4 ms·

Looks at my return rates of ~8-9% on S&P 500 Excuse me, what bonds are returning that?

• jaggederest 3y ago
  Is that an inflation-adjusted return? Just curious, same thing applies whether you're comparing nominal return or real return, I just know there are "inflation-protected" bonds.
  • tekla 3y ago
    And what are those inflation protected bonds returning?
    • mrcode007 3y ago
      1.4% in TIPS auction from today.
      • mikhailfranco 3y ago
        The Fed buys TIPS to suppress the yield (inflation expectations). I know, that should be illegal, but when does that ever stop them.
        • HDThoreaun 3y ago
          Managing inflation expectations is the Feds main job.
  • dragontamer 3y ago
    And what are the inflation adjusted returns of Stocks over the last year or two?
    • tekla 3y ago
      3%. Still higher than inflation protected bonds.
      • metaphor 3y ago
        How'd you figure? Looking at the S&P 500[1] over the past two years relative to today's close: Aug 15, 2023 Close = $4,437.86 Aug 15, 2022 Close = $4,297.14 Aug 13, 2021 Close = $4,468.00 1-yr Return = +3.3% 2-yr Return = -0.7% ...and using the latest CPI-U data[2] over roughly the same period: Jul 2023 Index = 305.691 Jul 2022 Index = 296.276 Jul 2021 Index = 273.003 1-yr Inflation = +3.2% 2-yr Inflation = +12.0% ...I get real returns of +0.1% and -12.7% over 1- and 2-yr periods, respectively. Same exercise looking at Vanguard VTI ETF[3]: Aug 15, 2023 Close = $220.37 Aug 15, 2022 Close = $215.78 Aug 13, 2021 Close = $230.05 1-yr Return = +2.1% 2-yr Return = -4.2% ...I get real returns of -1.1% and -16.2% over 1- and 2-yr periods, respectively. [1] https://fred.stlouisfed.org/series/SP500 https://fred.stlouisfed.org/series/SP500 [2] https://fred.stlouisfed.org/series/CPIAUCNS https://fred.stlouisfed.org/series/CPIAUCNS [3] https://advisors.vanguard.com/investments/products/vti/vanguard-total-stock-market-etf https://advisors.vanguard.com/investments/products/vti/vangu...
• mrcode007 3y ago
  A single coca-cola corporate bond was issued with an initial yield of 7.35% https://cbonds.com/bonds/100441/ https://cbonds.com/bonds/100441/ Current META bonds yield ~5.8% Barclays bond at ~10% https://www.bondsupermart.com/bsm/bond-factsheet/US06738EBX22 https://www.bondsupermart.com/bsm/bond-factsheet/US06738EBX2...
  • tekla 3y ago
    You are comparing the S&P 500 to a single company bond? Should I also compare the return of a SpaceX stock to the S&P 500?
    • mrcode007 3y ago
      you can build a portfolio of bonds that satisfy your risk preference and target yield. bonds can also be leveraged a lot which is how they are the largest financial market in the world trumping stocks by few orders of magnitude. a return of 8-9% on broad market index like SPX in a year when the market made 20% profit tells me you're very risk averse.
      • cj 3y ago
        (Stupid question) how does someone, who is not risk averse, go about executing the strategy you’re advocating for? Are Barclays bonds available for purchase via a consumer brokerage account?
        • mrcode007 3y ago
          You can browse bonds in Schwab and interactive Brokers for example. Fwiw I am not saying to go and buy Barclays bonds, but merely exposing the fact that a market far larger than the stock market exists. Edit: one thing worth pointing out is that there are also municipal bonds which are tax free if you live in the jurisdiction of the issuer. https://www.municipalbonds.com/bonds/issue/79771PU86/ https://www.municipalbonds.com/bonds/issue/79771PU86/ Here’s an example of the SF muni bond at 8.4% coupon currently yielding ~6%
  • 3y ago