(請合理地)繼續討論ibond

下面為回應黃世澤關於ibond問題的原文,沒有修改 (ok, 小文法上改動)。我的原觀點已載在這裡

That’s because TIPS and all other indexed-bonds are not for “investment” use. They are merely a better storage unit than cash and other ordinary bonds.

If you have a lot of money flowing around to invest in high risk/high yield, enough to do your own hedging and enough time to manage you profilo and make choices, good for you, but many others do not have the options. That’s why some buy stocks, some buy bonds, some buy funds, some fixed with banks, some got con’d into subprime derivatives.

TIPS and other indexed are designed for people who have enough of money to retire with but not enough to play [with] the market so much. That’s why nobody wants to sell, and that’s why Wall Street went against it in the first place as they cannot charge transaction fees with it.

Also, on TIPS, if you have been reading data, or not hiding under a rock in the past couple years, US has been running towards deflation, (see http://krugman.blogs.nytimes.com/2010/11/17/disinflation-continues/), at least disinflation, not inflation, CPI has been low, and there is also the delay in data released and adjustment, so yield is low for soon matured bonds. When you look at long term, yield is up again. Still despite deflation, especially in deflation, people get original money back, in terms of real income, gain not loss.

And what are US bonds’ rates anyway? http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/, look at long term, trend with TIPS coincide.

So somehow you are risk averse, like many American who are facing severe unemployment, but you have a modest saving, you expect high inflation for whatever reasons in the long term, so you want to put money(at least part) in something equal to bond risk. TIPS can be a good option. Some people worry inflation, some people don’t. You against them having options?

If you don’t know (or don’t care, I will give you the benefit of the doubt)the basic concept behind TIPS, how do you categorise it? Do you equate US T-bill with say some blue chip security? If you don’t know or don’t care the concept behind real rate and real income, how can you tell if TIPS is a gain or loss? Or do you assume everybody invest in the same manner or has the same capacity or face the same level of risk?

Furthermore, if you are so worried about management fees, what don’t you buy it from the Treasury “Direct” http://www.treasurydirect.gov/indiv/myaccount/myaccount.htm? You think govt can charge a lower admin cost?

Better still, the govt is selling bond, a mere promise to pay in the future. It won’t hurt anyone even if the thing tanks so bad. The only bad situation is severe and prolonged deflation, where the govt need to pay high value cash and people stop buying the thing due to the deflation.

Ignore theory? You are arguing from ignorance dude. Oh, if inflation-indexed is so useless, how do you explain every major economic power having at least one? Are they, what, all stupid? For a similar question, we understand that cash is a very bad storage unit, but why do we all hold cash anyway? Answer: different fucking functions.

oh by the way, do I have to be a man to know a man when I see a man? 「你投資緊啲乜?」is really meaningless. The question is, if your argument/critique is credible, why didn’t you mention the same instruments that exist litertarily in every major country? The question, thus, is about you partiality and bias.

Now, if you had argued how sucky HK ibond is with the comparison to other inflation-indexed bonds, then that would be a meaningful discussion. If you had mere said how sucky HK ibond is without comparison, then you are just being ignorant and failed to do research. On the other hand, if you had argued how sucky HK ibond is with full knowledge of TIPS and especially the history of TIPS, and still not make the comparison, I have every reason to doubt that you are arguing for your interest group, meaning the financial sector.

[end]

以上為英文,如希望山中以中文解釋,請留言告知。

歡迎任何討論。有不同見解者請留言。或可以選擇到黃世澤那邊留言。

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1 Response to (請合理地)繼續討論ibond

  1. 山中 說道:

    回應:「…舉個例子,美國現在的 5年期 TIPS回報是 0.5%,而 5年期國債回報卻有 2.4%,反映市場的通脹預期是差不多平均每年 2%( Breakeven inflation rate)。但如果往後 5年,真實的通脹只有 1%, TIPS的投資便會跑輸國債,而且價格也會下跌,甚至有負回報」。

    We can play out the scenarios:

    Suppose TIPS set rate is 1% and 5yr bond is 3%, sticking with the 2% difference. And we have 5 levels of inflation: inflation at 5%, 2%, 1%, 0 and -1%, in real terms:

    1. For 5% inflation: TIPS (assume totally adjusted) gives 1+4=5%, bond gives, no matter what 3, 3-5=-2. TIPS wins
    2. For 2 % inflation: TIPS 1+1=2, bond 3-2=1 TIPS wins
    3. For 1%: TIPS 1+0=1, bond 3-1=2. Bond wins
    4. For 0: TIPS 1+0=1, bond 3-0=3. Bond wins
    5. For -1 TIPS 1-1=set rate=1, bond 3–1=4. Bond wins

    That’s in relative terms, if you think in absolute terms TIPS never lose because deflation issue is cut off and the princpal will return in full if it is greater than face value. Even in disinflation, deflation scenarios 3, 4 and 5, it still doesn’t lose, it’s just that the bond faits better. But bond has real absolute loss in case of 1 and relative loss in 2. TIPS has no real loss, no real gain in all scenarios.

    So you are risk adverse, worry about inflation not deflation and disinflation, and want to have a really really save retirement fund, which is your pick? If you want to get nominal gain and higher yield, true, there are many much better options, and I have been though that.

    Now go back to severe and prolonged deflation scenario. There is a school of thought suggesting that TIPS can “really” gains a lot, see http://thefinancebuff.com/tips-during-deflation.html. Reason being at that time even long term bond has been really low rate and stocks fluate with price (go low). So, going back in time http://krugman.blogs.nytimes.com/2010/12/08/bond-vigilantes-still-invisible/, the thing will be completely another story. Thus need to read things in context.

    To reiterate, TIPS is a better storage unit than cash, fixed saving, national bond (in most time, as long as inflation is running and steady). It does not really let you gain with it (not for the most time anyway). It is a next to zero risk product backed by govt for the soon-to-be retired, it also set a upper limits of how much one can buy.

    Questions remain: 1) Is TIPS a good product? Yes, and if you don’t like it don’t buy it, at the very least it cannot hurt you or the economy, unlike something called the CDS. 2) Would anyone really lose during deflation, or at anytime? Yes, the government solely, and when the prospect of recovery is dim in extreme severe deflation (I also mentioned this in my 2nd post above) . 3) Will it help HK to get pass the inflation hike? Not really. But it helps the retirees who can put money into it. 4) Can it be a good product in HK? Can be, but hard to imagine, because it is hard to imagine HK govt will work in a bona fide good manner, besides, the HK treasury does not mention TIPS and how it works; furthermore, it won’t use the capital it gets to spend it in a productive manner.

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