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Is it time to sell my Gilts?
Topic Started: 31 May 2012, 04:07 PM (1,495 Views)
newjez
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I have to admit that I am far from an expert on bonds. I stumbled into the market after running out of performing assets. I understand the basic principles, but as we are looking at Greece and Spain collapsing, things are about to get very complicated.

I envisage a time over the next 6 months when I will move from Gilts to shares. But I am unsure of how to time this. I was planning on waiting for the likely collapse, and then sell the Gilts in the aftermath.

But is this wise, or would it be better to dump now, or wait till well after the dust has selltled? Opinions appreciated.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Pig Iron
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Bogan scum

newjez
31 May 2012, 04:07 PM
I have to admit that I am far from an expert on bonds. I stumbled into the market after running out of performing assets. I understand the basic principles, but as we are looking at Greece and Spain collapsing, things are about to get very complicated.

I envisage a time over the next 6 months when I will move from Gilts to shares. But I am unsure of how to time this. I was planning on waiting for the likely collapse, and then sell the Gilts in the aftermath.

But is this wise, or would it be better to dump now, or wait till well after the dust has selltled? Opinions appreciated.
what country, whats the maturity rate and when?
Edited by Pig Iron, 31 May 2012, 04:19 PM.
I am the love child of Tony Abbott and Pauline Hanson
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newjez
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timmy
31 May 2012, 04:17 PM
what country, whats the maturity rate and when?
UK - rangeing from 5 - 15 years - invested via a fund - I don't hold the paper.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Strindberg
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What you are asking for is financial advice re securities on what ASIC define as an Internet Discussion Site. Such advice might compromise the operator of this site. Take a look at the extreme lengths that HotCopper go to on their site in order to comply with ASIC Regulation 162.

However, I see no problem with offering hindsight comments. I'm sure your gilts have done very well. You would have done even better with Australian Treasury Bonds (fixed coupon or capital indexed) due to the change in the AUD/GBP exchange rate.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
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miw
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Strindberg
31 May 2012, 05:00 PM
What you are asking for is financial advice re securities on what ASIC define as an Internet Discussion Site. Such advice might compromise the operator of this site. Take a look at the extreme lengths that HotCopper go to on their site in order to comply with ASIC Regulation 162.

However, I see no problem with offering hindsight comments. I'm sure your gilts have done very well. You would have done even better with Australian Treasury Bonds (fixed coupon or capital indexed) due to the change in the AUD/GBP exchange rate.
I sold most of my US treasuries in March and it was a mistake. The situation in the US at the moment is that people are madly taking money out of the stock market and putting into treasuries. The 10-year bond just hit another record low yield and people are talking about it heading to 1%.

The US, German and Japanese bonds are being treated as a safe haven, the UK bonds less so but still better than most places. Bonds will eventually go bad but not showing any signs of it today. I think bonds require less vigilance than shares at the moment but they require some.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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stinkbug
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Gilts - they're those skirts the dudes from Scotland wear, right?
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Count du Monet
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newjez
31 May 2012, 04:07 PM


I envisage a time over the next 6 months when I will move from Gilts to shares. But I am unsure of how to time this. I was planning on waiting for the likely collapse, and then sell the Gilts in the aftermath.

If these are Australian gilts vs Aus shares........I'd be inclined to stick with the gilts over shares.

If history repeats, then junk bonds will be the flavor of the month before shares take off again.

We have been living in the midst of deflation..........inflation is still a few years around the corner, but it is coming.

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I sold most of my US treasuries in March and it was a mistake.


Don't worry even the greats like Gross have made that error.
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miw
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Count du Monet
31 May 2012, 05:52 PM

Don't worry even the greats like Gross have made that error.
The only way not to be wrong in investing is to not invest. But if you are prepared to admit your errors then you can usually recover.

So no - I am not worried about making mistakes or indeed admitting that I made them. I wear my scars with pride.

Far be it from me to try to pass myself off as a great investor/trader, but I note that the great investors out there are mostly quite happy to talk about their mistakes - Bill Gross included. It's the non-investors who will never admit they were wrong. I do try to emulate the great investors in that regard at least.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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newjez
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Strindberg
31 May 2012, 05:00 PM
What you are asking for is financial advice re securities on what ASIC define as an Internet Discussion Site. Such advice might compromise the operator of this site. Take a look at the extreme lengths that HotCopper go to on their site in order to comply with ASIC Regulation 162.

However, I see no problem with offering hindsight comments. I'm sure your gilts have done very well. You would have done even better with Australian Treasury Bonds (fixed coupon or capital indexed) due to the change in the AUD/GBP exchange rate.
I wasn't really after advice, I just wanted a general idea of how they would perform through a crash with lots of liquidity being thrown at the markets. More of a question as to when will shares start to perform better than gilts.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Mike
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newjez
1 Jun 2012, 05:22 AM
Strindberg
31 May 2012, 05:00 PM
What you are asking for is financial advice re securities on what ASIC define as an Internet Discussion Site. Such advice might compromise the operator of this site. Take a look at the extreme lengths that HotCopper go to on their site in order to comply with ASIC Regulation 162.

However, I see no problem with offering hindsight comments. I'm sure your gilts have done very well. You would have done even better with Australian Treasury Bonds (fixed coupon or capital indexed) due to the change in the AUD/GBP exchange rate.
I wasn't really after advice, I just wanted a general idea of how they would perform through a crash with lots of liquidity being thrown at the markets. More of a question as to when will shares start to perform better than gilts.
Scenario. Spains banks collapse with the spainish govt needing a bailout. Likely to spark world wide panic.

If this happens I can see the US unloading with a massive QE3 and perhaps other stimulus measures. China will be forced to use some of their substantial reserves in another round of large stimulus.

These 2 effects would have a large impact on resources prices as we have seen in the past. Even oil will bounce, although I do hope oil drops back down to $60-70, its now at $86.

Share markets will get hammered world wide, might be lots of opportunities after that to buy into the market again, only though if you think the Euro crisis ends with spain and does not spread to Italy.

I sold my shares back in March and im now sitting in International and Australian fixed interest for now. I will wait till I think the market has bottomed out.

I am really waiting for signs the world economy will stabilise which will lead to a long and sustained rally on wall street. If you look at the share value of many US corporations compared to earnings ratios, most are undervalued some 40% or more compared to long term averages. US hares prices should be much higher, but the negativity comming from Europe keeps the market in my opinion artifically low compared to fundementals of US corporations.

In short follow the trend, if most investors are moving to cash its for good reason. Even the WA treasury has pulled most of its investments out of Europe in the last month for fear of a financial panick sweeping Europe.
Edited by Mike, 1 Jun 2012, 09:21 AM.
http://mike-globaleconomy.blogspot.com.au/
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