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Wilbur Ross: Long-Term Bonds Are Huge Risk


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Ironically, Ray Dalio believes you should lever up and buy long term bonds. Reason being, as bonds come closer to maturity, the steep yield curve magnifies their return.


I've done great with FFH Bonds employing this over the last few years.  ;D




It's an interesting time. On the one hand you have Buffett and Wilbur Ross saying long term bonds are the worst thing to own. On the other hand, FFH is quoting Gary Schilling about "the great disconnect" and both warn a possible "event" on the horizon. Schilling continues with his long bond strategy suggesting in a recent interview they can hit low 2's.


Two incredibly respected groups with diametric view points.


Personally, I've been struggling to decide where I fall.  One the short term I could see stocks appreciating more (much like 1925) only to widen the disconnect and make the ultimate move to equilibrium even more painful. Seems  like this is what Prem is warning about.



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Similar to the GMO discussion, the difference could be explained via timeframe preference.  If you are Buffett, one does not need to take the hint of risk when you have great operations working for you.  If you have a timeframe of a year or three, then you can be in the Schilling/HamblinWatsa camp.  I see no real diametric view as I like bonds shorter-term and do not like them longer-term.


I have placed several bids this year for some 25-year zeros with no success yet since every time we get a new micro scare, bonds rally.




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