Inflation

[MPMD]

unfortunately that isn't the case. one party isn't interested in governing

whether or not i agree with you, inflation is much more complex both on the solutions and causes sides than partisan politics.

the period of low inflation we had lasted through multiple admins including the most tumultuous and unpredictable one in modern history.

whatever is going on here i think it's unhelpful to just go to our priors/retreat to our corners.

i will agree with you to say that the GOP is likely to benefit hugely in 2022 from inflation and omicron despite not even pretending to have any idea how to even begin to address either one. if the 2020 election had gone the other way tens of millions of people and the biggest media empire in the country would simply be denying that inflation was happening. fake news from the deep state.

[triad]

whether or not i agree with you, inflation is much more complex both on the solutions and causes sides than partisan politics.

the period of low inflation we had lasted through multiple admins including the most tumultuous and unpredictable one in modern history.

whatever is going on here i think it's unhelpful to just go to our priors/retreat to our corners.

i will agree with you to say that the GOP is likely to benefit hugely in 2022 from inflation and omicron despite not even pretending to have any idea how to even begin to address either one. if the 2020 election had gone the other way tens of millions of people and the biggest media empire in the country would simply be denying that inflation was happening. fake news from the deep state.

if was just referring to the debt ceiling debate. the choices are self inflicted recession or not. seems like an easy choice for me, not so much for others.

inflation is definitely more complex. supply chain problems from covid and the suez canal don't have an easy fix. increasing the labor supply domestically would help but increasing immigration and government funding of daycare are proving to be unpopular positions.

[YogiMD]

I wonder if with inflation at all times high and the interest rates low, would still make sense the traditional allocation of "your age in bonds", or the bond allocation portion should change in any way? My main concern is that bonds yield will fall behind inflation too much. Any thoughts?

[jacoavlu]

I wonder if with inflation at all times high and the interest rates low, would still make sense the traditional allocation of "your age in bonds", or the bond allocation portion should change in any way? My main concern is that bonds yield will fall behind inflation too much. Any thoughts?

as usual, it depends on your risk tolerance and a lot of factors and there isn’t a right or wrong answer. the only bonds i hold are i bonds.

[Tim]

I wonder if with inflation at all times high and the interest rates low, would still make sense the traditional allocation of "your age in bonds", or the bond allocation portion should change in any way? My main concern is that bonds yield will fall behind inflation too much. Any thoughts?

Just pointing out this a form of active management and market timing.
AA change based the perception of the future rather than your own risk profile as mentioned.

[jacoavlu]

Just pointing out this a form of active management and market timing.
AA change based the perception of the future rather than your own risk profile as mentioned.

this is the market force that manipulation of rates downward is intended to do

[Tim]

this is the market force that manipulation of rates downward is intended to do

YogiMD was referring to changing AA based on market forces.

[jacoavlu]

YogiMD was referring to changing AA based on market forces.

yep. i wasn’t disagreeing with you. i’m not sure the point you’re making.

[StarTrekDoc]

he's in favor of not having a self-inflicted recession. the other party feels differently

It's always the opposition party that does this cause they are riding shotgun. Akin of threatening to throw the car into park cause it's on the middle console to get attention but at the end of the day, knowing it'll cause harm to everyone --but it does force the driver to give the shotgun it's audience of insanity.

[triad]

It's always the opposition party that does this cause they are riding shotgun. Akin of threatening to throw the car into park cause it's on the middle console to get attention but at the end of the day, knowing it'll cause harm to everyone --but it does force the driver to give the shotgun it's audience of insanity.

if every opposition party did this you would have a point. that is not the case

[bovie]

if every opposition party did this you would have a point. that is not the case

You seem oddly intent on making this political.

[triad]

You seem oddly intent on making this political.

i just don't want to suffer because of idiocy. purely selfish motives here

[Brains428]

A lot of people have retreated from bonds because of the negative real yields. But if you view bonds as the price of money for whatever duration that bond is, and inflation as a backward looking metric, then it's less than intuitive to set an asset allocation based on inflation. It's like predicting the road ahead by looking at the rearview mirror.

It should be anticipated that we have a recession if QE ends and Fed funds rate increases (both independent scenarios in and of themselves would potentially lead to lower growth). https://fred.stlouisfed.org/series/FEDFUNDS
- the only area in the above chart where fed funds were increased and not followed by a recession was right after 1990.

IMO, accommodative policy has been cheered on because it benefited the largest working demographic for a long time. I wouldn't be surprised if the end of 2018 happens again- try to pull the punch bowl, only to give it back because the largest voting block which is already in retirement or near retirement sees a 20% haircut in retirement portfolios.

[bovie]

i just don't want to suffer because of idiocy. purely selfish motives here

Idiocy isn't unique to the "opposition party" you continue to reference, nor to that which you support. Plenty of idiocy to go around.

[bovie]

A lot of people have retreated from bonds because of the negative real yields. But if you view bonds as the price of money for whatever duration that bond is, and inflation as a backward looking metric, then it's less than intuitive to set an asset allocation based on inflation. It's like predicting the road ahead by looking at the rearview mirror.

Agree that you shouldn't set an asset allocation based on inflation; it should instead be static (or with prescribed changes) and set to deal with--or without--inflation.

Love the analogy as well, but I'm not sure it's entirely accurate as the best predictor of future bond returns is current bond yields.

So the retreat--at least for traders and market timers--seems appropriate to me, if understandable.

I'll continue to stick with my bondless allocation, it seems.