Sabri wrote: > How about this one: I beat you by one bachelors and > two masters degrees. Further, I teach debt at the > graduate level, both at masters and PhD.
Talk about apples and oranges! Wait until I get to be your age. :-) > But this is not the issue: why are you taking what I > said in my original post as if I tried to insult you > or some such thing? I just expressed a sincere opinion, > or so I thought! If your objective in the graph you sent > is to compare the "returns" of the three instruments > there, you better make the measurements in the same > measurement system. Sabri, No, my friend. I didn't take it as an insult. I took it (and still take it) as an error. This is something that can be established by anybody with a bit of patience. If I'm right, yours is not an impeachable offense. We are both good people. No question about it. Errare humanum est. You said -- and are now repeating -- that it is apple-to-oranges to compare (1) the yield to maturity of T bonds (as measured by an index that underlies CBOT options) to (2) the S&P net rate of return, and to (3) a gold ETF net rate of return. So, here's a couple of questions that should settle this: Do these assets exist? Do each of the measures refer to the net gain from holding the asset (appreciation plus income) as a ratio of initial prices? The answer is yes to both. Replace the percentage sign with a cent sign and the graph will show how many cents $1 invested in each of them (gross of transaction costs, taxes, etc.) would gain over the corresponding period of time. (I set the period to 5 years, but you can toggle the time period as you wish. If the data on different assets start at different points, then just mentally shift the lines so that they start with zero cents at the same point in time.) Note that I'm not saying that these assets are otherwise similar. They are assets. They exist as such or can be engineered by combining other traded assets. That's what they have in common. To that extent, it is entirely acceptable to compare their respective performance. Why their performance is so different is entirely another question which I'm not so foolish as to try to answer. Now, this has nothing to do with whether the yields are on on- or off-the-run T bonds. On- or off-the-run, somebody buys these Treasuries. Furthermore, how can there be off-the-run T bonds without them first being traded on-the-run? Denying this is like saying that we cannot buy IPOs, that we can only buy the stocks in the secondary markets. Now, you say that, in comparison to gold, long-term T bonds have done well. I don't know this as a matter of personal experience. But I can look at the data. You say that my original graph underestimate the performance of T bonds. I should use a T bond ETF instead. Well, I can't find T bond ETFs on Yahoo or Bloomberg, but bond ETFs are available (that is, no T bonds, just bonds). Unlike T bonds, which are pricier (because they are deemed safest), no-T bonds are expected to have higher returns. So, if I show that no-T bonds ETFs performed below the gold ETF in the last few years, then I am showing that gold very likely outperformed T bonds over the period. So, here: http://finance.yahoo.com/echarts?s=GLD#chart3:symbol=gld;range=2y;compare=blv+biv+bsv+^tyx+bnd;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined No matter how you cut it, gold ends up way above the pack. If you show that my facts are mistaken, my reasoning is faulty, or something is just flat wrong, I'll admit it and accept a beer from you. (After all, I've been multitasking while typing this, trying to get my son to bed and watching Dr Zhivago on PBS.) But if cannot show that, then you should buy me a beer. In any case, peace. [Final note on this: I didn't really intend the graph to be sent to PEN-L. I was sending it to Marxist Debate (http://groups.google.com/group/marxist-debate), an emerging force that is challenging Michael Perelman's dominance on listservs. But my mind played a trick on me and by mistake sent it to PEN-L. People should know that I plan to cross-post these exchanges on Marxist Debate whether I'm right *or* Sabri is wrong. :-) ] _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
