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Negative interest on TIPS

bo peep writes:
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Well, TIPS bought at-current-issue are a nice hedge.
If we have massive inflation you get the inflation adjustments. If we have deflation, then since the principal is not allowed to fall below the at-issue principal, you'll get a nice real return.
-- Rich Carreiro snipped-for-privacy@rlcarr.com
Reply to
Rich Carreiro
I guess that is the thinking of a Wall Street article on how to turn your retirement investments to act more like a pension plan with steady returns
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According to their bar chart, they tweak conventional asset allocations to shift about 10% (of the entirety) currently in medium term bonds into TIPS. Then in surely a mental lapse they shift almost 10% (of entirety) from foreign bonds and stocks into cash, under the preposterous assumption that their living expenses will be in dollars, regardless of how much it shrinks to or how much is imported!
Here is a chart of how US markets have been dead money for 8 years, and meanwhile the rest of developed markets have given solid returns. The emerging markets are shown tripling in that period. I recall it being often the same in earlier periods, and that the emerging bond market has given almost unbroken spectacular total returns (can't recall the developed world bond total returns).
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^GSPC
Reply to
dumbstruck
You may have noticed in the last few months that emerging market funds have stopped outperforming by much, and TIPs have sagged. In the emerging case, I think it is due to the BRIC countries having "emerged" and many funds not switching to remaining striving and vital economies like Indonesia, Peru, etc (but not advising a switch to the sketchier "frontier" economies).
BRICs haven't gotten comfortably rich, but the problem seems to be their gov'ts are beating back bubbles of success with clumsy instruments that leave the patient bloody, just like the developed world. What's needed are funds like the many "asia ex japan" but "emerging ex bric". I found another etf database to explore this at
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Reply to
dumbstruck

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