TIPS

Icy_Jelly_315

Talking head on UK radio says that this is much worse than 1973 oil crisis because we get much more fertilizer from petroleum than we did then. So it's 73 plus extra food inflation (beautiful word, groceries) Calls on TIPS tinned food ammo. And buy the dip on gold when it initially crashes in the everything crash

VeryStableGenius

> holding a large cash position means getting slowly slaughtered by the cost of living while waiting for a crash that never comes. Buy some TIPS.

VeryStableGenius

Just wanna put it out there ... TIPS (inflation adjusted T-bonds, "100% safe") are paying 2.6% over inflation. In a retirement fund, there's no tax. If you're afraid of risk, TIPS are a decent place to park your money. They're hard to buy in many retirement accounts though. Vanguard will work, though. Outside a retirement account, tax is paid even on the entire interest, including the part that compensates for inflation. It all depends on your tax bracket.

CarioGod

dump news on iran: > IRANIAN PRESIDENT PEZESHKIAN: IN IRAN, THERE ARE NO RADICALS OR MODERATES; WE ARE ALL "IRANIAN" AND "REVOLUTIONARY," AND WITH THE IRON UNITY OF THE NATION AND GOVERNMENT, WITH COMPLETE OBEDIENCE TO THE SUPREME LEADER OF THE REVOLUTION, WE WILL MAKE THE AGGRESSOR CRIMINAL REGRET HIS ACTIONS. ONE GOD, ONE NATION, ONE LEADER, AND ONE PATH; THAT PATH BEING THE PATH TO THE VICTORY OF OUR DEAR IRAN, MORE PRECIOUS THAN LIFE. - POST ON X >IRANIAN PARL’T SPEAKER GHALIBAF RESIGNS FROM NEGOTIATING TEAM FOLLOWING REVOLUTIONARY GUARDS INTERVENTION – N12 and US 5-YEAR TIPS SALE: HIGH YIELD RATE: 1.367% (PREV 1.433%) BID-COVER RATIO: 2.57 (PREV 2.62) DIRECT ACCEPTED: 26.9% (PREV 21.9%) INDIRECT ACCEPTED: 64.6% (PREV 72.6%) WI: 1.365%

VeryStableGenius

This will get downvoted I'd put it in BRK-B so that 38% of it is in cash, and Warren Buffet times the market for you. Right now Buffet isn't buying at all. Plus maybe some value funds. Or put some of it into 10,20, or 30 year TIPS (inflation adjusted T-Bonds) which pay 2.66% over inflation (30 year), and wait. If there's a recession, long term rates might fall, and these TIPS would sell at a profit. I think that OP is right to suspect that this is a high risk era, at near-record Shiller P/E (CAPE), and this is not the time to dump a lump sum into it.

Top-Positive6537

MGNC getting a few hits low float lottery play. NXGB getting a lot of volume here same ceo as TIPS

hollow_bridge

Global Recession isn't the only one of course, but what is the most likely threats you are expecting? Your current idea seems to be more focused on protection against dollar devaluation, which certainly could be a good choice. But imo it doesn't seem to protect against the things you were thinking it does. I'm also invested in chinese e-commerce (on and off for many years) and korean/japanese/polish indexes more recently with this specifically in mind. If your concern isn't dollar devaluation shorts, bonds, TIPS, CDs and others would diversify in a way that could actually protect your assets from the threats you mentioned. You don't need to leave the US markets to do this, you don't even need to leave equities, shorts and hedged sell orders could protect you without leaving the US or even tech. To be clear I'm not saying your strategy is bad, it's very similar to my own, I just don't think it's protecting you in the way you're expecting it to. For example Many of trump actions have negatively affected Chinese markets, and I would expect the effect to be significantly worsened if US economy had a significant recession, depression, or inflation.

ToughRaisin126

Keep an eye on TIPS, insane run last few days. Should continue with news incoming soon. Itty bitty float

skilliard7

1. TIPS are US treasury bonds... 2. TIPS are priced based on consensus inflation estimates. If you are confident inflation will be higher than 2.2%, you can profit by shorting treasuries and buying TIPS with an equivalent duration/convexity. The only way you can correctly argue that US bonds are negative yielding is if you count taxes based on the top marginal tax rate across state and federal(>50% combined tax rate for high income California residents). In that case, if you are paying a 50% tax rate on a 5% yield, you only get 2.5% after tax, which might be less than inflation.

BoboThePirate

TIPS != Bonds and have significantly lower volume and make up a way smaller share of market.

HoodsBonyArse

TIPS is the tip, ha

HoodsBonyArse

TIPS, another massive day, news coming

skilliard7

> Bonds are currently negative yield which is a fucked situation. This is completely wrong. TIPS are indexed to inflation, and offer 2.7% yields on top of this over 30 years.

skilliard7

Based on TIPS/Treasury yields, the bond market is pricing in 2.2% inflation over the next 30 years.

skilliard7

The issue isn't inflation. If you look at the spread between 30 year TIPS and 30 year bonds, the market is only pricing in 2.2% inflation over the long term. Even comparing 5 year TIPS with 5 year bonds, the market is only pricing in 2.6% inflation. I think the more likely reason is that bond investors are more risk averse than equity investors.

sleepystockmarket

There's actually a near-perfect historical parallel: late 1972 into early 1973. The S&P 500 hit an all-time high in January 1973. Unemployment was low, corporate earnings looked strong, and the economy was humming. And yet within the next 24 months, the index lost nearly 50% of its value as the Arab oil embargo detonated inflation and the Fed was forced to slam the brakes. The key lesson from that period: markets are genuinely bad at pricing in inflation \*before\* it arrives. The mechanism is this — inflation is initially good for nominal corporate earnings (revenues rise with prices), which makes P/E multiples look reasonable even as the real value of those earnings is being eroded. It's only when the Fed responds aggressively, or when the inflation becomes so embedded that it crushes consumer spending, that the repricing happens — and it happens fast. So to directly answer your question: if markets were "pricing in" severe inflation in the traditional sense, you'd expect to see TIPS spreads blowing out, energy/commodity stocks significantly outperforming, gold at multi-year highs, and long-dated Treasuries being sold off hard. Some of those are happening. The question is whether the equity market has caught up or whether it's still in the 1972 phase — blissfully extrapolating recent earnings growth while the macro fuse is already lit. History says the market usually figures it out about 6-12 months too late.

D74248

> staying invested is the best plan any of us have. There is a universe of investing possibilities outside of VOO and green cash. Asset allocations should be well thought out and changed as situations evolve. Stocks/bonds/cash is similar to categorizing food into the three macros of protein/carbs/fat -- and good financial plan goes into much greater detail just as a good diet does. Tomorrow someone, maybe my wife, might sell half of their Nividia holdings and buy 2034 TIPS. Is that not investing? And isn't that kind of tactical move something that would be a good subject to discuss on a real investing sub?

Master_External9526

the tell is TIPS breakevens staying sticky while HY spreads compress. equities hear "credit risk is fine" and ignore inflation pricing. Q2 earnings will settle which side was right

Xexanoth

If you’d like a more-direct metric around market-expected inflation rates, compare the current real interest rate from Treasury Inflation Protected Securities (TIPS) to the current nominal interest rate from nominal Treasuries of the same duration. The difference / spread is the market estimate of anticipated CPI inflation over that upcoming period whose length matches the duration of the bonds.

D74248

In my case, invested since 1983. In 1999 my wife and I looked at the “noise” and sold our speculative stocks — only keeping the ones with solid earnings. Thus we bled a lot less in 2000/2001 than those who “ignored the noise”. And that episode was, in hindsight, no small part of our being able to retire early. There is a difference between noise and information. A difference between a party in the hotel room next to you and someone in the hall screaming FIRE! Real investing is a complex field, not just a binary choice between VOO and a pile of green paper. Someone who spends this weekend looking at risks and then on Monday sells half of their NVDA and buys 2035 TIPS is investing, and on a higher level than many of the people posting on this sub.

Master_External9526

swap HYG for TIPS breakevens. credit spreads just track equity momentum, they tell you what you already know. breakevens show what bonds think about inflation independent of risk appetite. rn spreads are tight but breakevens haven't pulled back. that divergence is the one i'd lose sleep over

Master_External9526

credit and rates don't agree with this. HY spreads ripped tighter but TIPS breakevens stayed sticky. equity reads 'less bad than worst case', rates are still pricing inflation. splits like that don't resolve clean. not chasing 7000.

VeryStableGenius

> Inflation doesn't matter in situations like this, because the alternative is holding it in cash, which becomes devalued at the same rate TIPS are now paying 2.65% over inflation. Just saying. Looking pretty good for an IRA or 401-K if you think the market is overpriced.

D74248

Keeping up with inflation was the task that you originally assigned. > And if inflation is low it would significantly underperform TIPS, laddered and held to maturity [as they should be for most investors] trounced VOO 2000 to 2010, when inflation was only running at 2.5%

D74248

> It's not like there's better ways of keeping up with inflation though? TIPS. Which is something that you would think would be discussed in an "investing" sub.

Cool_Giraffe6495

Yep. Also called "Phantom income". If you ask Google AI, you'll get a pretty good 4-point detailed response. I would never hold TIPS in a taxable account.

aotus_trivirgatus

With Howard Nutlick now in charge of calculating the CPI, you can bet that TIPS won't pay.

toolfan21

TIPS

Prestigious_Waltz_36

I think they are referring to Treasury Inflation-Protected Securities (TIPS), which are U.S. government bonds designed to protect savings from inflation by adjusting their principal value based on the Consumer Price Index (CPI).

toolfan21

TIPS

Jumpy_Childhood7548

Your quote. ”Opportunity cost doesn’t matter” This is partially true but still misleading. SPDAs may be appropriate for risk-averse clients but, opportunity cost still exists, Inflation risk remains, and equity growth has more potential. SPDA’s offer lower long-term real returns, even for conservative investors. Alternatives like Treasuries, TIPS, or ladders may offer more flexibility with comparable risk. Suitability doesn’t eliminate opportunity cost, it just changes how you weigh it.  

Affectionate_Pen6882

TIPS

toolfan21

TIPS

big_deal

It entirely depends on when you *need* the money. If you won't need the money for more than 10 years, then stocks funds will almost certainly have higher expected return than the HYSA. Not guaranteed, but a significantly high probability. If you need the money within the next 2 years, then the probability that stocks will have higher returns is lower and the certainty of the HYSA yield has more value. So if you're saving money for a near term and inflexible expense (buy a home, start a family, start a business, etc) keep it in an cash like assets (HYSA, CD's, short term treasuries, TIPS, etc). If you're saving a far future expense (retirement) or have flexibility to delay spending indefinitely if the market is down, then invest in stocks which have higher expected returns over long term but very uncertain return over short term.

yatruthordare

Do a TIPS ladder - they are inflation protected…

yatruthordare

TIPS they’re built for inflation

averysmallbeing

There are inflation protected products like TIPS, no? 

ziggy029

This is what things like bond tents and TIPS ladders are for.

VeryStableGenius

If you're approaching retirement, have enough money, and CAPE/Buffet warnings lights are flashing, TIPS are looking pretty nice. 2.7% over inflation, guaranteed. If you have $1M, you can withdraw 4% a year and drawdown only 1.3% a year. If there's a market correction, you can reallocate. If that happens, rates might go down and you could profit handsomely on the TIPS.

VeryStableGenius

> excess CAPE yield I looked it up. It's basically 1/CAPE-Real10YearBondYield So it seems to be an earnings-averaged equity risk premium. It's now 1.7% according to an image I added. It went negative during dot com bubble according to this fitgure. Not sure I can figure out why. During dot-com, peak CAPE=42, and real rates were 2.1%, so I get excessCape=0.003 Now, CAPE=39.4 and 10 year TIPS yield 1.92%, so I get excessCape=0.006. So with my numbers, I get the same excess CAPE as dot com bubble. Maybe CAPE is computed differently.

VeryStableGenius

In a retirement account, inflation adjusted bonds might be safe haven. 2.7% above inflation, currently. Outside a retirement account, you pay tax on the entire interest (including inflation component), so they're not so great. Risk: real rates go even higher, so TIPS fall. Upside: if there's a recession, Treasury restarts QE to goose the economy, rates fall, TIPS go way up in resale value.

VeryStableGenius

You're right that M1 exploded in 2020 (I added a graph), but it's now steady, or even declining in GDP adjusted terms. There's [some debate](https://digitalcommons.iwu.edu/cgi/viewcontent.cgi?article=1030&context=econ_honproj) about the effect of M1 on stock prices. Supposedly Keynesians say that M1 drives stocks down, while 'real activity theorists' say the opposite. According to linked paper, empirically the real activity theorists seem to be right. The flip argument is that stocks are competing with real bond yields, which are currently quite high 2.7% (30 year TIPS).

The-glamDoll

for just 2 years, low risk is king. HYSAs, TIPS, short term treasuries, maybe a tiny portion in ultra short bond ETFs if you want a little extra yield. banktruth is good for checking which options give slightly better returns while staying safe helps you avoid the trap of chasing something “too good to be true.”

PHL1365

I'm thinking about 40% in HYSA+SGOV. Total cash is \~450k. That would be for now until retirement+2 years (so basically through \~end of 2030). What are some steady but lower-yield ETF's that might be appropriate for a 4-8 year horizon? FWIW, my risk tolerance is fairly high. I could live off just SS + 2% SWR from IRA as early as mid-2030, but looking to use the cash to optimize Roth conversions. Maybe TIPS for the next 20% and then SP500 ETF for the remaining 40% (which would get shifted into cash starting around 2032)

Accurate_Shift_3118

for the 2-year timeframe, the objective isn’t “a little higher return,” but rather ensuring that you don’t completely blow up your sequence of returns risk right before your retirement bucket strategy explained simply: hold two-three years’ worth of expenses in cash/MMF/T-bills (ladder), another three-five years’ worth in short-duration bonds or TIPS, while putting everything else in equities if you’re looking to juice yields slightly, go with short-term treasury bonds or laddering (3-12 months) as far as the optimal strategy right now investing in equities for two years’ worth of funds is something people come to rue later on , this bucket strategy is already a win for you, and now you’re just protecting it

PsychologicalCap5770

Anyone telling you there is no short term is wrong. For retirement you’ll want a treasury and bond ladder with a portion dedicate to TIPS. There are maturities as little as 4 weeks, but 13 weeks seems to be the sweet spot for those with SS and or pension income.

MarketOddsL

The most underestimated second-order effect is always inflation expectations. Oil spikes feed into transportation costs, which feed into food prices, which feed into rate expectations. That chain takes months to play out and most retail investors have moved on by then. If you want to position rationally: energy exposure for the short term, inflation-protected assets (TIPS, commodities, gold) for the medium term, and cash ready to buy quality names if broad markets overcorrect on fear for the long term. This is just my opinion of course :)

VeryStableGenius

SP500 ATH is 7000. At today's value of 6582, it is down 6%, not 10%. So it is down 6% from 'fair' price, but only if you consider the all time high as being the most reasonable reference point. Relative to two years ago, it is up 35%, far more than its historical annual growth rate of 6.5% over inflation (I'm ignoring the 1 year run up because that started in the middle of the short tariff dip). The PE ratio is 28, very much on the high side historically. Look at a PE graph, and you'll see the market does not tend to spend much time above PE=28. The $28 you spend for each dollar of earnings represents 3.5% real annual return, not much better than the 100% safe 2.6% (over inflation) you get on TIPS. And we're potentially approaching an *epic* oil shock. Hey, it doesn't mean that we *will* have a crash. But saying *"Down 6%! What a deal! Buy, buy, buy!"* might be what ole' Greenspan called 'irrational exuberance.'

GiGiAGoGroove

2 Qs: 1-would I find the muni info at Fidelity and then research them or does Fidelity have background on them? 2-can u help me understand the difference between the value of the dollar crashing and insolvency ie the US Treasury was declared Insolvent on one level last week so why are “experts” still saying the safest place to wait out a stock drop is to buy TIPS or short term US bonds? The dollar dying is one thing perhaps, but Insolvency long term-we are still paying the current interest, but shouldn’t that concern me buying something the Govt owes me but might not be able to pay back-which would mean we have bigger issues of course but how can one feel safe buying any govt investment if parts of it are insolvent?

Icy-Necessary3904

For Muni bonds, you can look at the credit ratings in that division, all public information. TIPS are different because, in the name, they are Treasury inflation-protected securities, which fluctuate more with inflation than short-term bonds, as those have fixed coupon payments and are less sensitive to inflation. I think FDLXX is safest, but short-term bonds closely follow, with the riskiest being TIPS. As fed holds rates steady, the money market rates will be fixed for longer periods. My overall suggestion is that if you are waiting to find a good entry, enter high-liquidity assets where you can take your money out at any time, such as the Fidelity money market you suggested, but if you are looking to reduce your variance for 3+ months, I would consider buying Munis 3yr out, just because they are less sensitive.

pdfernhout

u/ub3rm3nsch My own musings from yesterday on S&P 500 possibilities: [https://www.reddit.com/r/stocks/comments/1sbjwyn/comment/oe5v59l/](https://www.reddit.com/r/stocks/comments/1sbjwyn/comment/oe5v59l/) The key point: "Divide the annual distributions by the total market cap and that works out to an annual return of about 2.7% on invested capital for the S&P 500 -- or essentially about the current inflation rate. ... If the S&P 500 was to drop in market cap by about 50% (to about US$30 trillion), then the return would double to about 5.4%, or somewhat greater than TIPS to reflect a small (about 3%) risk premium for holding stocks." The bottom line is that the S&P 500 is valued as what it is mostly based on an expectation of continued growth in revenues. If the Middle East conflict changes that expectation of growth long-term (from energy shocks, inflation, global infrastructure damage, etc), then the market cap of the S&P 500 could drop significantly (or perhaps stay as-is nominally while inflation rages at 10% for a decade like in the 1970s, decreasing its real value in half or more, as a lost decade of growth). I still remember [watching Nasdaq lose about 75% of its value](https://en.wikipedia.org/wiki/Dot-com_bubble) over a couple of years in the dot com crash. That said, while I think the market has not fully priced in the Iran war (like the destruction of energy infrastructure that will take years to rebuild, other consequences like Amazon datacenters being damaged, rising insurance rates for shipping, and possibly worse outcomes if things escalate), I also think the market has not fully priced in likely transformative changes (like solar power and better batteries, energy efficiency, fusion power maybe soon, AI & robotics, 3D printing, and so on). Some of those changes -- like a rapid move to renewables and energy efficiency, or greater emphasis on flexible local manufacturing to avoid shipping risks, or greater investments in fusion energy --- may also be an indirect outcome of the Iran war. This is because the war shows the folly of depending on foreign oil -- same as the 1970s long gasoline lines in the USA eventually lead to to more investment in energy alternatives and more fuel efficient cars. So it is not so easy to say where the markets will go long-term given overlapping trends and the market being forward-looking -- even if we can see that in the short-term there will be a lot of economic pain globally.

Ancient-Swordfish292

You're saying to insulate from inflation while sitting on 30 year nominal bonds. The two don't go together. Those things are risk assets too; their value is going to tank if rates go up. Short term TIPS might be a better play. I've got my emergency fund in I bonds.

pdfernhout

u/admin_default Thanks for your informative comment. To support your point of a 30-40% decline as a reasonable base case decline, here is another way to look at it. Feedback appreciated if I got any of this analysis wrong. Ultimately, the value of stock is based on what the company returns to the shareholders, which is dividends, buybacks, and free cash used for growth. The underlying assets of the company (land, commodities, culture, goodwill, patents, trademarks, etc.) support producing income -- so we can ignore their resale value on the assumption that anyone buying those assets directly is just going to get a similar annual returns on them. Let's do a simple steady-state analysis of the S&P 500's value assuming that there will be no growth in the S&P 500 underlying assets -- but also no losses in revenue (so, no changes from the ongoing new energy crisis, market cycles, extended war, decline of the US Dollar, credit crunches, and/or AI decimating the middle class and so on). The S&P 500 is currently valued collectively at [about US$60 Trillion](https://www.slickcharts.com/sp500/marketcap). Recent distributions (buybacks, dividends, and free cash) for the S&P 500 are about US$1.6 trillion annually [according to this S&P Global report](https://www.spglobal.com/content/dam/spglobal/global-assets/en/documents/general/US%20market%20dividends%20in%202025.pdf). Divide the annual distributions by the total market cap and that works out to an annual return of about 2.7% on invested capital for the S&P 500 -- or essentially about the current inflation rate. So, in that sense, holding the S&P 500 provides returns of about the same as holding generally-assumed-risk-free US TIPS bonds with zero additional interest beyond inflation. But TIPS currently offer [about 2% return beyond inflation](https://tradingeconomics.com/united-states/10-year-tips-yield). So, given that, from this narrow steady-state perspective, the S&P 500 is a very bad investment (considering just direct returns) compared to TIPS right now. If the S&P 500 was to drop in market cap by about 50% (to about US$30 trillion), then the return would double to about 5.4%, or somewhat greater than TIPS to reflect a small (about 3%) risk premium for holding stocks. If the S&P 500 were to drop about 75% (to about US$15 Trillion), then the return would be about 10.8%, which would be much larger risk premium of about 8-9%. I'm guessing most long-term investors would be happy enough somewhere in between 3-9% returns beyond inflation, which means the S&P 500 should be valued at somewhere between 25%-50% of what it is now from a steady-state perspective. The energy shock may decrease revenues and thus lower returns more than in the past. We also might expect inflation to go up given an energy shock, meaning the S&P 500 from this limited perspective would return much less than TIPS with no interest if inflation went back to 5% or more. Add decreasing revenues together with high inflation, and that would mean an even lower steady-state valuation for the S&P 500 of perhaps only 20% or so of what it is now (to compete with TIPS, assuming TIPS interest yields don't change in returns, but they might -- they might even go up with high interest rates, driving the S&P 500 down even further comparatively). Of course, in general, the stock market looks forward expecting growth from companies -- and so tends to value companies higher than a steady-state value based on such expectations. And managing those expectations is what so much of investing is all about, and I am purposefully ignoring those growth expectations here (as a bearish case). But, it may not be unreasonable to ignore future expectations for growth if, even short of WWIII, the entire global economy is plunged into a decade of energy shocks and smaller-scale crises as a result of the Iran war. As just one headline from a week ago: "[France confirms oil crisis, says 30-40 percent of Gulf energy infrastructure destroyed](https://www.france24.com/en/france-confirms-oil-crisis-says-30-40-gulf-energy-infrastructure-destroyed)". And Southeast Asia is [entering a profound energy crisis](https://www.npr.org/2026/03/26/nx-s1-5760763/southeast-asia-is-being-hit-hard-by-irans-cutoff-of-oil-and-gas) which may have huge impacts on manufacturing, tourism, transportation, services, and potentially lead to broad social unrest. So, in a worst case, with an energy shock, and stagflation, and with more infrastructure losses from ongoing war, it's quite possible the S&P 500's market cap could drop much further than half -- maybe even by 90% or more with declining revenues and increasing inflation. Of course, given inflation, it's possible the S&P 500's market cap could be higher than otherwise to track inflation in underlying assets somewhat while also offering no real gains beyond that. Also, an S&P 500 that is still US$60 Trillion in 2036 after, say, ten years of 10% energy-shock-driven inflation (e.g. s[imilar to the US 1970s)](https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp) would only be worth less than half of what it is now (factoring in inflation) -- even if it never "dropped" in nominal value. But, there is a also perceived public interest (as a positive externality) in governments assuring businesses continue to function and continue to employ people -- given the right to consume for most people depends on getting a paycheck and might otherwise participate in unrest (leading to bailouts). Those expected bailouts allow companies and investors to take on more risk than otherwise and to expect higher gains (arguably as a moral hazard) -- since in our current economic system business gains tend to be privatized while costs and risks tend to be socialized. Also, if the S&P 500 drops by 75% and that drop is associated with substantial layoffs, one might expect government to step in and prop up companies at least long enough to bailout big investors (who are major political donors) and to manage unemployment rates (like when the US government bailed out GM). In a best bullish case though, the sky is the limit, and as Iain Banks wrote "Money is a sign of poverty". AI, 3D printing, solar energy, fusion energy, better batteries, and other technological advances -- if they benefit most people like Marshall Brain depicted in his "Manna" novella of James P. Hogan depicted in "Voyage from Yesteryear" -- may make all this analysis a moot point. That's the post-scarcity future I am hoping for. :-) It also makes betting against global growth (and, say, shorting the S&P 500) problematical no matter how many short-term crises we have ongoing. What if, say, we get cheap fusion energy next year and so the energy shock dissipates quickly? If more and more people take a broader perspective on abundance, we could collectively get to that post-scarcity system fairly soon -- if we don't keep blowing up productive infrastructure for whatever political reasons, or otherwise wasting so much abundance in various other ways, especially by using it to create artificial scarcity [to prop up dysfunctional out-dated social systems](https://web.archive.org/web/20080702023453/http://www.whywork.org/rethinking/whywork/abolition.html). As I say in my sig: *"The biggest challenge of the 21st century is the* [*irony*](https://pdfernhout.net/recognizing-irony-is-a-key-to-transcending-militarism.html) *of technologies of abundance in the hands of those still thinking in terms of scarcity."*

TempusFugit314

What’s TIPS?

456M

Gold, RE, commodities, TIPS

kjmuell2

I think you're right, in that oil will hurt consumers more than businesses. The risk in my view is with the compounding of layoffs and decreasing number of new job openings. Would you hit people with high unemployement and rapidly increasing, unavoidable costs llke gas and electricity, they cut down spending everywhere. Then the businesses revenues drop, followed by more job cuts, etc etc... So stand alone, the issue of oil isn't as big as people make it seem. When you add in the other cracks showing in the economy, the picture looks a bit gloomier, in my opinion. It's why I'm trying to focus on what most people consider mandatory expenditures - Tech that has business applications (like MSFT while its low), energy, water and healthcare. As well as shifting my short term bonds to TIPS

GiGiAGoGroove

That is a great answer. How does one determine a prosperous municipal bond? Are TIPS the same as short term bonds and are these as safe as a holding like FDLXX?

markthelast

Unfortunately, my 401k fund options are a lot of pedestrian garbage from Vanguard and Blackrock. At the time, the only index fund that I liked was State Street's US TIPS because of the currently high inflation environment, and Fidelity/my employer got rid of it with a vague, undetailed email. Later, when I logged in to check, they transferred my money into some Vanguard 2060 fund, which I pulled out and put into another fund. I do not put money into my 401k and give up my company match because I want to control my own investments instead of Fidelity controlling my "retirement," or whatever the future holds.

InevitableAd2436

I’m late 30’s but I still put 30% of my 401K in TIPS at the beginning of the month. Fuck anyone that says to not time the market when the US government is making foolish decisions

Gullible_Ad3785

I'm bullish...on TIPS.

sorocknroll

Cash often protects you from inflation since the cash rate is generally set above the inflation rate. And of course TIPS pay actual inflation.

bushed_

I udnerstand private credit is int he news a lot, but given the terms and conditions, I think an expectation of a fast crash are actually quite low. Prolonged bear and re-rating? sure. Following the specific crisis, which is yet to be defined it depends on the course of action taken by the US government. Print = inflationary (beneficial for the government, as it reduces existing debt). In this case, existing dollars are worth less, regardless of coupon #s, etc, its bearish for bonds. This could be somewhat of a feedback loop as people do not roll their treasuries/bonds over. Let it ride = deflation. Bullish for fixed income instruments as their coupon payments were set on old future cashflow expectations. Unfortunately, the US can (and has) done things like yield curve control which makes the duration of the bonds a more interesting, nuanced discussion. TIPS / I Bonds exist and are worth pondering imo.

Wegs1

The Karg Island scenario is genuinely underreported — if that infrastructure gets taken out or damaged you're not talking about a months long disruption, you're talking about years. That island handles a massive percentage of Iranian crude exports and the loading terminal infrastructure is not something you rebuild quickly. The stagflation angle is the one that worries me most from a market perspective — elevated energy prices feeding into everything from transportation to manufacturing to food while the Fed has limited tools to respond without crushing an already shaky economy. That's a very different market environment than a clean ceasefire and quick normalization. The congressional trade angle here is actually interesting — if any members of the Energy or Finance committees start moving into inflation hedges, commodities, or TIPS in the next few weeks that would tell you something about what they're hearing in closed door briefings. That's exactly the kind of pattern we track at tradeupstream dot com — less about any one trade and more about what the collective positioning tells you about where this is heading.

MisledByCertainty

TIPS bonds

InevitableAd2436

I moved $70K into TIPS and even those are fuckn losing money 🤣😭

Gullible_Ad3785

Just the TIPS

ackackakbar

My bonds position is in a TIPS ladder.

DrMaridelMolotov

Could TIPS ETF work or no?

ninjagorilla

TIPS… it’s what they’re made for. It doesn’t have world beating yield but you know you won’t loose money to inflation

BobtheChemist

SGOV is ideal. TIPS type etfs might also be OK.

Dependent-Building23

TIPS

therealjerseytom

Generally, for capital preservation with inflation specifically hedged, TIPS are designed exactly for that. If you're looking truly short term like this December, a money market position is fine. VTIP, SGOV, money market... something along those lines.

InevitableAd2436

As someone that moved 30% of their 401K portfolio to TIPS, today’s dump is fake as fukk. Gonna rip today and tomorrow and bleed into the end of the month before the 2pm 1.5% pump on the 31st (end of month 401k buys)

Infamous-Mixture8278

Maybe I should just buy more TIPS like the boring ass I am 😔

Infamous-Mixture8278

Think I’m just gonna load up on TIPS like a boring loser 😔

Cav829

Pretty much. Even r/bonds kind of hates TLT at this point. Which is also why I started looking at it in the first place as usually once everyone hates something, that's right before the countertrend rally starts lol. Like on Friday, TLT/VGLT dropped more than the actual S&P. But I fully realize it could backfire, so short-term and intermediate bonds as well as TIPS are probably better if you want to avoid the volatility.

D74248

> How are you thinking about this? asset allocation changes, or just setting return expectations? We are all in different places. In my case starting with being early in retirement. But also being in a position to be somewhat more risk tolerant than a typical retiree. Risk management seems to be a missing element on this sub. Risk is important because it is what we are getting compensated for and because it is, well, risk. Over the past year I have adjusted my asset allocation, reducing US exposure and tilting what I still have towards value and away from simple market cap indexes. More international, and I have built up my existing bond ladder/bond tent strategy using a mix of nominal US Treasuries and TIPS. The biggest risk that I see is not valuations, and to be clear CAPE is not the only valuation measure that is very stretched, but rather national leadership -- and by that I don't mean politics in the traditional sense. To look back in history, we would have gotten through the 2008 GFC with either Obama or McCain in the Oval Office since both would have had competent cabinet officers and staff, albeit with different political leanings. This current administration is a cast of clowns, with the exception of Bessent. Try back testing a GFC-type crisis with this administration. And given the issues in private credit we might get to see that experiment run.

D74248

> I guess Im not sure what the alternative is? Adjusting your asset allocation plan, tilting towards value, considering index methodologies other than simple market cap. Even laddering TIPS bonds. There are a lot of opportunities outside of the *Church of VOO and Chill* that are still index based.

Dull_Broccoli1637

TIPS TO SAVE ON GAS 1.) Check air in your tires 2.) Reduce your speed 3.) Avoid lots of starts and stops 4.) Don't go to war just because Israel tells you to 5.) get rid of extra weight, unless it's your dog. Keep him, he's a good boy.

Ecstatic_Kale3326

I generally agree with the framework of your statement 👍, but it's too long-term in perspective and practically unusable for making money in the short term. TIPS are defensive tools, not money-making tools. If you've already decided that "the dollar is being diluted," would you prefer stable value preservation or capturing a short-term surge in returns?

Ecstatic_Kale3326

I agree with your and the original poster's line of thinking. Inflation-linked government bonds (similar to TIPS) are indeed a "passive defensive tool" against inflation, while gold is a more market-driven and flexible inflation hedge. Both essentially protect purchasing power. For short-term funds, I prefer gold; for long-term defense, I'd consider inflation-linked bonds. When you trade gold, do you lean towards news-driven (macro) trading or purely technical short-term trading?

helpful_stranger

I think we're getting down to semantics at this point. I agree that you haven't technically lost any money in absolute terms, but you do see erosion in purchasing power. The comparison I made to holding cash is similar. If you just hold cash you'll never lose money in the absolute sense, but due to inflation the amount of goods and services that you could buy with that money is eroded. TIPS is better as you've alluded to, since at least you're locking in a real rate, but even then bad things can happen; i.e. if the Fed preemptively raises rates to keep inflation in check. In a big picture sense, the main point I wanted to get across is that not losing money isn't the same as no risk. Wealth is relative, and if you didn't lose money while everyone else doubled their money, in essence you've just lost half your purchasing power. This is highlighted in the boom market of these past few years. Holding cash or even bonds rather than an index fund was a pretty risky play all things considered. Holding to maturity is an option, but again it's no better than taking the cash out and re-buying at the current market rate. By the time rates moved, you've already lost, and holding to maturity does not mitigate the loss, but rather reflects a belief that at the current moment this bond at the current market rate is a good investment.

therealjerseytom

> the real-world value of a dollar is just not what it was three years ago. It feels like a "hidden tax" that no one wants to talk about. Nobody talks about inflation or real returns? Honestly inflation over the past 3 years has been pretty modest in the grand scheme of things. Equities of course tend to have significantly positive real return on the long run. If you're interested in leaning more towards capital preservation, TIPS are literally designed for inflation protection.

15pH

If you have money to invest, like you won't need it for spending and just want it to grow, there's no reason to not invest SOMEWHERE. If you are risk-averse, there are low risk options like TIPS or bank CDs. Sitting on cash just lets inflation slowly eat it.

DataVaultStudio

It's very much the 'it matters until it suddenly does' situation. The US has been able to sustain this debt level because the dollar is the world's reserve currency — but that status isn't guaranteed forever. The real risk isn't the number itself, it's the interest payments. At current rates the US is spending more on debt interest than on defense. That's the number that should be keeping people up at night. For portfolios I'd be watching TIPS and gold as hedges if you believe dollar dominance weakens over the next decade.

basementdweller263

For stagflation, I’d focus less on finding the perfect “hedge” and more on building something resilient and avoiding two common mistakes: parking too much in cash while inflation stays hot, or overloading on rate sensitive assets. A balanced approach usually looks like broad diversification plus a modest inflation aware sleeve (for example TIPS, commodities or energy exposure) and disciplined rebalancing, rather than trying to time a six month window. On REITs, they can hold up in some inflationary environments, but they are still very rate sensitive, so I’d treat them as part of the mix, not the hedge itself. What’s your timeframe and what’s this money for (mortgage recast timing vs long term investing)?

pigglesthepup

Consumer staples are always good as defensive stocks. But they're still equities. When equities crash, consumer staples will take a hit. They just rebound faster than the rest of the market. The better recession hedges are Treasuries: VTIP/STIP: short-term TIPS. Good for inflationary shocks -- like right now. SPTI/VGIT: intermediate Treasuries. Neutral ballast. SPTL/VGLT/TLT/EDV: deflationary shock absorbers. 2008 + 2020 style crisis hedges.

D74248

In hindsight, the only thing that "worked" was rolling short term treasuries. Sort of. And then came the magic day, also only known in hindsight, when you wanted to go long. Oh, to have snagged some of those December 1981 30 years that were over 14%! Inflation was high, so when looking at stock market returns for that era you want to be careful and look at real returns, not nominal. There was a spike in gold, but you had to time that one right. So realistically, when in the middle of it, nothing worked. It sucked to be invested. It sucked to be working for a living. It sucked to be feeding a family. There were three recessions between 1973 and 1982. Inflation was high. Interest rates spiked, with the 30 year fixed rate mortgage peaking at 18% in 1981. However we did not have TIPS, and they might be effective if we really do go into stagflation. But you have to trust the Trump Bureau of Labor Statistics. If I really wanted to collect downvotes in this sub I would suggest selling VOO and laddering TIPS. Which is what I have done to a degree -- moved my equity from broad index funds to funds with a value tilt, increased my bond allocation and strengthened my bond rungs between 2029 and 2034 with additional TIPS. Time will tell. What is scary is that the 1970s were marked by two things. Disruption in oil supplies and a President [Nixon] who had a puppet [Burns] as Fed Chairman. History may not repeat, but sometimes it rhymes.

h2f

By holding to maturity you are losing an opportunity to invest in something that would give you a higher return. That however, is not a loss but an opportunity cost. Yes, I could time it wrong and make 2% instead of 3% but that's a bit like saying if I invested in a CD at 4% a year ago I lost the opportunity to buy NVDA and make a whole lot more. The lost opportunity is not the same as a real loss. Would you say that I lost money by buying a CD instead of NVDA? Probably not because NVDA is riskier than a CD. Prices are set based on expectation of risk. The rate for TIPS today can be different from the rate for TIPS tomorrow. If we believe that the market is efficient (which for the bond market is a reasonable approximation of reality IMO) If the rate goes up tomorrow, it's because something has changed (inflation expectations, a war, etc.) The rate is set based on expectations at the time of the transaction and will go up if things in the world made the TIPS riskier.

50CalRound

Energy, Fertilizer, TIPS. Watching Gold and XAR closely.

Tanuja_Aggarwal

Hedging stagflation requires assets that outpace rising costs while resisting low growth. Commodities (oil, gold) and TIPS offer inflation protection. Real estate provides rental income and appreciation. Focus on defensive stocks with high pricing power and avoid high-growth tech.

h2f

If I buy 5 year TIPS at 2%, I'll beat inflation by 2% a year for the next 5 years. Let's assume that inflation is 0% to make things simple. If tomorrow TIPS rates change to 3% I have lost the opportunity to make 3% instead of 2% and I won't be able to sell early and still make 2%. In fact, if I need to sell early I will have lost money. However, if I can hold to maturity I know that I'll make that 2%; which is worth a lot.

helpful_stranger

I see there's some confusion in the replies regarding on how bonds and TIPS work, so thought I'd offer some clarification. 1. "If you hold the bonds until maturity you don’t lose money." True in that if you hold to maturity you get your principal back plus interest. However, you still technically lose money if rates go up (similar concept to your cash technically losing value if inflation goes up). Let's look at a quick example. Say you buy a 1 year bond today paying 100% interest for $100. At the end of the year you get back $100 + $100 = $200. Now let's say tomorrow rates jump to 300%. Your bond is now worth $50 on the secondary market. Why is that? Well someone buying a bond at 300% interest will have 4x their money at the end of the year. Since your bond pays $200, then for them to buy your bond vs. what's offered on the open market, it would have to be at $50. Along the same vein, if you had waited a day, you would have $400 instead of $200 at the end of the year, so you've effectively lost $200 (of year end money). 2. "Rates going up is bad for TIPS". Also technically true, assuming all else remains equal. TIPS value is a reflection of both its coupon rate and inflation. In essence this is real rates (coupon - inflation). Therefore if real rates went up (coupon rate goes up faster than inflation), then TIPS will lose value, but if real rates go down (inflation increases faster than coupon rate) then TIPS will actually increase in value. Another way to look at it is if the Fed is proactive in raising rates to combat inflation, that is bad for TIPS, but if the Fed if slow to raise rates and lets inflation run wild for a bit, then that is good for TIPS.

D74248

TIPS. Buy the actual bonds, hold to maturity. TIPS are very sensitive to interest rate changes, so they are a big boy game other than the simple buy/hold to maturity strategy. Or roll short term Treasuries.

D74248

Those are I bonds. TIPS are a very different thing. [Here](https://treasurydirect.gov/marketable-securities/tips/)

Dstein99

Treasury Inflation Protected Securities. Currently a 5 year TIPS is yielding 1.14% plus they adjust this rate for CPI inflation so you would be guaranteed 1.14%/year net of inflation for 5 years. The normal 5 year treasury yields 3.87% so theoretically the TIPS are pricing in 2.73% inflation per year over the next 5 years. If you think that inflation will be higher than this especially if we go to a stagflationary environment it could make sense to wait it out and guarantee a return net of inflation.

Dear-Original-1024

Same thing happened in 2022. TIPS aren't bad, but SGOV is better in this scenario.

Dstein99

I said TIPS not a TIPS etf. If you hold the bonds until maturity you don’t lose money.

No-Dust-1722

Can you elaborate on that? I hadn’t heard of TIPS before your parent comment but they sound interesting

Defiant-Opposite-501

Monetary metals, TIPS. Historically "real" assets. I have some concerns about domestic real estate. The carrying costs of real property in the United States between property taxes and insurance has become astronomical. You're already seeing rents decreasing, before a sigificant break in property values. The end result is that ROI is going to drop. My personal portfolio doesn't hold any debt instruments with a maturity date greater than 5 years from now.