I suggested that long dated treasury's were a good buy ages ago. Some suggested otherwise :) With the EU printing 1 trillion/Euro's year with no end in sight (80B/month) ... money is very cheap. So much so that some even pay to lend to treasuries (why would a counterfeiter borrow money when they can just print some off themselves to spend).
In the context of legal counterfeiting ... the printer gets to spend the money they print at the expense of all other money in circulation being devalued a little. They're not going to go broke, so in lending to them you're certain to get your money back, albeit that money has less purchase power when it is returned to you including interest payments (negative real yields).
With other assets the risks are much higher. A rise in interest rates would have investors re-valuing assets at much lower prices. "Fixed" income held to maturity have a definite outcome - known at the time of purchase.
Certain groups are obligated to hold treasury's - no choice and have to continue buying no matter what the price.
If the world were comprised of two islands, EU and US, and EU is printing money like crazy to spend, then US will suffer and see its currency appreciate relative to the EU. To counter the US has to print at a equal rate ... which negates the otherwise benefit to the EU. Brexit has helped the UK as otherwise the Pound was strengthening considerably against the Euro, resulting in more (cheaper) imports, fewer (expensive) exports. Realigning has negated that 'cost'. IIRC the new President will have a handful come the end of the first quarter 2017 as that's when I believe the US emergency measures come to a end and the debt ceiling will again come to the forefront. Remember last time when Fed workers were potentially not going to be paid, concerns about a default ....etc that ran right up to the wire. Well 2017 and the new President will again have to 'address' that. Many of the current big-names in the EU will also be gone come the third quarter of 2017 (elections), replaced by current unknowns who will have their hands full in addressing issues. I just hope not too many extremists rise to fame.
Pre 2008 and banks took risks on a heads win, tails win basis. Speculate and win and pay themselves massive bonuses. Speculate and lose and taxpayers bail them out. The same has been scaled up, but instead of banks its now states. Who will bail out the states that are printing to buy things (at relatively high prices), if/when the avalanche of a rush for the exit (sell) occurs. It only takes one state to decide enough is enough for such a avalanche to potentially occur (earlier to the door, the less the negative impact). UK printing to spend was spent on buying up older higher cost debt it had issued, and replaced it with more lower cost debt. Responsible central banking. Others such as the EU are irresponsibly borrowing to spend, buying corporate (speculative) assets.
Buying TIPS that promise to return your money in inflation adjusted terms at some fixed future date, less some costs (negative real yields), even at 2% yearly cost is potentially a good asset if all else is crashing and burning.
That all said and its been a good year for long dated UK treasury bonds, up over +30%, so relatively speaking not the best of times to be buying (that was last year). I suspect next 12 months will see a good year for stocks, relatively poor year for Treasury's ... at least from a UK perspective. But with the likes of the first quarter of 2017 US debt ceiling issues providing some buying opportunities along the way.
Subject to the usual unknowns of course. Remember that when Germany was in difficulties the Greeks amongst others helped bail them out. More recently Germany has irresponsibly lent to the Greeks who have irresponsibly borrowed to buy German goods. Since that has peaked, instead of writing off debt as the Greeks did for the Germans the Germans have two fingered the Greeks. Neither side is fully to blame, neither side is clean. The Greeks for instance had made paying tax voluntary, and introduced the likes of retiring at age 50, along with 3 months of summer vacation periods...etc.
Helicopter money looks to be a good choice. To date most of technological advances such as robotics working 24/7, replacing millions of menial work, hasn't been for the benefit of the collective, rather to the benefit of very few. That wealth needs to be redistributed. 1% billionaires, 99% in declining living standards/overcapacity has to be addressed. Otherwise we'll continue along the lines of the likes of where China supply steel at below cost, simply on the grounds of over-capacity/low demand where selling at any cost is better than not selling at all. Increasing demand to match/exceed supply is the way forward, which can be induced by sharing money around more fairly that generates demand when otherwise demand would have remained low.
1980's to noughties had the benefit of tail wind, interest rates declining from 15% down to more recent near 0% levels. Either there will be a soft landing where interest rates remain near 0% for a prolonged period of time, or there will be some crisis like the 1970's that sees inflation/interest rates soar into double digits and we start the 1980's/noughties type cycle all over again. We're not on a gold standard/peg, so none of the 1933/34 years when gold was pegged and compulsory purchased at around $20 levels to a year later ramp the peg price up closer to $40. That sort of thing/trick had been used in the past - Henry VIII was known as Copper Nose as the prior silver coinage that he continued to mint but with copper mixed in, with wear had his image of his face on the coin showing the copper through.
We still have gold coins as legal tender in the UK, a gold sovereign has a legal tender value of one pound, not that you'll get any in your loose change as the metallic value is worth much more. A few years ago when copper prices soared the public had to be reminded that it is illegal to destroy/melt legal tender i.e. when copper pennies copper value was worth more than the penny legal tender value. As a guide the Pound dates back to the 700's when a Pound was a Saxon Pound weight of silver. The Pound nowadays buys nowhere near the same amount of silver.
Some wise individuals across time have suggested diversification is the key. Own some land, a business, keep some cash safely and some gold/precious. Diversification isn't just different stocks. CISCO for instance list on both the Mexican and New York stock exchanges, buying some of each appears to be more diverse than one alone, but is the exact same in reality. Open up that more widely and what might appear more diversified can amount to being no different.
Instead diversify ... and exploit the volatility in the differences in a positive manner ... take from those that trade the same assets in a negative manner. Or as Tom puts it, buy from the scared, sell to the greedy.
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