What the hell is a long-term debt now?
The short-term risk is significant.
There are three ways to fix the inversion of 2y and 10y interest rates:
1. There was a soft landing, inflation continued to cool down, and the Federal Reserve slowly cut interest rates. Eventually, us2y gradually declined, and us10y gradually rose, and the inversion was lifted. After that, 2y10y declined simultaneously as inflation cooled down. Short-term losses were bad, and long-term benefits were good.
2. A hard landing, a sudden thunderstorm in finance or real estate, an emergency bailout by the Federal Reserve, US2Y rapidly declined, lifted its inversion, and TLT skyrocketed.
3. If it doesn't land, inflation will not cool down at all, and the economy will not recede. The Federal Reserve can only abandon the 2% target and allow the inflation rate to stay above 3% because it does not want to continue to raise interest rates to damage the economy. Interest rates and inflation have remained high for a long time. Furthermore, interest rates on long-term bonds soared, surpassed short-term bonds, and the inversion was lifted. Although TLT will not plummet, since interest rates are not cut, it will not rise. It only has a dividend yield of 3-4%, and the return is lower than that of other investments. However, with 32 trillion dollars of debt and interest rates above 4%, I am skeptical about how long the US government can hold. I am afraid that in the end, the US government will become insolvent and unable to repay the high amount of interest. Either go bankrupt, or go back to unlimited draining to indulge in hyperinflation. The possibility of letting the whole economy and finance collapse to pay for the bill is basically zero.
I think the last one is unlikely; interest rates will have to be cut sooner or later, so TLT's long-term investment logic is still there, and it may be against the wind in the short term. It bucked the trend in the past two days. I increased my position at the bottom, and now it's just right to sell Covered Call.
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本人散户，闲钱投资，名字为富图系统生成。这里记录投资感悟与趣事。所有言论都纯属娱乐，不是投资建议。㊗️大家越来越🐮
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FelixGao : The blogger who first recommended TLT basically acknowledged it, but of course the long-term investment logic is still there; it's just that many retail investors have had to cut their flesh from a few months of sideways trading and decline.
高贵的阿德莱德OP FelixGao: I don't think anyone expected the US economy to last this long. However, spies above 450 are definitely not as attractive as TLTs below 100
稳稳的幸福ღ 高贵的阿德莱德OP: How is TMF compared to
高贵的阿德莱德OP 稳稳的幸福ღ: It's too risky, and I wouldn't recommend using triple leverage. If you're really not afraid of short-term risks, it's better to buy TLT with three times the amount of capital. There's no leverage loss, and dividends are a bit more
稳稳的幸福ღ 高贵的阿德莱德OP: Having said that, I'll just throw it away. From making money to losing money
高贵的阿德莱德OP 稳稳的幸福ღ: Bonds are easier to do than the stock market. If you look at data such as CPI, big fat, agricultural, etc., you can roughly grasp the direction of the Federal Reserve. Tomorrow's risk is mainly that CPI exceeds expectations, compounded by the Ministry of Finance issuing new debt. But CPI data is hard to guess, and I wouldn't dare to gamble. If the position is heavy, today is indeed a good time to cut part of the position. My current strategy is to buy at low prices and sell when it goes up, only earn royalties, not greed, and wait until it falls before buying it back. If it falls, it won't be cut; only royalties and dividends will be collected; there will be no loss in the long run.
isaac k3 高贵的阿德莱德OP: May I ask what is the meaning of buying on a low price as a reminder call? If it goes up, won't the salary call lose money
高贵的阿德莱德OP isaac k3: No matter how you make an undertaking call, you'll never lose money due to rising stock prices. It's the difference between earning more and earning less. You can do your own research for the details.