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Author: jackcrow Big gold star, 5000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35357  
Subject: Re: Question on long TIP's Date: 10/25/2010 10:48 AM
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Dave,

I have an old TIPS (Treasury Inflation-Protected Security) not TIPs, rolling around in the bottom of a financial drawer somewhere. I bought it as an experiment a long time ago, if memory serves a 3 5/8 of 28 or 29 it was purchased at slight discount on the secondary market. As you can see a better coupon than the more recent 2 1/8. I have never tried to sell it on the secondary market nor will I that was not the intent of the experiment.

We can make some guestimates from this data
http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?...

Current price in ball park of 138, the yield has gone from a meh 2 1/8 in April to 1 1/8ish now. Neither yield is a decent yield. Toss on the CPI adjustments and tiny plus tiny equals tiny. So in the near rear view mirror April was much better time to buy than today, and by my preferences April wasn't that grand either.

I have nothing against TIPS I think they are an interesting idea. Current prices and coupons, actually, prices and coupons for a while have not been in our favor. This is not one persons' opinion in isolation there are several folks that pop on off this board that find current prices and coupons stinky. Seriously, who thinks that 1.2% inflation adjusted for the next 20 years is a good deal? On what planet does that scream "buy truck loads and I'll be set for life".

If they issue a decent coupon and I can buy them for a fair price I would consider buying more.

They are silly instrument to hold in a fund, particularly on the long end because their are so few issues to choose from. Paying someone a fee to hold a basket of the exact same thing you can hold directly and buy via Treasury Direct commission free is, I don't mean to be harsh, stupid. These are not like corporates in any way shape or form for depth and breadth of selection there simply are not that many maturity dates and coupons to choose from. I'm not really sure how well the CPI adjustments translate to the individual fund holder. The funds sure look pretty on charts tho.

Anyway there is some interesting and more intelligent stuff on the WEB than is currently being kicked around most articles and sales pitches if one is willing to look, read and think.

http://www.federalreserve.gov/pubs/feds/2008/200805/index.ht...

older but many like the approach

http://www.retireearlyhomepage.com/safetips.html

jack
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