Showing posts with label US Treasury. Show all posts
Showing posts with label US Treasury. Show all posts
Sunday, August 28, 2011
Investing Tug of War
I hope you are doing well and are enjoying life as August comes to a close. For an investor, a good way to describe this past week is to think of the game Tug of War. I will illustrate this in the middle section. The first section is from Vanguard. The last section is more trivia on the subject of the Tomb of the Unknown Soldier.
Vanguard Weekly Recap
The march to extreme caution quickened its pace this week led by more disappointing news for the fragile economy. Key reports on housing, new orders, and national output indicate that the economy, still buffeted by slow growth and persistent joblessness, remains far from reaching a sustained recovery. Amid this discouraging environment, Federal Reserve Chairman Ben Bernanke—in widely anticipated comments on Friday from Jackson Hole, Wyoming—said the central bank stands ready to help dig the economy out of the doldrums but didn't indicate what tools he would use to do so. For the week ended August 26, the S&P 500 Index rose 4.7% to 1,176.80 (for a year-to-date total return—including price change plus dividends—of about -5.2%). The yield on the 10-year U.S. Treasury note increased 12 basis points to 2.19% (for a year-to-date decline of 111 basis points).
Tug of War
I think the best way to describe investing for this year is to use the game of tug of war. As you recall, in this game each side is pulling against each other to move a rope a distance so that a team can win. Normally, during the game the number of players on a team are fixed.
For investing the teams for this tug of war are gold and US Treasury Bonds on 1 side and Stocks on the other side. As gold and US Treasury Bonds go up, stocks go down and vice versa. What makes this game unique is that investors have no loyalty and are either switching sides on a continual basis or putting their money in cash and leaving the game all together.
Who will win this tug of war during 2011? My money is on Stocks since Corporate profits are at an all time record high, about 10% higher than the previous peak in 2006 while the price of gold and US Treasury Bonds are inflated, making absolutely no sense.
Just watch for yourself this week the price of gold, the interest rates on the 10 year US Treasury Bond, and the S&P 500. Since this tug of war exists, this is why a balanced portfolio has both stocks and bonds.
Tomb of the Unknown Soldier Trivia
• Originally called “The Tomb of the Unknown Soldier” it is now called “The Tomb of the Unknowns.” (This change has not been ratified by Congress.) This is the result of WWII, Korean War and the Viet Nam War.
• The guards are called “sentinels” not guards. The sen-tinels wear no insignia of rank on their uniforms so as not to outrank the “unknowns” buried there.
• The sentinels stop on the 21st step, do a ninety-degree turn and face the Tomb for 21 seconds, turn ninety de-grees again hesitate 21 seconds before beginning their return walk. This walk is done on a black mat.
• Why are the sentinels gloves wet? Their gloves are moistened to prevent losing their grip on the M14 rifles, which are unloaded, but kept ready for use at all times and always have a bayonet fixed.
• How many women have served as sentinels? Three.
• Do the sentinels carry their rifle on the same shoulder all the time? No. They always carry their rifle on the shoulder away from the tomb. After they walk 21 steps across the mat, they execute a ninety-degree turn and move the rifle to their outside shoulder.
• How often are the sentinels changed? Sentinels are changed every thirty minutes during the summer – (April 1 – September 30) - and every hour during the winter (October 1 – March 31.) During the hours the cemetery is closed, the sentinel is changed every two hours. The Tomb is guarded twenty-four hours a day, 365 days a year. There has been a sentinel on duty every minute of every day since July 2, 1937. Currently the sentinels work on a three Relief (team) rotation. 24 hours on, 24 hours off, 24 hours on, 24 hours off, 24 hours on and 96 hours off.
• What are the physical characteristics of all sentinels? For a person to apply for sentinel duty they must be be-tween 5’ 10” and 6’ 4” tall and their waist size cannot exceed 30 inches. They are assigned to Relief Teams by height. This is done so that each team will look as identical as possible.
Sunday, June 5, 2011
US Debt Limit
This week the top story was the USA reaching its debt limit of about $14.3 Trillion and the fear of default. While lots of experts have already provided insight on this topic, I want to provide input on the impact for holders of US Treasury Bonds. The first section is from Vanguard. The last section is some trivia for your enjoyment.
Vanguard
While recent reports provided reasons to pause and ponder the condition of the U.S. economy, the gradual recovery doesn't seem to be in danger. Somewhat negative news came from the index of leading economic indicators, existing-home sales, and new residential construction. While economists expected better from all three, there were explanations rather than alarms. The Federal Reserve Board's release of meeting minutes indicated that care must be taken when it eventually weans the economy off its support. For the week ended May 20, the S&P 500 Index fell 0.3% to 1,333 (for a year-to-date total return—including price change plus dividends—of about 6.8%). The yield of the 10-year U.S. Treasury note fell 3 basis points to 3.15% (for a year-to-date decrease of 15 basis points).
US Debt Limit and US Treasury Bonds
If you an investor, this is the main event for the year. The best way to watch this unfold is to watch the US Treasury yield curve that shows the interest rate for all debt issued by the US Treasury. If you are an investor that has purchased these bonds and plan to hold onto these bonds until maturity this has less of an impact than someone who is now purchasing these bonds. The foundation for all investing strategies is that all US Treasury debt has no risk of default so that this is a really, really, really big deal.
Since this is the main event, let's introduce the players like a boxing match. In this corner is the Republican party who say cut spending to reduce future debt obligations. In the other corner is the Democratic party who says that the debt limit should be extended so that it has minimal impact on the economy so that jobs can be created and spending cuts could put our country back into a recession. Who wins? I hope that us citizens eventually win.
Each view has its merits and your view of who is right depends on your perspective. If you are getting a check from the US government you probably are rooting for the Democratic party. If you are the one paying so that another person gets a check you are probably rooting for the Republican party. Everyone wants a balanced budget as long as it does not impact them directly.
Two main points exist in this debate: risk of default and a slowing economy and both impact the interest rates for US Treasury bonds. If a risk of a default exists, then investors will stop buying US Treasury bonds reducing prices and raising interest rates. If the economy slows then investors will start buying US Treasury bonds raising prices and reducing interest rates. You can determine which side is winning by watching the 10 year US Treasury bond interest rate. Since the US Treasury is the largest issuer of bonds this will control the interest rate for the entire economy including mortgages, corporate bonds, car loans, etc.
My perspective is that we will not default on the US debt and we will not slow down the economy. This is high stakes politics and sets fiscal policy for many years and we are the spectators. If we have a risk of default then interest rates go up creating a much larger problem. To illustrate, if interest rates go up by 1% because of this risk on $14.3 Trillion the impact on our budget is $143 Billion annually in higher interest payments. The last thing we need is a $143 Billion rock and the cost of credit for everything we buy will go up. Anyone who is borrowing money wants interest rates to stay low. As far as the impact on the economy, given that the Gross Domestic Product, GDP, for the USA is $20 Trillion if government spending is reduced it will have an impact of a few percent on the economy. I believe that private spending continue to increase regardless of US government spending.
What is the bottom line? The threat of a default risk will take the price for US Treasury bonds higher lowering interest rates. This means that investors should avoid buying US Treasury bonds and any mutual fund that invests in US Treasury bonds right now. Also, if the default risk becomes serious, my recommendation is to get out of all mutual funds that invest in any type of bond and go into cash until this blow over.
This is a fairly complicated topic. Please contact me if you have a question or a concern.
Trivia,
“The taxpayer - That's someone who works for the federal government but doesn't have to take the civil service examination.” Ronald Reagan
"If you put the federal government in charge of the Sahara Desert, in five years there would be a shortage of sand.” Milton Friedman
More than half of the coastline of the entire United States is in Alaska.
The Amazon rainforest produces more than 20% of the world's oxygen supply. The Amazon River pushes so much water into the Atlantic Ocean that, more than one hundred miles at sea off the mouth of the river; one can dip fresh water out of the ocean. The volume of water in the Amazon River is greater than the next eight largest rivers in the world combined and three times the flow of all rivers in the United States.
Istanbul, Turkey, is the only city in the world located on two continents.
Vanguard
While recent reports provided reasons to pause and ponder the condition of the U.S. economy, the gradual recovery doesn't seem to be in danger. Somewhat negative news came from the index of leading economic indicators, existing-home sales, and new residential construction. While economists expected better from all three, there were explanations rather than alarms. The Federal Reserve Board's release of meeting minutes indicated that care must be taken when it eventually weans the economy off its support. For the week ended May 20, the S&P 500 Index fell 0.3% to 1,333 (for a year-to-date total return—including price change plus dividends—of about 6.8%). The yield of the 10-year U.S. Treasury note fell 3 basis points to 3.15% (for a year-to-date decrease of 15 basis points).
US Debt Limit and US Treasury Bonds
If you an investor, this is the main event for the year. The best way to watch this unfold is to watch the US Treasury yield curve that shows the interest rate for all debt issued by the US Treasury. If you are an investor that has purchased these bonds and plan to hold onto these bonds until maturity this has less of an impact than someone who is now purchasing these bonds. The foundation for all investing strategies is that all US Treasury debt has no risk of default so that this is a really, really, really big deal.
Since this is the main event, let's introduce the players like a boxing match. In this corner is the Republican party who say cut spending to reduce future debt obligations. In the other corner is the Democratic party who says that the debt limit should be extended so that it has minimal impact on the economy so that jobs can be created and spending cuts could put our country back into a recession. Who wins? I hope that us citizens eventually win.
Each view has its merits and your view of who is right depends on your perspective. If you are getting a check from the US government you probably are rooting for the Democratic party. If you are the one paying so that another person gets a check you are probably rooting for the Republican party. Everyone wants a balanced budget as long as it does not impact them directly.
Two main points exist in this debate: risk of default and a slowing economy and both impact the interest rates for US Treasury bonds. If a risk of a default exists, then investors will stop buying US Treasury bonds reducing prices and raising interest rates. If the economy slows then investors will start buying US Treasury bonds raising prices and reducing interest rates. You can determine which side is winning by watching the 10 year US Treasury bond interest rate. Since the US Treasury is the largest issuer of bonds this will control the interest rate for the entire economy including mortgages, corporate bonds, car loans, etc.
My perspective is that we will not default on the US debt and we will not slow down the economy. This is high stakes politics and sets fiscal policy for many years and we are the spectators. If we have a risk of default then interest rates go up creating a much larger problem. To illustrate, if interest rates go up by 1% because of this risk on $14.3 Trillion the impact on our budget is $143 Billion annually in higher interest payments. The last thing we need is a $143 Billion rock and the cost of credit for everything we buy will go up. Anyone who is borrowing money wants interest rates to stay low. As far as the impact on the economy, given that the Gross Domestic Product, GDP, for the USA is $20 Trillion if government spending is reduced it will have an impact of a few percent on the economy. I believe that private spending continue to increase regardless of US government spending.
What is the bottom line? The threat of a default risk will take the price for US Treasury bonds higher lowering interest rates. This means that investors should avoid buying US Treasury bonds and any mutual fund that invests in US Treasury bonds right now. Also, if the default risk becomes serious, my recommendation is to get out of all mutual funds that invest in any type of bond and go into cash until this blow over.
This is a fairly complicated topic. Please contact me if you have a question or a concern.
Trivia,
“The taxpayer - That's someone who works for the federal government but doesn't have to take the civil service examination.” Ronald Reagan
"If you put the federal government in charge of the Sahara Desert, in five years there would be a shortage of sand.” Milton Friedman
More than half of the coastline of the entire United States is in Alaska.
The Amazon rainforest produces more than 20% of the world's oxygen supply. The Amazon River pushes so much water into the Atlantic Ocean that, more than one hundred miles at sea off the mouth of the river; one can dip fresh water out of the ocean. The volume of water in the Amazon River is greater than the next eight largest rivers in the world combined and three times the flow of all rivers in the United States.
Istanbul, Turkey, is the only city in the world located on two continents.
Sunday, March 27, 2011
Sell US Treasury Bond Fund
The main purpose for this e-newsletter is to let you know that it is time to make an investment change which is to sell bond funds associated with the US Treasury. For the clients who own this fund it is time to make a change. This will be discussed in some detail in the middle section. The first section is from Vanguard. The final section is on the use of wasp spray for personal protection.
Vanguard
In a week that was light on new data, a revised estimate showed the U.S. economy grew 3.1% in the fourth quarter of 2010, a bit higher than the previous estimate of 2.8% released last month. On a more downbeat note, sales of new and existing homes declined sharply. For the week ended March 25, the S&P 500 Index rose 2.7% to 1,314 (for a year-to-date total return—including price change plus dividends—of about 4.9%). The yield of the 10-year U.S. Treasury note rose 18 basis points to 3.46% (for a year-to-date increase of 16 basis points).
Sell US Treasury Mutual Fund
The performance of this type of fund is inversely related to the longer term interest rates so that as these interest rates go up the performance of this fund goes down. These longer term interest rates have been suppressed by the Federal Reserve purchasing of US Treasury bonds called Quantitative Easing or QE 1 and 2. By making these purchases the Federal Reserve increased demand and lowered the interest rates so that businesses would be more attracted to borrow money and stimulate the economy.
The Federal Reserve has been successful in their goal and the economy is recovering. Also, the Federal Reserve has stated that this program will end on time at the end of May 2011. As the Federal Reserve stops making these purchases interest rates will rise. Eventually, the Federal Reserve will sell these bonds which will raise interest rates even more. With higher interest rates coming fairly quickly, it is time to make a change before QE 2 ends.
Three options exist: buy a money market fund, buy a corporate bond fund, or buy a stock fund. If a client wants to become more conservative and take less risk it is time to buy a money market fund. If a client wants to maintain their current risk level then it is time to buy a corporate bond fund. Lastly, if a client wants to take on a higher amount of risk then it is time to buy a stock fund.
Also, if you have a home mortgage with an interest rate over 5% now would be a great time to consider re-financing to a lower interest rate. Home mortgage interest rates will increase as longer term US Treasury bond rates increase. The re-financing opportunity will not last much longer.
WASP SPRAY
A friend who is a receptionist in a church in a high risk area was concerned about someone coming into the office on Monday to rob them when they were counting the collection. She asked the local police department about using pepper spray and they recommended to her that she get a can of wasp spray instead.
The wasp spray, they told her, can shoot up to twenty feet away and is a lot more accurate, while with the pepper spray, they have to get too close to you and could overpower you. The wasp spray temporarily blinds an attacker until they get to the hospital for an antidote. She keeps a can on her desk in the office and it doesn't attract attention from people like a can of pepper spray would. She also keeps one nearby at home for home protection... Thought this was interesting and might be of use.
Val Glinka teaches self-defense to students at Sylvania Southview High School. For decades, he's suggested putting a can of wasp and hornet spray near your door or bed. Glinka considers it inexpensive, easy to find, and more effective than mace or pepper spray. The cans typically shoot 20 to 30 feet; so if someone tries to break into your home, Glinka says, "spray the culprit in the eyes". It's a tip he's given to students for decades. It's also one he wants everyone to hear. If you're looking for protection, Glinka says look to the spray.
Vanguard
In a week that was light on new data, a revised estimate showed the U.S. economy grew 3.1% in the fourth quarter of 2010, a bit higher than the previous estimate of 2.8% released last month. On a more downbeat note, sales of new and existing homes declined sharply. For the week ended March 25, the S&P 500 Index rose 2.7% to 1,314 (for a year-to-date total return—including price change plus dividends—of about 4.9%). The yield of the 10-year U.S. Treasury note rose 18 basis points to 3.46% (for a year-to-date increase of 16 basis points).
Sell US Treasury Mutual Fund
The performance of this type of fund is inversely related to the longer term interest rates so that as these interest rates go up the performance of this fund goes down. These longer term interest rates have been suppressed by the Federal Reserve purchasing of US Treasury bonds called Quantitative Easing or QE 1 and 2. By making these purchases the Federal Reserve increased demand and lowered the interest rates so that businesses would be more attracted to borrow money and stimulate the economy.
The Federal Reserve has been successful in their goal and the economy is recovering. Also, the Federal Reserve has stated that this program will end on time at the end of May 2011. As the Federal Reserve stops making these purchases interest rates will rise. Eventually, the Federal Reserve will sell these bonds which will raise interest rates even more. With higher interest rates coming fairly quickly, it is time to make a change before QE 2 ends.
Three options exist: buy a money market fund, buy a corporate bond fund, or buy a stock fund. If a client wants to become more conservative and take less risk it is time to buy a money market fund. If a client wants to maintain their current risk level then it is time to buy a corporate bond fund. Lastly, if a client wants to take on a higher amount of risk then it is time to buy a stock fund.
Also, if you have a home mortgage with an interest rate over 5% now would be a great time to consider re-financing to a lower interest rate. Home mortgage interest rates will increase as longer term US Treasury bond rates increase. The re-financing opportunity will not last much longer.
WASP SPRAY
A friend who is a receptionist in a church in a high risk area was concerned about someone coming into the office on Monday to rob them when they were counting the collection. She asked the local police department about using pepper spray and they recommended to her that she get a can of wasp spray instead.
The wasp spray, they told her, can shoot up to twenty feet away and is a lot more accurate, while with the pepper spray, they have to get too close to you and could overpower you. The wasp spray temporarily blinds an attacker until they get to the hospital for an antidote. She keeps a can on her desk in the office and it doesn't attract attention from people like a can of pepper spray would. She also keeps one nearby at home for home protection... Thought this was interesting and might be of use.
Val Glinka teaches self-defense to students at Sylvania Southview High School. For decades, he's suggested putting a can of wasp and hornet spray near your door or bed. Glinka considers it inexpensive, easy to find, and more effective than mace or pepper spray. The cans typically shoot 20 to 30 feet; so if someone tries to break into your home, Glinka says, "spray the culprit in the eyes". It's a tip he's given to students for decades. It's also one he wants everyone to hear. If you're looking for protection, Glinka says look to the spray.
Sunday, August 30, 2009
US Treasury Bonds
HISTORY LESSON:
The U.S. government knew that the costs of World War I would be great, and the question of how to pay for the war was matter of intense debate. The resulting decision was to pay for the war with a balance between higher taxes and government debt. Traditionally, the government borrowed from other countries, but there were no other countries from which to borrow in 1917: U.S. citizens would have to fully finance the war through both higher taxes and purchases of war bonds. The Treasury raised funding throughout the war by floating $21.5 billion in 'Liberty bonds.'
TYPES
A United States Treasury security is a government debt issued by the United States Department of the Treasury through the Bureau of the Public Debt. Treasury securities are the debt financing instruments of the United States Federal government, and they are often referred to simply as Treasuries. There are four types of marketable treasury securities: Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation Protected Securities (TIPS).
Treasury bills (or T-bills) mature in one year or less. Like zero-coupon bonds, they do not pay interest prior to maturity; instead they are sold at a discount of the par value to create a positive yield to maturity. Many regard Treasury bills as the least risky investment available to U.S. investors. Regular weekly T-bills are commonly issued with maturity dates of 28 days (or 4 weeks, about a month), 91 days (or 13 weeks, about 3 months), 182 days (or 26 weeks, about 6 months), and 364 days (or 52 weeks, about 1 year).
Treasury notes (or T-Notes) mature in two to ten years. They have a coupon payment every six months, and are commonly issued with maturities dates of 2, 3, 5, 7 or 10 years, for denominations from $100 to $1,000,000.
Treasury bonds (T-Bonds, or the long bond) have the longest maturity, from twenty years to thirty years. There are 2 types, a coupon bond with payment every six months like T-Notes, or a without a coupon called a zero coupon bond. They are commonly issued with maturity of thirty years. The secondary market is highly liquid.
Treasury Inflation-Protected Securities (or TIPS) are the inflation-indexed bonds issued by the U.S. Treasury. The principal is adjusted to the Consumer Price Index, the commonly used measure of inflation. The coupon rate is constant, but generates a different amount of interest when multiplied by the inflation-adjusted principal, thus protecting the holder against inflation. TIPS are currently offered in 5-year, 10-year and 20-year maturities. This is not good for a long term growth investment.
TREASURY YIELD CURVE
The different time durations have different interest rates and when plotted on a graph form a curve. Some of the rates from yesterday are: 3 month = 0.15%, 6 month = 0.24%, 2 year = 1.06%, 5 year = 2.50%, 10 year = 3.57%, and 30 year = 4.43%. Note that the rate grows with time to compensate for the time risk of holding for a longer time period. This is normal and the shape is called a normal yield curve.
INTEREST RATE CHANGES AND LONG TERM BONDS
The price of the bond changes with the interest rate and the longer the time duration the bigger the change. To best illustrate this point, a 30 year zero coupon will be used. The value of the bond, the price to buy or sell, is shown below for different interest rates.
1% = $749, 2% = $563, 3% = $424, 4% = $320, 5% = $243
6% = $185, 7% = $140, 8% = $107, 9% = $82, 10% = $63
Notice how fast the value drops with rising interest rate. Imagine buying a $1,000 bond with interest rates are at 4%, about like now, and paying $320 and then selling it when the interest rate is at 5% and only having a value of $243 and losing 25% of your money, OUCH. Imagine buying a $1,000 bond with interest rates are at 7% and paying $140 and then selling it when the interest rate is at 5% and having a value of $243 and making 70% of your money, BEAUTIFUL. To get a capital gain you want to buy long bonds when interest rates are falling.
What is the bottom line: With the massive amount of US government spending and having a record deficit, $1.27 trillion so far this year, $180.7 billion in July alone, interest rates are going to go up. DO NOT OWN LONG TERM BONDS NOW, YOU ACCOUNT WILL GO OUCH!!!!!!!!
The U.S. government knew that the costs of World War I would be great, and the question of how to pay for the war was matter of intense debate. The resulting decision was to pay for the war with a balance between higher taxes and government debt. Traditionally, the government borrowed from other countries, but there were no other countries from which to borrow in 1917: U.S. citizens would have to fully finance the war through both higher taxes and purchases of war bonds. The Treasury raised funding throughout the war by floating $21.5 billion in 'Liberty bonds.'
TYPES
A United States Treasury security is a government debt issued by the United States Department of the Treasury through the Bureau of the Public Debt. Treasury securities are the debt financing instruments of the United States Federal government, and they are often referred to simply as Treasuries. There are four types of marketable treasury securities: Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation Protected Securities (TIPS).
Treasury bills (or T-bills) mature in one year or less. Like zero-coupon bonds, they do not pay interest prior to maturity; instead they are sold at a discount of the par value to create a positive yield to maturity. Many regard Treasury bills as the least risky investment available to U.S. investors. Regular weekly T-bills are commonly issued with maturity dates of 28 days (or 4 weeks, about a month), 91 days (or 13 weeks, about 3 months), 182 days (or 26 weeks, about 6 months), and 364 days (or 52 weeks, about 1 year).
Treasury notes (or T-Notes) mature in two to ten years. They have a coupon payment every six months, and are commonly issued with maturities dates of 2, 3, 5, 7 or 10 years, for denominations from $100 to $1,000,000.
Treasury bonds (T-Bonds, or the long bond) have the longest maturity, from twenty years to thirty years. There are 2 types, a coupon bond with payment every six months like T-Notes, or a without a coupon called a zero coupon bond. They are commonly issued with maturity of thirty years. The secondary market is highly liquid.
Treasury Inflation-Protected Securities (or TIPS) are the inflation-indexed bonds issued by the U.S. Treasury. The principal is adjusted to the Consumer Price Index, the commonly used measure of inflation. The coupon rate is constant, but generates a different amount of interest when multiplied by the inflation-adjusted principal, thus protecting the holder against inflation. TIPS are currently offered in 5-year, 10-year and 20-year maturities. This is not good for a long term growth investment.
TREASURY YIELD CURVE
The different time durations have different interest rates and when plotted on a graph form a curve. Some of the rates from yesterday are: 3 month = 0.15%, 6 month = 0.24%, 2 year = 1.06%, 5 year = 2.50%, 10 year = 3.57%, and 30 year = 4.43%. Note that the rate grows with time to compensate for the time risk of holding for a longer time period. This is normal and the shape is called a normal yield curve.
INTEREST RATE CHANGES AND LONG TERM BONDS
The price of the bond changes with the interest rate and the longer the time duration the bigger the change. To best illustrate this point, a 30 year zero coupon will be used. The value of the bond, the price to buy or sell, is shown below for different interest rates.
1% = $749, 2% = $563, 3% = $424, 4% = $320, 5% = $243
6% = $185, 7% = $140, 8% = $107, 9% = $82, 10% = $63
Notice how fast the value drops with rising interest rate. Imagine buying a $1,000 bond with interest rates are at 4%, about like now, and paying $320 and then selling it when the interest rate is at 5% and only having a value of $243 and losing 25% of your money, OUCH. Imagine buying a $1,000 bond with interest rates are at 7% and paying $140 and then selling it when the interest rate is at 5% and having a value of $243 and making 70% of your money, BEAUTIFUL. To get a capital gain you want to buy long bonds when interest rates are falling.
What is the bottom line: With the massive amount of US government spending and having a record deficit, $1.27 trillion so far this year, $180.7 billion in July alone, interest rates are going to go up. DO NOT OWN LONG TERM BONDS NOW, YOU ACCOUNT WILL GO OUCH!!!!!!!!
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