Bonds.

25 сентября, 2021 от fake Выкл

«Road spoon to dinner»

(c) folk wisdom

Our moms and grandmothers invested their savings into a completely secure financial instrument — deposit. It seems even — in Sberbank deposits. But it is not exactly. Here the Sber in the testimony is confused. With its age, the Sber, as a real Coccob, can not decide: when the anniversary is noted with a scope — he leads his story since 1841. And as soon as it comes to compensation for the Soviet savings to the population — here he has sharply «younger»))

Well, okay, we are not a samp, we are talking about financial instruments. And the safety of these most financial instruments. Which, as we can see from the article, is not even constant. Hmm, alas and ah, «nothing forever under the moon.»

Our moms and grandmothers, which «kept money in a savings office» was, by the way, behind the shoulders are also a considerable experience. And this experience suggested that the savings book is «reliably beneficial and convenient.» And after all, there really were dozens of years.

And then our moms and grandmothers were not the Internet — so there was nowhere to read about the upcoming financial apocalyps.

But we have the Internet with you. And we could easily be like to residents of wild tribes, which from generation to generation are based solely on the wisdom of ancestors. Wild tribes are easier — they have a lot of life for thousands of years and for them such a system of gaining knowledge works. And we do not have. At least in the world of finance, quite accurately. Everything changes with unimaginable speed and yesterday’s safe bonds of steel today is a fairly risky tool.

How could it happen? Let’s deal with.

Bond is a debt. By which the borrower promises to return the principal debt and pay interest.

Therefore, normal logic in buying bonds is always alone —

Or, if we look at the logic of buying bonds on the other hand —

Anyway — we see that investing in bonds is always a competition with inflation, it is always reflections on inflation, it is always forecasting inflation.

And the word «security» refers to the bond as a financial instrument, only in the sense that you are guaranteed coupon payments and the return of debt bodies (I now consciously leave behind the brackets the reliability of the Issuer — we are discussing the financial instrument, and not specific issuers).

That is, you «safely» get your coupons and you will be returned to the body of debt, but

Now it remains to look at the bond market and understand whether rates on bonds are revealed at the moment inflationary expectations or not?

And here we see simply «mystic» — the world’s largest debt market — the market of American government bonds is trading below officially announced by their «speaking heads» of inflation for inflation.

Official inflation forecasts for the next year exceed 2%, and the rate on annual bonds — does not give one percent of profitability. What kind of miracles? Who is the patrons that this «wonderful» financial instrument buys? No wonders are buying his Fed. (Note in brackets — and why not buy, if you can draw more money)))

That’s just for the rest of the buyers of bonds, which are deprived of the opportunity to draw money and naively try to keep their earned in bonds, and not even drawn money — it is very bad news.

Fish, as you know, rotes from my head. Here the bond market has «spoiled» from the head — from the most «safe» and «wonderful» American bonds. The rest dance from them. If the yield on state budgets of America is striving for zero — why offer creditors much more on other bonds? And so take, the choice is small. No one offers.

What do we end up? The bond market is distorted at its own root — at the level of US government borrowing. Next, at all steps and in all countries, we have the same discrepancy between coupon income with inflationary expectations.

And the saddest thing is that the methods of counting inflation are so much imperfect, whether the so-called «linkers» — bonds are completely useless, with reference to inflation indicators are completely useless.

Judge for yourself. It is difficult for us to assess consumer inflation in the United States. But here Russia, where we all live. There are official statistics of inflation for the year — 4.9%.

And there is an assessment held by private Romir Study Holding. According to their estimates, consumer inflation amounted to about 18%. Interestingly, most people attending shops agree with Romyr’s assessment.

Well? How does the investor from 18% of real inflation save the linker bond? If she is «plunged» to five percent inflation?

But this is still talking about in general, a stable life. Yes, with an unpleasant level of price increase — but with far from a deadly level of inflation.

Many of us remember such a «wonderful» thing as «hyperinflation».

For young generations — this is when 100% or 1000% in the year prices are growing. All of a sudden. Suddenly.

Usually such a thing — hyperinflation — it comes precisely suddenly. Without the declaration of war, as they say. And at this moment, the happy owners of bonds understand that their «safe» investments covered. And — neat so. Safely. As when Soviet savings are depreciated in Sberkass. They were given out — all without cheating. Come — and get everything to a penny. Only instead of the apartment can buy sausages and a bottle of Coca-Cola.

Approximately so with bonds will be with hyperinflation.

By the way, maybe I am one such financial opportunity? Maybe all smart people say — it is necessary to invest in the bonds — and only an unreal millionaire passion, Mordesta tells about inflation some and other nonsense?

Let’s, as they say, look at the authorities — here we will not be smaller — I will go immediately with the trump card))

Warren Buffette

If desired, the opinions of other financiers can also be given. So, for example, Ben Carlson, director of the management of institutional assets of Ritholtz Wealth Management, one of the best financial consultants of the United States, expects large difficulties in the bond market in the coming years, since the rates are at the bottom, there are no interest rates, and with growing rates, the cost of bonds Doomed to fall. As you can see — a look with another perspective, but also not very optimistic.

The famous Russian retail investor — Oleg Klochenok, a large lover of bonds in a very recent past — now completely eliminated them from his portfolio.

As you can see — wherever you look — the ranks of bond lovers are thinned. No one wants to meet the times of growing inflation with bonds in the portfolio.

And why with shares not so alarmingly look into the eyes of inflation?

Yes, everything is simple: the action is a share in the company. The company is an infinite production of material values or services. Along with inflation will increase prices and these products / services. Let not immediately — but gradually everything will fall and the market will put everything in places. Inflation — and even hyperinflation — does not devalue the company, it can only create workers problems at some point.

Therefore, with an uncontrolled monetary emission that overwhelms the whole world, when the next trillions of dollars are about to come to the US market and spread through the planet, be very careful with once safe bonds. Stocks more chances to make you