Today is a pot-pourri day (Does anyone use this French term anymore?).  Okay.  Today, I have three dissimilar questions all rolled into one column.  Is that better?  It is for me.  

  • What do you think about the bond market?  How high or low will the 10- or 30-year treasuries go in 2011?

Hmmm … The bond market, specifically the Treasury bond market.  Hmmm … Well, as I write this, the 10-year is at 3.41 and the 30-year is at 4.52.  Not particularly good yields, considering what one will get in the stock market this year, but this is not the question, now is it?  No, the writer is asking me to look into the future, or at least my vision of the future.  So here we go …

Long-term Treasury bonds have long been a staple of conservative investing.  Why?  Simply, the answer is stability and safety.  The yields tend to stay put (relatively) and the bonds are backed by “the full faith and credit” of the United States government.  Granted, since last March, the yields on the 10- and 30-year have moved up and down quite a bit, relatively speaking.  In the last five years, though, the yields have been somewhat steady, except for the big dip in 2009.  However, in the last thirty years (which is what we are talking about), the yields peaked at around 15% (early eighties), give or take, and then steadily dropped to the levels we see today.  Now that I think about it, Treasury bonds really have not been that stable, have they?  As to their safety … Until the Republican Tea Party folks came to town, one never had a reason to worry.  Well, that is no longer the case.  This year could be the year in which one could no longer describe Treasury bonds as “safe.”  If the extreme deficit hawks in Congress flex their newly found muscle with a “no thank you” to raising the debt ceiling sometime between March and May, not only will the 10- and 30-year bonds collapse, but the global economy will as well.  Even the rhetoric of the debate could cause yields to move, if that debate is seen as real, not just politics as usual.  In truth, given this, I have no idea about 10- and 30- year rates in 2011.

  • Why doesn’t everybody stop listening to Moody’s and start using his or her own brain?  This way, Moody’s will go out of business.  Its time they did.

The question is rhetorical, but at least one person agrees with me.  Yahoo!

  • Just out of curiosity, are you in SLO area or San Simeon area?  Your puzzling clues in the humility article are driving me nuts.

Sorry to make you crazy.  This is never my intention, but, alas, I am human, and it seems that more often than not, someone out there (or in here) is making someone crazy, so I guess I am not an isolated case.  I am closer to San Luis Obispo (SLO) than San Simeon, but I am even closer to Arroyo Grande than I am to SLO.  In fact, I am even closer to Pozo than I am to Arroyo Grande, but that little drive (some 11 miles) takes about two hours, which is just about an hour less than it takes on the back of a horse.

Trade in the day; invest in your life …

Trader Ed