7:49 pm

Re: emergency preparation

———-

NP, if you break it down to the absolute basics, if you are able to subsist completely off grid for

That’s a big ask. Nonplused can’t even go camping w/out a generator.

#95 Dr V on 03.07.21 at 12:10 am

78 ponzie – that was only a couple of percent above inflation, was taxed fully, and I don’t think there was a market to sell them for cap gains.

#96 Nonplused on 03.07.21 at 12:13 am

#91 Sail Away on 03.06.21 at 9:44 pm
#83 Nonplused on 03.06.21 at 7:49 pm

Re: emergency preparation

———-

NP, if you break it down to the absolute basics, if you are able to subsist completely off grid for 2 weeks, that covers virtually any emergency beyond total apocalypse.

So…

Lights- get a 12 v. deep cycle battery and a couple of good LED camp lights. Keep the battery on trickle charger. This will run those lights for months.

Food- camp stove and propane, enough pasta/rice/canned stuff. Honestly, most of us have enough fat reserves for 2 weeks with nothing.

Heat- lots of ways to go here

That’s all. Most people I know who go the generator route pay $10k or more and end up with a generator they never use. The above will get you through. Which, for a rare emergency, is all that’s needed.

——————————-

Ya those are considerations. But I am considering being able to run the freezer throughout said 2 weeks so I don’t spoil $100’s of dollars worth of meat. Although I suppose that wouldn’t be the worst thing that could happen if you are in Texas with a variable electric plan.

I’m leaning more towards a cheap Friman tri-fuel 7500 watt generator and some sort of cutover switch for essential circuits. I’ll probably start with the cutover switch because I already have a 2900 watt generator for camping. Fuel is the big issue. Even a 2900 goes through a lot of gas, or propane, or whatever.

I have a heat option if the natural gas stays on (natgas fireplace) but I don’t trust things like a “LittleBuddy” or a kerosene heater. Too much CO potential. A wood fireplace would be nice but I don’t have one and installing one would be $$$$$.

#97 Nonplused on 03.07.21 at 12:17 am

#73 VGRO and chill on 03.06.21 at 7:01 pm

This lady has some ideas, none of which a palatable.

https://ourfiniteworld.com/

#98 Faron on 03.07.21 at 12:50 am

#129 Cici on 03.05.21 at 10:17 pm

#39 Faron

Holy Faron, you sure have been working hard tonight!

By the way, all great posts. I’m sure Garth appreciates having another voice of reason floating about to set the records straight in the comments section.

Have a good one and keep munching on that nutritious sourdough bread!

Thanks cici. Have a good weekend!

#99 theoryAndPractice on 03.07.21 at 7:41 am

#43 theoryAndPractice on 03.06.21 at 3:14 pm

Doug, going forward expected raising interest rates and inflation, how would you allocate percentage of bonds in a B&D portfolio, and what would be the breakdowns type of bonds ETF’s you would choose?

—-

You’re like the buddy who crashes at your place for free, eats your food, but who still wants a ride to the airport.

—Doug

Well, my analogy to you is that: The driver get paid for airport transfer but the customer is taken to wrong airport and missed the flight, and lost the opportunity to fly on top of the fees paid.

#100 SOMETHINGS UP! on 03.07.21 at 7:42 am

#53 Doug Rowat on 03.06.21 at 4:04 pm
#43 theoryAndPractice on 03.06.21 at 3:14 pm

Doug, going forward expected raising interest rates and inflation, how would you allocate percentage of bonds in a B&D portfolio, and what would be the breakdowns type of bonds ETF’s you would choose?

—-

You’re like the buddy who crashes at your place for free, eats your food, but who still wants a ride to the airport.

—Doug

—————————————————

Lots of people don’t have buddies.

They would be honored to lend out a helping hand to a buddy in need.

Be kind to others.

Were not guaranteed tomorrow.

#101 James on 03.07.21 at 7:53 am

Hi Doug – What are your thoughts on keeping bonds for their price appreciation not for their yield (Gary Shilling approach)?

Thanks for your words of wisdom.

#102 IHCTD9 on 03.07.21 at 8:57 am

Ya those are considerations. But I am considering being able to run the freezer throughout said 2 weeks so I don’t spoil $100’s of dollars worth of meat. Although I suppose that wouldn’t be the worst thing that could happen if you are in Texas with a variable electric plan.

I’m leaning more towards a cheap Friman tri-fuel 7500 watt generator and some sort of cutover switch for essential circuits. I’ll probably start with the cutover switch because I already have a 2900 watt generator for camping. Fuel is the big issue. Even a 2900 goes through a lot of gas, or propane, or whatever.
— ——-

Have a look at inverter gensets. When load is low, these can throttle down while still putting out 60hz. The old school units have to hold 3600 rpm to maintain 60hz no matter what the load is. IG’s use a lot less fuel, and make a lot les noise.

Downside is they don’t make them very big, and they can be hideously expensive. 7500w’s means you’ll likely have to buy two of them, and run them in a “stack”.

#103 IHCTD9 on 03.07.21 at 9:09 am

#91 Sail Away on 03.06.21 at 9:44 pm

That’s all. Most people I know who go the generator route pay $10k or more and end up with a generator they never use. The above will get you through. Which, for a rare emergency, is all that’s needed.
————

That’s the thing with considering a genset, you have to hang your hat on what kind of power outage you’re expecting to deal with. A long one drives the costs and complexity thru the roof on all fronts. Planning for a few days outage is cheap and simple.

Probably the best way is a good sized genset, and to only run it when you need to. Or you go off the beaten path via a wood or charcoal gasifier to fuel the genset which removes the cost and considerations for storing a crapload of fuel on site.

#104 crowdedelevatorfartz on 03.07.21 at 9:28 am

@#97 Nonplused
“This lady has some ideas…”

++++

None very original.
But she did wait until about the 5 minute mark to start referencing the bible…
Another biblical Doomsday Prophecy shill.

Jared Diamond’s book
Collapse: How societies fail
A far more informative book that looks at ancient societies (Mayans, Viking settlements, European settlers in Africa, ect)
He has some very sobering conclusions for our “modern” man.

We man be able to land a man on Mars but when it come right down to it……we’re still just an angry mob with torches and pitchforks
If the storming of the Capital buildings was any indication…

You want to keep what you have?
Bullets, beans, bullion and bumwad…..in that order.

#105 Sparrow on 03.07.21 at 10:34 am

#66 Nonplused on 03.06.21 at 6:01 pm

17 Flop… on 03.06.21 at 12:09 pm

For every study there is a counter study:

https://fee.org/articles/harvard-study-gender-pay-gap-explained-entirely-by-work-choices-of-men-and-women

This one claims that when corrected for hours worked, overtime, and same job to same job the gender pay gap largely evaporates. A quote:

“What do you think of when you hear the phrase “gender pay gap”? Perhaps you think of a man and woman who work exactly the same job at exactly the same place, but he gets paid more than she does. This sort of discrimination has been illegal in the United States since the passage of the Equal Pay Act in 1963.”

The fact is that women tend to work shorter hours, shun overtime, take time off to raise kids, and shun certain types of jobs. So you can’t just take men’s average annual earnings and compare them to women’s annual earnings. You have to look at the average hourly wage for the same job, for which it is illegal to discriminate base on sex or any other reason.

So yes, it is a fact that women on average make only 80% as much as men do. They are also only working 80% as much. There isn’t anything the government is going to be able to do to correct that, if we assume it needs correcting, which it doesn’t because women should be free to chose to work however much they want.

———

Bingo!

How does this not make sense? I work with plenty of women who are on exactly the same pay scale as I am. It’s all about what they are free to choose.

#106 Stone on 03.07.21 at 10:50 am

#99 theoryAndPractice on 03.07.21 at 7:41 am
#43 theoryAndPractice on 03.06.21 at 3:14 pm

Doug, going forward expected raising interest rates and inflation, how would you allocate percentage of bonds in a B&D portfolio, and what would be the breakdowns type of bonds ETF’s you would choose?

—-

You’re like the buddy who crashes at your place for free, eats your food, but who still wants a ride to the airport.

—Doug

Well, my analogy to you is that: The driver get paid for airport transfer but the customer is taken to wrong airport and missed the flight, and lost the opportunity to fly on top of the fees paid.

———

By any chance, are you that geographically challenged driver? Challenges. Challenges. So many challenges.

Also, do you live somewhere where airports are like Tim Hortons and Shoppers Drug Mart?

Just because you didn’t get what you wanted and got called out on it, now you want to guilt trip the person who called you out. Lame-o. Dumb analogy too.

#107 Dogman01 on 03.07.21 at 10:58 am

Generators, Bullets, beans, bullion and bumwad.

The Technology Trap
https://www.youtube.com/watch?v=lKELMR6wACw

From Jared Diamond’s book Collapse you realize, no matter your self-sufficiency it will be other’s lack of self sufficiency which will collapse your preparations.
The Southern Greenland Vikings were fine but all their relatives from the failed Northern settlement showed up one day, violence, overcrowding, lack of resources.

Look at Canada and PPE, total dependence on others for goods needed in a crisis and no preparation, imagine our society will a real crisis. (a cyberattack and we are toast – snowflake society)

#108 Doug Rowat on 03.07.21 at 11:18 am

#101 James on 03.07.21 at 7:53 am

Hi Doug – What are your thoughts on keeping bonds for their price appreciation not for their yield…

—-

Timing interest rate cycles? This is difficult though many posters here will tell you otherwise. And because of smaller coupons your buffer for a mistake in timing has now largely evaporated.

Let regular portfolio rebalancing take care of whether you can get a bit more out of bond price appreciation (or on the flip side, a bit more out of yield).

—Doug

#109 Ray Sunga on 03.07.21 at 11:52 am

People have to do what is right for themselves and don’t think what the big wigs do is necessarily right for them. In our personal situation, we don’t need to take higher risks in real estate with debt, leverage and in equities. We are perfectly content with just buy provincial strip bonds in my TFSA’s, RRSP’s. We also by them in my non-registered with mostly laddering them and as an accountant by trade I know how to calculate these things and do all my income tax calculations so for me it is very easy. We are very conservative couple by nature as my wife is a life insurance administrator.

It has been over a year since I bought these things, a bunch in 2019 at 3.2% to 3.3% yields. I just bought some at 3.01% last few days. My family’s strategy is simple, just save 2.5 times the amount I was told since in my 20’s, 40% versus 15% and try to achieve a minimum 2.75% to 3.25% average before compounding rate of return.

We have run the numbers many times and saving 1) $40,000 a year at 2.75% for 35 years versus say saving 2)$15,000 a year at 7% for 35 years and we are still ahead. It is 1)$2.3 million versus 2)$2.01 million.

We have so far achieved a 3.6% average annual return before compounding since 2006 so we are still above our goal rate range of 2.75% to 3.25% before compounding.

Another very important part of our 3 part financial long term strategy is having no debts, no mortgage, no line of credit. We are debt free for 6 years now, both in our mid 40’s and having 18 months of reserve accounts in liquid savings and 3 years of living expenses in laddered GIC’s plus 12 years of guaranteed income in fixed term certain annuities and life insurance policies.

#110 Sail Away on 03.07.21 at 12:40 pm

#109 Ray Sunga on 03.07.21 at 11:52 am

Re: bonds

————-

Ray, more power to you.

I personally find the whole financial game endlessly fascinating, so would expire of ennui from your strategy.

Opportunism can be far more exciting, but you are clearly not looking for financial excitement.

#111 Ray Sunga on 03.07.21 at 2:29 pm

Sail Away, I always heard bonds were boring. The only problem is those that trade bonds and buy at low yields are losing 10% to 15% in their ETF’s in the last 12 months and don’t hold them maturity like I have always done.

Boring works for us and that is all that matters to us.

#112 Sail Away on 03.07.21 at 2:45 pm

#111 Ray Sunga on 03.07.21 at 2:29 pm

Sail Away, I always heard bonds were boring. The only problem is those that trade bonds and buy at low yields are losing 10% to 15% in their ETF’s in the last 12 months and don’t hold them maturity like I have always done.

Boring works for us and that is all that matters to us.

————-

Yep, if it works for you and the future plans are on-track, you’re doing it right.

#113 James on 03.08.21 at 7:31 am

RE: Post #108.

Thank you for your sharing your thoughts, Doug.