Who are the idiots buying bonds for 1% interest?

tj, I'm sorry... I am normally very tolerant, as many people here can attest, but, at this point, I have to say this.

You're an idiot. You don't understand trading, you don't understand rates and you certainly don't have a slightest clue about trading rates. That wouldn't be a problem for me, normally, but you're also an arrogant idiot, which really really makes me very upset.

It would be a waste of time for me to mention yet again why almost everything you have said is nonsense.
 
When the same number is an income you found it big, when it is a loss you find it small. The capital loss is even WORSE! Why: because 0.23% is not small as it is SIX MONTHS of interest income on the twos.

The buyers of the twos lose 0.23% in only two weeks, but need 26 weeks to earn the same while exposing themselves to more potential capital loss--- what can happen in 24 weeks is 3.5=SQRT(12) times what happened in two weeks in terms of capital loss. Always reason in time, because time is absolute. Yield is not. The OP was right when he asked at the time "Who are the idiots buying bonds"?
 
Oh no, please stop, tj... My head is about to explode from the gibberish you're spouting.

What does anything have to do with the yield/coupon of the 2s?
 
Hit my profit target today (in the Dec 2s - I rolled forward). Despite all the braying from supposed experts on here, the market did exactly what I expected - capped out and went back down before expiration. My timing wasn't perfect on the bonds (it more or less was on the equities) but it was more than good enough to make a nice chunk of change.

Profit on the bonds: CHECK
Profit on the equities: CHECK
Making bone look like the tool he is: CHECK

my work here is complete.
 
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That's it ? 10/32 and it's a victory lap ? Big macroeconomic broad sweeping manifesto on rates being too low and you tuck tail and run so soon ?

Balls of steel.
 
Man, you've already lost so badly here it's not even funny. Time to shut up and get back to the hard work of scamming your clients. With any luck you'll recoup your losses on that long bond position. Meanwhile I'll be spending my profits and laughing at your dumb ass.
 
Quote from The Big D:
Hit my profit target today (in the Dec 2s - I rolled forward). Despite all the braying from supposed experts on here, the market did exactly what I expected - capped out and went back down before expiration. My timing wasn't perfect on the bonds (it more or less was on the equities) but it was more than good enough to make a nice chunk of change.

Profit on the bonds: CHECK
Profit on the equities: CHECK
Making bone look like the tool he is: CHECK

my work here is complete.
More...
But wait a sec, I thought the premise behind your trade was that there were all these spec longs that were going to have to liquidate their positions in the Sep contract? Are you telling me that all this time this was just a random punt on the state of the US eco? And what about the logic you were talking about in the roll?

I am not sure who's left looking like a tool here, tbh...
 
Quote from Martinghoul:

But wait a sec, I thought the premise behind your trade was that there were all these spec longs that were going to have to liquidate their positions in the Sep contract?
More...

Not exactly. The premise was that all the longs are speculative because the price is too high. The only reason the sep-dec spread was interesting was that it was evidence of that fact - Sep prices were depressed and/or Dec. prices were too high. But that effect was NOT what I was trading. Had I wanted to trade that, I would have traded the spread. I intentionally chose NOT to trade the spread - and it was a good choice since the situation did not persist and I would have been trading against an obvious if weak arbitrage, which would be retarded since somewhere there's an idiot willing to put $400K on the line to make $30.

What I did was take the information that the longs were speculative, and make use of it by just going short. Since there are few if any buyers in a situation like that, and I knew those longs would eventually end up under water, and a portion of them would be forced to sell as a result. Now, my timing wasn't perfect. Had the market news been less negative in mid-Aug, the 2s would have broken right there since that's where the "buy bonds" frenzy peaked. Instead they moved sideways though the bad news and THEN broke. My consolation prize obviously was a nice profit on the equity short as long as the bad news lasted. When it ended, it was time to drop the equity short and let the bonds make money by themselves.

Part of the point of posting this was to illustrate why spread trading is generally retarded. Had I simply taken the sep-dec arbitrage, I would have suffered a drawdown about on the order of the size of my eventual profit. That's ugly. Instead I got two trades, one of which never moved against me and one of which moved against me by about 1/2 the size of my eventual profit. That's much better from a risk/reward POV.
 
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