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TheMentat TheMentat is offline
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Join Date: Dec 2004
Location: Ocean Park, BC
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Inflation-indexed bond - Wikipedia, the free encyclopedia



People have been buying the TIPS for the past 4ish years and earning next to nothing as they thought inflation was about to take off. Well here we are 4 years later and they are still waiting. My question is why not wait until inflation starts to jump way up and then buy them? That seems to make more sense that buying them when inflation is low and then waiting for it to go up.
The problem with waiting is that these securities tend to be priced according to EXPECTED future inflation and interest rates. I suspect that prices on TIPS will have spiked long before it becomes generally accepted that inflation has taken hold. If you buy after prices have spiked, you will simply earn a lousy yield, unless inflation is higher than expected.
Old 01-11-2013, 02:24 PM
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