Bonds!

[tede02]

Despite the move in nominals, TIPS haven't moved as much. 

[Hektor]

6 minutes ago, gfp said:

I would buy the actual bonds if I was going to hold them.  For a trade that I scale into and out of I use these ETFs because they are liquid and easy.  It's not as liquid as TLT (not much is), but I like this ZROZ etf of 27-ish year average strips that Pupil mentioned.  There is a lot of juice on that type of STRIP!  Not for the faint of heart

Thank you.

[dwy000]

Whoa.  $6.5bn pulled from leveraged loan funds this week.  By far the most ever.  

[Gamecock-YT]

10 hours ago, Blake Hampton said:

All I can say is don't buy bonds. But none of you really care.

 

 

That's a pretty striking amount of hubris. You bring a lot of this bullying you receive on the site on yourself. Then you compound that with stomping off, "taking a break", only to reappear. 

 

If you really believe all the shit you are talking, then you better have your portfolio aligned accordingly. Variant perceptions are rare, and if you are right will pay off handsomely. 

 

But you stick your neck out as much as you do, you better be able to take it, and to this point you seem to wither when called out. 

 

Best of luck. 

Edited April 12, 2025 by Gamecock-YT

[Dinar]

@Blake Hampton, Blake, I have been in the markets for more than three decades.  This is the most uncertain time that I can remember, possibly comparable to Mexico in 1994 and fall of 2008 in the US/Globally. 

 

The spread of possible outcomes is very wide, so I can certainly understand your frustration/fear/concern.   Here is what I would do if I were in your place:

a) Assuming you do not have a super stable job (I think you were worried about lay-off being a Federal employee), I would have enough in T-bills to cover 12 months of expenses

b) Make a list of high quality businesses that should do well regardless of the economic environment (I am not talking about the Great Depression here.)  Then see which ones are undervalued and buy them.  The names I would buy today if I had a clean sheet: Airbus + GE + Safran (I would have as much in Airbus as in GE + Safran combined) + TDG, Fairfax, Heidelberg Materials+MCEM+CRH+Arcosa (crushed stone/sand/gravel/cement), NEN, JOE, CP.  I would also write puts on Moody's - MCO, if you get assigned, great, if you don't you make money.  You might want to take a look at Robertet in France as well.  Spirax Sarco in UK is also an interesting name.  

c) Don't use leverage, unless it is via options

d) Stay away from oil/gas/mining - I don't know anyone who has reliably made money in these sectors.  If you are concerned about inflation, find a couple of high quality US homebuilders and buy them below tangible book. 

 

Best of luck to you.  

[Spekulatius]

I think the bond trade breaks down in a stagflation  scenario too and with spectaculary bad outcome.

 

on another note and regarding the exchange rate - the Euro is  having a spectacular run. You could say that part of the Mar de Largo accord plan (if this is the plan?) is working.

 

[thepupil]

I bought TLT synthetic call on Friday, Jan 27 $70 puts are $2.5 or whatever. I’m sure that’s historically expensive. But cutting off the tail is implrtant to me given recent events. 
 

I think the duration sell off is mostly levered folks unwinding and it will reverse and there will potentially

be a nice bid for duration in a likely economic downturns.
 

over very long term, I think damage is done and th dollar/US’s status is diminished. but at least I’m short a mortgage in greater size…
 

But think a little early to conclude we’re spiraling into currency crisis/stagflation/etc.

[KJP]

12 hours ago, Dinar said:

 Heidelberg Materials+MCEM+CRH+Arcosa (crushed stone/sand/gravel/cement),

 

 

Have you look at Titan America?  I've glanced at it quickly but not close enough to have an opinion.

[thepupil]

Honestly my biggest issue with TLT is that because it has decent coupons now there’s not enough duration. Might have to Go Options on 30yr futures or zeroes. Zeroes have bad tax treatment on the accrual but the return will mostly be gain / loss from duration anyway.

 

like let’s say you put 10 points in 30 yr zero on margin. That will cost you 50-60 bps/yr in interest and another 18 bps in taxes on the accrual. So it negatively carries, call it 70 bps.

 

i think that 70 bps a year buys you a fair amount of punch as a deflation / depression hedge. Rates fall a couple % and you’re gaining 6 points to your portfolio. In an extreme japanification your getting 20 pts 

Edited April 12, 2025 by thepupil

[SharperDingaan]

12 hours ago, Gamecock-YT said:

If you really believe all the shit you are talking, then you better have your portfolio aligned accordingly. Variant perceptions are rare, and if you are right will pay off handsomely. 

 

Best of luck. 

 

Blake, keep in mind that a great many on this board bring decades of practical portfolio experience, and have all the related professional union cards that you might expect. If the PM failure rate is 30% per economic cycle, and a PM is still doing this after 4 cycles, they are in the top 24% (1-.3)^4. Selection bias.

 

Variants are outliers, most everyone achieves it via different paths, and the more cycles they survive the rarer they are. But no matter what ... everyone increasingly has similar characteristics as the number of cycles goes up. Two of them are judgement/maturity, and fluid change management. Find what suits you best, learn your craft, and apply/adapt daily.

 

Sometimes the rougher you are the better! Years of continually getting back up and playing against the Gretzky's, knocks the chips off your shoulder, raises your game, and maybe ..... there's a diamond underneath. Then it's just a matter of whether it's 50 carats .... or 500 carats, and get the hell out of my way    

 

Best of luck.

 

SD

 

  

[sleepydragon]

20 hours ago, gfp said:

I would buy the actual bonds if I was going to hold them.  For a trade that I scale into and out of I use these ETFs because they are liquid and easy.  It's not as liquid as TLT (not much is), but I like this ZROZ etf of 27-ish year average strips that Pupil mentioned.  There is a lot of juice on that type of STRIP!  Not for the faint of heart

 

gfp, I'm curious what's the thesis for buying TLT? If we have a recessions and feds cut rate, TLT will go up, but by how much ? Maybe 30%? On the hand, the tariff will cause inflations, and I feel it's not going away, which will force the feds to keep rates high. After all, so far people are still buying and having jobs. 

[Blake Hampton]

8 minutes ago, sleepydragon said:

gfp, I'm curious what's the thesis for buying TLT? If we have a recessions and feds cut rate, TLT will go up, but by how much ? Maybe 30%? On the hand, the tariff will cause inflations, and I feel it's not going away, which will force the feds to keep rates high. After all, so far people are still buying and having jobs. 

 

There is no thesis—he's simply so patriotic that he feels it's his duty to provide liquidity for our government.

[Eldad]

I’m worried that when the bull market resumes, he may become a communist. 

[Dinar]

3 hours ago, KJP said:

 

Have you look at Titan America?  I've glanced at it quickly but not close enough to have an opinion.

I have.  I don't like the business - it is in the cement business along the East Coast and hence subject to competition from imports.  I also don't like being a minority investor, unless I am highly confident of being treated well.  I don't know the family and so don't have the confidence.

[Rainier]

On 4/11/2025 at 10:23 PM, Dinar said:

@Blake Hampton, Blake, I have been in the markets for more than three decades.  This is the most uncertain time that I can remember, possibly comparable to Mexico in 1994 and fall of 2008 in the US/Globally. 

 

The spread of possible outcomes is very wide, so I can certainly understand your frustration/fear/concern.   Here is what I would do if I were in your place:

a) Assuming you do not have a super stable job (I think you were worried about lay-off being a Federal employee), I would have enough in T-bills to cover 12 months of expenses

b) Make a list of high quality businesses that should do well regardless of the economic environment (I am not talking about the Great Depression here.)  Then see which ones are undervalued and buy them.  The names I would buy today if I had a clean sheet: Airbus + GE + Safran (I would have as much in Airbus as in GE + Safran combined) + TDG, Fairfax, Heidelberg Materials+MCEM+CRH+Arcosa (crushed stone/sand/gravel/cement), NEN, JOE, CP.  I would also write puts on Moody's - MCO, if you get assigned, great, if you don't you make money.  You might want to take a look at Robertet in France as well.  Spirax Sarco in UK is also an interesting name.  

c) Don't use leverage, unless it is via options

d) Stay away from oil/gas/mining - I don't know anyone who has reliably made money in these sectors.  If you are concerned about inflation, find a couple of high quality US homebuilders and buy them below tangible book. 

 

Best of luck to you.  

 

Thanks for this. Very useful and some good names to research.

[Rainier]

On 4/12/2025 at 10:59 AM, SharperDingaan said:

 

Blake, keep in mind that a great many on this board bring decades of practical portfolio experience, and have all the related professional union cards that you might expect. If the PM failure rate is 30% per economic cycle, and a PM is still doing this after 4 cycles, they are in the top 24% (1-.3)^4. Selection bias.

 

Variants are outliers, most everyone achieves it via different paths, and the more cycles they survive the rarer they are. But no matter what ... everyone increasingly has similar characteristics as the number of cycles goes up. Two of them are judgement/maturity, and fluid change management. Find what suits you best, learn your craft, and apply/adapt daily.

 

Sometimes the rougher you are the better! Years of continually getting back up and playing against the Gretzky's, knocks the chips off your shoulder, raises your game, and maybe ..... there's a diamond underneath. Then it's just a matter of whether it's 50 carats .... or 500 carats, and get the hell out of my way    

 

Best of luck.

 

SD

 

  

I’m probably pretty similar to Blake, in that my investment analysis experience is somewhat limited and I only have in-depth expertise in one industry.
 

But I’ve been lurking on these boards for years (only recently signed up).  There are probably 20-30 people (probably more than that, but some people post sparingly and I can’t remember them) on these boards who have really helped me understand quite a few industries, businesses, and general economics. And on the topic of economics - the learning here has been significantly more useful/accurate than what I learned in college Econ classes or what I hear/read in mainstream media. And that was with me not even having access to a big chunk of the boards for a while because they were behind the paywall!

[Blake Hampton]

23 minutes ago, Rainier said:

I’m probably pretty similar to Blake, in that my investment analysis experience is somewhat limited and I only have in-depth expertise in one industry.
 

But I’ve been lurking on these boards for years (only recently signed up).  There are probably 20-30 people (probably more than that, but some people post sparingly and I can’t remember them) on these boards who have really helped me understand quite a few industries, businesses, and general economics. And on the topic of economics - the learning here has been significantly more useful/accurate than what I learned in college Econ classes or what I hear/read in mainstream media. And that was with me not even having access to a big chunk of the boards for a while because they were behind the paywall!

 

Don’t forget, Buffett has a master’s in economics.

 

I strongly feel that the macro picture today is 180 degrees from when Buffett first started. Inflation had come down post-WW2, the Fed had just gained its independence, the system wasn’t a hodge-podge of different types of assets and liabilities, debt-to-GDP was quite low, politicians were 1000x more rational, and valuations were generally incredible.

 

When I started investing, one of the first things I noticed was just how much attention the financial industry placed on the Federal Reserve. I thought it was odd, but assumed there had to be a reason, so I set off to try and understand what was really going on. I think over these last few years, I’ve developed a pretty solid handle on it. A lot of policy over the last two decades has been very radical, and even extremely intelligent people often misunderstand how these institutions work—especially how their policies ultimately effect both markets and our currency. And I said intelligent people. I don’t think the average person has any idea what the Fed and Treasury actually do.

 

I strongly think macro outcomes are going to define a lot of what we see in the future. I think a strategy that tries to completely ignore them is not prudent. At a base though, it's the valuations and the future performance of what you own that matters.

[Red Lion]

5 minutes ago, Blake Hampton said:

even extremely intelligent people often misunderstand how these institutions work

Has it ever occurred to you that you might be an extremely intelligent person who doesn’t understand everything? I wish I had your degree of certainty. 

[Blake Hampton]

1 minute ago, Red Lion said:

Has it ever occurred to you that you might be an extremely intelligent person who doesn’t understand everything? I wish I had your degree of certainty. 

When did I ever say that I understand everything? I'm confident in my understanding of macroeconomics, politics, and oil, and that's it. While I would say my understanding of the oil market is quite strong, it's almost certainly the weakest of those three.

[Blake Hampton]

39 minutes ago, Rainier said:

I’m probably pretty similar to Blake, in that my investment analysis experience is somewhat limited and I only have in-depth expertise in one industry.
 

But I’ve been lurking on these boards for years (only recently signed up).  There are probably 20-30 people (probably more than that, but some people post sparingly and I can’t remember them) on these boards who have really helped me understand quite a few industries, businesses, and general economics. And on the topic of economics - the learning here has been significantly more useful/accurate than what I learned in college Econ classes or what I hear/read in mainstream media. And that was with me not even having access to a big chunk of the boards for a while because they were behind the paywall!

 

Also read @wabuffo. His economic posts are great.

[Castanza]

2 minutes ago, Blake Hampton said:

When did I ever say that I understand everything? I'm confident in my understanding of macroeconomics, politics, and oil, and that's it. While I would say my understanding of the oil market is quite strong, it's almost certainly the weakest of those three.

“All I can say is don’t buy bonds, but none of you really care.” 

Edited April 13, 2025 by Castanza

[Blake Hampton]

31 minutes ago, Castanza said:

“All I can say is don’t buy bonds, but none of you really care.” 

 

"Paper money can see its value evaporate if fiscal folly prevails. In some countries, this reckless practice has become habitual, and, in our country’s short history, the U.S. has come close to the edge. Fixed-coupon bonds provide no protection against runaway currency."

 

- Warren Buffett, Feb. 2025

[Blake Hampton]

[Red Lion]

1 hour ago, Blake Hampton said:

When did I ever say that I understand everything? I'm confident in my understanding of macroeconomics, politics, and oil, and that's it. While I would say my understanding of the oil market is quite strong, it's almost certainly the weakest of those three.

Shit I wish I was confident in any of those. I’m not confident in much of anything right now. 

[gfp]

23 minutes ago, Blake Hampton said:

 

"Paper money can see its value evaporate if fiscal folly prevails. In some countries, this reckless practice has become habitual, and, in our country’s short history, the U.S. has come close to the edge. Fixed-coupon bonds provide no protection against runaway currency."

 

- Warren Buffett, Feb. 2025

 

Blake, what is the current positioning of your portfolio - I know you have a lot of cash and oil, but what percentage cash, which other investments?  Oil producers equity, an ETF?  Oil futures? 

 

Are you bullish on the Euro currency?  Are bearish on the DXY dollar index (primarily EUR/JPY) ?  If you own a lot of US dollar cash - same as Warren from the quote above - how does his quote make you feel about your cash?

 

Do you own any non-oil equities that you intend to hold for a long period?  Do you own Berkshire Hathaway or Fairfax Financial stock?

 

Has your investment track record since you started doing this been good?  Do you keep track of your returns to know if your confidence is working in the real world?