Yet another who has the same view on TIPS that I have mentioned here several times. He also writes that this strategy is pretty much free of Fed behavior, something I've stated here as well.
The only risk, in my view, is the calculation for inflation. You buy if the yield above inflation is acceptable to your needs. That's pretty much it. That's the decision. Need more above inflation? Pick the right stocks. A lot of companies, including both the government and households, are going to have trouble financing debt.
Despite the recent risk-on rally, I think the broad indexes will struggle for real returns in the long run. Valuations are very high. There is a "buy the dip" mentality that has become ingrained through money supply expansion over decades, but debt is making this unsustainable.
I do see the Fed eventually caving and increasing its 2% target. Political pressure will do that. The Fed already changed the wording to a "2% average" without actually defining the averaging period. They've also corrupted it through stating a "dual mandate," which could hurt retiree savings -- newly invested money -- should they once again drop real yields into negative territory to prop up employment.
Negative real yields are not good for improving overall living standards in an economy. Bad companies need to be weeded out, just as bad workers need to be weeded out. Corporate socialism is just as bad as labor socialism. Both encourage poor productivity. Real productivity is the only thing that can improve living standards.
The only risk, in my view, is the calculation for inflation. You buy if the yield above inflation is acceptable to your needs. That's pretty much it. That's the decision. Need more above inflation? Pick the right stocks. A lot of companies, including both the government and households, are going to have trouble financing debt.
Despite the recent risk-on rally, I think the broad indexes will struggle for real returns in the long run. Valuations are very high. There is a "buy the dip" mentality that has become ingrained through money supply expansion over decades, but debt is making this unsustainable.
I do see the Fed eventually caving and increasing its 2% target. Political pressure will do that. The Fed already changed the wording to a "2% average" without actually defining the averaging period. They've also corrupted it through stating a "dual mandate," which could hurt retiree savings -- newly invested money -- should they once again drop real yields into negative territory to prop up employment.
Negative real yields are not good for improving overall living standards in an economy. Bad companies need to be weeded out, just as bad workers need to be weeded out. Corporate socialism is just as bad as labor socialism. Both encourage poor productivity. Real productivity is the only thing that can improve living standards.
