The names Bond.

[Bubblegun]

Not really an AI stock, but take UBER... they posted their first annual profit last week (in almost five years), yet their stock has gone up 98% in the last 12 months, and 76% in the last 24 months. Makes you wonder.

It does indeed make you wonder. And while Uber seems to be seen primarily as a taxi/food delivery service. It won't be long before they start to add shipping, planes, and trucks to their service. Are we entering bubble territory? I am wondering if we are seeing the 1920s again. Post WW1 we had a massive pandemic, then the roaring 20s, and a massive headache. Are we going to see the same, post-quantative easing, post-pandemic, roaring 20s, followed by a headache? .....This is the main reason I want to diversify into bonds.

[Bubblegun]

Or if I just need money five years from now, if my equities are down big time I will be happy to have some bond fund to sell instead.

Your idea has kinda made me consider that I could put a few million or a couple of years' worth of yen into the GLOBAL BOND ETF, and if there is a big downturn, or crash nearer or during retirement, I could turn to the bonds which guarantee a return (NO?) and ride the downslope until the stocks and shares ETFs rebound again. Almost as good as cash sitting in the bank?

[sutebayashi]

Or if I just need money five years from now, if my equities are down big time I will be happy to have some bond fund to sell instead.

Your idea has kinda made me consider that I could put a few million or a couple of years' worth of yen into the GLOBAL BOND ETF, and if there is a big downturn, or crash nearer or during retirement, I could turn to the bonds which guarantee a return (NO?) and ride the downslope until the stocks and shares ETFs rebound again. Almost as good as cash sitting in the bank?

It’s by no means guaranteed… this is not my personal base case at all, but say the yen were to strengthen significantly, then those foreign currency denominated bonds would lose some value in yen terms.

But the underlying bonds should indeed be paying coupons regularly, which continuously works in a positive manner.

Even if my bond fund did go down in value, due to sudden changes in the markets, at least they probably won’t suffer as much of my stock funds.

[Tsumitate Wrestler]

Or if I just need money five years from now, if my equities are down big time I will be happy to have some bond fund to sell instead.

Your idea has kinda made me consider that I could put a few million or a couple of years' worth of yen into the GLOBAL BOND ETF, and if there is a big downturn, or crash nearer or during retirement, I could turn to the bonds which guarantee a return (NO?) and ride the downslope until the stocks and shares ETFs rebound again. Almost as good as cash sitting in the bank?

Even if my bond fund did go down in value, due to sudden changes in the markets, at least they probably won’t suffer as much of my stock funds.

Did you catch how bonds dropped over the last few years? There are no guarantees.

Jack Bogle, who recommended a minimum 20% bond allocation for all investors:

...why would an intelligent investor hold any bonds at all? First, because the long run is a series of short runs, and during many short periods, bonds have provided higher returns than stocks. In the 117 years since 1900, bonds have outpaced stocks in 42 years; in the 112 five-year periods, bonds have outpaced stocks 29 times; and even in the 103 fifteen-year periods, bonds have outpaced stocks 13 times.

Second, and perhaps more important, reducing the volatility of your portfolio can give you downside protection during large market declines, an anchor to windward, so to speak.

The Little Book of Common Sense Investing

#1 Is not guaranteed for Japanese investors due to currency risk
#2 Is not a guarantee at all (see the last 3 years)

Bonds are looking less and less appealing to me.

https://www.youtube.com/redirect?event= ... lgMSDYnT2o

https://youtu.be/JlgMSDYnT2o?feature=shared

[Bubblegun]

Your idea has kinda made me consider that I could put a few million or a couple of years' worth of yen into the GLOBAL BOND ETF, and if there is a big downturn, or crash nearer or during retirement, I could turn to the bonds which guarantee a return (NO?) and ride the downslope until the stocks and shares ETFs rebound again. Almost as good as cash sitting in the bank?

Even if my bond fund did go down in value, due to sudden changes in the markets, at least they probably won’t suffer as much of my stock funds.

Did you catch how bonds dropped over the last few years? There are no guarantees.

Jack Bogle, who recommended a minimum 20% bond allocation for all investors:

...why would an intelligent investor hold any bonds at all? First, because the long run is a series of short runs, and during many short periods, bonds have provided higher returns than stocks. In the 117 years since 1900, bonds have outpaced stocks in 42 years; in the 112 five-year periods, bonds have outpaced stocks 29 times; and even in the 103 fifteen-year periods, bonds have outpaced stocks 13 times.

Second, and perhaps more important, reducing the volatility of your portfolio can give you downside protection during large market declines, an anchor to windward, so to speak.

The Little Book of Common Sense Investing

#1 Is not guaranteed for Japanese investors due to currency risk
#2 Is not a guarantee at all (see the last 3 years)

Bonds are looking less and less appealing to me.

https://www.youtube.com/redirect?event= ... lgMSDYnT2o

https://youtu.be/JlgMSDYnT2o?feature=shared

Well, I can see what everyone is saying. But if bonds are so worthless, what's the point in anyone buying apart from say a pension fund? I'm sure pension companies have done the math, knowing how much they'll earn when someone buys an annuity vs how much they'll pay out during what's left of that person's lifetime. I wonder if i should make a poll. mmmmm

1) bonds are worth it only for big institutions.
2) bonds are worth it for the individual
3) I have no idea.
4) bonds are not worth it for an individual.

Thank you for the youtube links.I'll watch them later.

[Tsumitate Wrestler]

Even if my bond fund did go down in value, due to sudden changes in the markets, at least they probably won’t suffer as much of my stock funds.

Did you catch how bonds dropped over the last few years? There are no guarantees.

Jack Bogle, who recommended a minimum 20% bond allocation for all investors:

...why would an intelligent investor hold any bonds at all? First, because the long run is a series of short runs, and during many short periods, bonds have provided higher returns than stocks. In the 117 years since 1900, bonds have outpaced stocks in 42 years; in the 112 five-year periods, bonds have outpaced stocks 29 times; and even in the 103 fifteen-year periods, bonds have outpaced stocks 13 times.

Second, and perhaps more important, reducing the volatility of your portfolio can give you downside protection during large market declines, an anchor to windward, so to speak.

The Little Book of Common Sense Investing

#1 Is not guaranteed for Japanese investors due to currency risk
#2 Is not a guarantee at all (see the last 3 years)

Bonds are looking less and less appealing to me.

https://www.youtube.com/redirect?event= ... lgMSDYnT2o

https://youtu.be/JlgMSDYnT2o?feature=shared

Well, I can see what everyone is saying. But if bonds are so worthless, what's the point in anyone buying apart from say a pension fund? I'm sure pension companies have done the math, knowing how much they'll earn when someone buys an annuity vs how much they'll pay out during what's left of that person's lifetime. I wonder if i should make a poll. mmmmm

1) bonds are worth it only for big institutions.
2) bonds are worth it for the individual
3) I have no idea.
4) bonds are not worth it for an individual.

Thank you for the youtube links.I'll watch them later.

I think it's more nuanced. I depends on the currency you operate in, and what is available .

If you a paid in USD then yes, treasuries are probably a good call for part of your portfolio,. Especially for Americans I-Bonds have been a great deal.

However, for those working on Yen, the math isn't as clear. It isn't an automatic decision like it might be in USD terms with treasuries. Buying bonds at 149 USD to yen might be a poor decision. (And not something to be dismissed by handwavy don't time the market comments).

[sutebayashi]

Did you catch how bonds dropped over the last few years? There are no guarantees

Yes, I did catch that, and I myself noted that positive return is not guaranteed.

Also though, I try to make my asset allocation based on long term data, not on recent data alone, and with risk characteristics that look acceptable to me. Data can be had at myindex.jp.

Even recent performance though has been no disaster in yen terms. That’s a function of yen weakness overwhelming the foreign bond weakness, but the data is what it is.

Edit: also I think the GPIF is about 25% in foreign bonds if memory serves me well, but I make my choice based on data rather than what GPIF is doing - just throwing it out there. Maybe we can have a debate about their asset allocation choices

[Deep Blue]

If you only think about yen based returns you’ll paralyze yourself. The longer one’s investment horizon, the more irrelevant forex becomes. If you might need your capital back in three or five years then absolutely worry about forex. If you’re investing with a twenty or thirty year horizon then you can safely ignore it as noise.

Those of us non-Japanese who might have non JPY based expenses in the future are even more free to ignore forex as we won’t need to repatriate our non JPY investments in the future.

[Tsumitate Wrestler]

If you only think about yen based returns you’ll paralyze yourself. The longer one’s investment horizon, the more irrelevant forex becomes. If you might need your capital back in three or five years then absolutely worry about forex. If you’re investing with a twenty or thirty year horizon then you can safely ignore it as noise.

Those of us non-Japanese who might have non JPY based expenses in the future are even more free to ignore forex as we won’t need to repatriate our non JPY investments in the future.

I am speaking of bonds here, not equities. A concentrated bond purchase at a low yen-usd could take decades to recover. I am simply advocating a more cautious approach, and not applying the risk-free language that is used by investors when mention bonds in USD terms (or any domestic bond-currency pair).

Did you catch how bonds dropped over the last few years? There are no guarantees

Edit: also I think the GPIF is about 25% in foreign bonds if memory serves me well, but I make my choice based on data rather than what GPIF is doing - just throwing it out there. Maybe we can have a debate about their asset allocation choices

They used to be WAY more bond-heavy. This is their "new more aggressive" allocation.

https://www.gpif.go.jp/en/performance/p ... et_mix.pdf

[Deep Blue]

I am speaking of bonds here, not equities. A concentrated bond purchase at a low yen-usd could take decades to recover. I am simply advocating a more cautious approach, and not applying the risk-free language that is used by investors when mention bonds in USD terms (or any domestic bond-currency pair).

Bonds, equities, same risk la. Buy an S&P500 tracker and the world goes into recession, Fed cuts aggressively and yen goes back to 100 while the S&P falls 50%. You’re going to be waiting a while to recover your yen notional.

At least with offshore bonds they’re likely to do a lot better in a yen appreciation scenario than equities, from this starting point.