The Money Mustache Community

Learning, Sharing, and Teaching => Investor Alley => Topic started by: frompa on February 01, 2013, 06:22:13 AM

Title: anybody doing only treasuries?
Post by: frompa on February 01, 2013, 06:22:13 AM
Does anybody here still stick to the old YMOYL, minimize-risk-to-principal, Treasuries-only approach to their 'stache?  I'm pretty confident I know all the reasons NOT to (practically no returns, inflation eating away, etc.), but I wonder if I'm missing any of the reasons to do so.
Title: Re: anybody doing only treasuries?
Post by: KingCoin on February 01, 2013, 08:03:24 AM
As an investment approach it makes very little sense and is probably riskier long/medium term than a more balanced approach.

You'd have to have a very specific investment thesis in order to own an outsized position in treasuries. Perma-bear Gary Shilling runs through some reasons why he like treasuries in this recent Bloomberg article:

It's interesting that a bearish bonds sentiment has become the largely consensus opinion. That doesn't mean the consensus is wrong, but if you believe contrarian investing is a way to pick up undervalued assets, holding at least some treasuries might not be a bad idea, and is a good hedge to crisis.
Title: Re: anybody doing only treasuries?
Post by: Tyler on February 01, 2013, 10:09:30 AM
IMHO, it's not healthy to be 100% invested in any asset - treasuries, stocks, commodities, even cash. The YMOYL recommendation may have made sense at the moment the book was written, but markets change in unpredictable ways and diversification is a critical preparation for an unknowable future.

BTW, I own long term treasuries as a key part of my portfolio.  They're great as a counterbalance to swings in the stock market. I'll always keep a set percentage - if they fall in value it most likely means my stocks are doing great and I'll just rebalance with those profits.
Title: Re: anybody doing only treasuries?
Post by: John74 on February 01, 2013, 10:52:58 AM
Investing in nominal treasury bonds didn't even seem to work that well for Joe Dominguez himself based on what I read about his lifestyle in the late 90's. Today, one can enjoy the safety of treasuries while having inflation protection (i-bonds, TIPS), which offers a more sensible all-treasury approach. But it'll cost you.