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You say stock market returns between the peak at 1929 and 1954 were almost zero even considering dividend reinvestment. I have read many sources that say the break-even point with dividend reinvestment was around 1944. And back then dividends were much larger than they typically are now, so this seems not unreasonable to believe. Can you prove what you said is true?
2020 : Cares Act
2021 : American Rescue Plan
2022 : (rampant inflation)
2023 : Omnibus Spenfing Plan
That should finish off the middle class taxpaying consumer.
Still pissed the GOVT. refuses to include fuel and food in the Inflation numbers………Dishonest…………Paul
you need to get to the point faster
Bonds trade based on yield to maturity so of course all of the 20 year bonds have the same yields. The prices are just a function of the coupon but your return if held to maturity will be the yield to maturity not the coupon rate. The coupon just tells you how income or interest you will receive each year. Having said that, there is no rule that says you must hold a bond to maturity. You could buy a 20 or 30 year bond today and sell it tomorrow or next week or month, whenever you want. However, the price you get upon sale will be determined by whatever the market yield to maturity is when you sell it. If the yield goes down your price will go up and if the yield for your bond goes up your price will go down. Your total return will be coupon income plus or minus any gain or loss in price.
So, am I to assume that you are predicting a dire economic outlook, similar to the depression lying ahead of us? The parallel story might delve into the USA size of markets, (GDP) percentage of debt, and what the Federal Reserve was doing during this same time frame. Size of bond markets, then and today, size of equity market back then and now. Add into the mix that in 1920-1950+ the Bristish pound was considered the reserve currency for the world. That ended with Brenton Woods, and the petrol-dollar was created, making the greenback the new reserve currency, which we have benefitted greatly from over the past 75 years or so. All these levers get pulled and our lives are affected. The Federal Reserve is removing the punch bowl, the party is over. The Dance band on the Titanic is playing, to quote Harry Chapin, "the icebergs off the starboard bow, Nearer my God to Thee!"
I just keep holding Altria ticker MO and its past spin-offs love the dividends (it could go to zero tomorrow it has been paid off since 2003 so it has been free to me quite sometime now) It has more then coved my leaving a "crappy old job" gotta love that quote of Josh's. I learned from John Boehner's quote "Making money from stupid people will always be a truth in businesses that sell vices they will never fail to make profits in good times or bad." I paid a pretty penny to hear him say that back in the day. I am not a social investor I buy what pays me a good return. I do hope 10 or 30 year T Bonds will get up to at least 12% not holding my breath, but at that rate I will swap my Altria and everthing else for them.
I used to buy individual bonds based on Yield to Maturity, but if they were close to the actual coupons, I would buy the higher coupon just to get a bigger payment every 6 months. I held mine to maturity (still have some), and was surprised to learn some people actively trade them. The credit market is larger than the stock market, saw a 10:7 ratio but I thought it was a much larger difference. Maybe it's converging. Thanks for another educational video, Josh.
I've been buying new issue bonds and Cd's for my cash position and rate is 4.6% to 4.7% (and some a little less) from 1-10 years on Schwab. Schwab posts CDs in two separate spots and you've gotta look for it!
Great video! Thank you!
Eggs are now $4.59/dz. A year ago they were under $2.00. Gas has come down a little due to the SPR being drained.Healthcare costs up. Rent up. Mortgages up. With the 1.7T boondoggle the last Congress did, there will be more, not less inflation. The Govt will do anything to hide the real inflation numbers. That 6.5% annual CPI print today is laughable. Not seeing this argument as valid past q1.
Good food for thought.
Is BND the new SnP?
The insane thing is 3 month treasuries are earning 4.7% right now…which is well above even the 30 year bond. A very strong indicator recession (or worse) is coming.
So, would you buy individual Bonds now, or stick with Wellington, or swap to Wellesley?
Inflation does not hurt everyone. By me Contract Nurses are getting $200-$400 extra a day to take the work for the day. I think Tech will get us back faster. Tech has made business more efficient and people too, so we can produce a lot more as individuals.. Look at Airlines, its a total loss and inflation is killing the overhead costs. Joe on the street can not afford to fly within the states for $2000.
THIS is an excellent and informative video!
Thanks again for a great video ! I enjoyed it !
So for 2023 Wellesley over Wellington…Hmmm?