UnThreaded | Threaded | Whole Thread (15) | Ignore Thread Prev | Next
Author: TMFGalagan Big gold star, 5000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35351  
Subject: Re: Poll: Ignore WSJ? Date: 1/30/2007 5:16 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Yes, the right time to buy TIPS is when the fixed rate is high, the problem being guessing what "high" is relative to other options at a given time.

Just to make sure I'm not getting confused, isn't the time to buy TIPS as opposed to traditional bonds when the real rate offered by TIPS is higher than your own estimate of the real rate being offered by traditional bonds? For example, TIPS at 2.5% might be a great deal compared to traditional bonds at 4.5% if you think inflation will be higher than 2%, while TIPS at 3.5% might not be a good deal compared to traditional bonds at 6.5% if you think inflation will be less than 3%.

Granted, if you can buy when inflation expectations are low and then those expectations get higher, then you'll end up winning on both ends. But it's easy to focus on the rate and not look beyond it to what your other options are.

dan
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (15) | Ignore Thread Prev | Next

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement