Understanding Bond Market Dynamics and Investment Strategies

Bonds offer stability and potential returns of 5% to 7% through careful market strategies.

### Understanding Bonds: Strategies for Investment and Market Movements
* 📉 Bonds are generally low-volatility products, with U.S. Treasury bonds considered the **most stable assets** due to their **dollar-denomination** and backing by the **U.S. government**.
* 📈 When interest rates rise, bond prices fall, and conversely, when interest rates fall, bond prices increase; this is a **critical concept to remember for investors**.
* 💡 The bond market typically moves within a range due to its **low volatility**, allowing investors to make partial purchases during declines and sell during rises, potentially yielding returns of **10% to 20%**.
* 📊 For long-term bonds, it is essential to identify price floors and peaks, with the current target rate from the Fed being adjusted between **2.5% and 3%**, while the 10-year Treasury bond is seen peaking around **3.5% to 4%**.
* 🔍 Investors must consider technical analysis and market sentiment to determine the bottom line for bonds, which is often **subjective and influenced by factors such as Federal Reserve policies and Wall Street predictions**.
* 💰 A reasonable buying range is estimated around **4.1% to 4.3%**, with selling targets set around **3.7% to 3.8%**, allowing for strategic profit calculations based on bond duration and yield.
* 📅 As investors gain experience with yields of **5% to 7%**, they can better understand market movements and develop strategies to **maximize returns**, despite the challenges posed by **rising interest rates and market volatility**.
* 📚 Continuous study and adaptation in the bond market can lead to **consistent profits over time**, even if they may not match the **high returns of stock investments**.

I'm not very familiar with it, so could you please explain it briefly and concisely? I am also thinking deeply about it. Let me explain it in depth. Bonds are products with low volatility. Originally, they were, but now they are a bit high, but generally, they have low volatility. Bonds are very stable assets, and additionally, they can be further stabilized by being dollar-denominated assets, which are backed by the U.S. government. Therefore, the most stable asset in the world is U.S. Treasury bonds. 

Another point about bonds is that when interest rates rise, bond prices fall. You need to memorize this. There are discussions about discount rates and so on, but this is something you need to remember when investing. When interest rates fall, bond prices rise. In this situation, I mentioned that volatility is low. So how does the bond market move? Well, they...

Due to low volatility, we see movements within a range. The same goes for stocks. If you look for stable companies, that's a good strategy. When I refer to this range, think of it like this: when you identify one, two, three points within the box, how do you focus on your strategy? You can make partial purchases in the declining phase, and when it rises, make partial sales from the top. Just repeating this can yield an investment return of 10% to 20%. 

Then there's swing trading. I got into stocks after crossing over to Japan due to a marriage issue, starting with absolutely no knowledge. I faced a lot of challenges at first but then discovered YouTube and came across a channel that helped me. After work, I would study intensely at night, and today I managed to achieve a 20% profit on my principal. Compared to others, my returns have been quite good.

Still, I feel a sense of achievement. You always have to be happy. I earned 20% on my principal. Oh, it’s tough working in a distant place. It really is tough out there. Nowadays, I think the world is a great place to live, and it's because of things like this. Just how good life is! You can just watch from anywhere in the world if the timing is right. Oh, thank you for the first Super Chat. I look forward to your continued support. Yes, right. I need to tell you that you should properly set your box in the bond market. What I want to emphasize about long-term bonds is this: Where is the price floor for long-term bonds? You need to establish some criteria for the lows and highs. So, what will you start with? Let's take the U.S. 10-year Treasury bond.

Insurance company employees and those who have invested for a long time, those with a lot of money, have clear standards. The bottom line is not clearly defined, but the peak is clearly defined. I keep mentioning that the target rate the Fed talks about is announced in March, June, September, and December. This is translated into Korean as long-term target yield. It can also be expressed as interest rate target or neutral rate. However, they discuss it based on the target rate plus about 1%. So, what is the current target rate proposed by the Fed? The neutral rate is between 2.5% and 3%. Last year, they mentioned a target rate of 2%, but recently, Fed officials have come out and said that having a target rate of 2% is...

The complete market is now at 2%. We can't take just 2%, so we need to make some adjustments. What is being discussed now is that the interest rate has been slightly adjusted upward from 2.5% to 3%. If we look at an increase of 1%, the long-term interest rate, based on the 10-year bond, is considered to be at its peak. The 10-year bond is somewhere between 3.5% and 4%, which is regarded as the peak. When it comes to selling long-term bonds, if the rate exceeds 4%, we should start considering selling. So, what about the bottom line? This requires technical analysis and various considerations, but the bottom line I’m currently observing is around 4.1% to about 4.25%, which is the range I’m looking at.

If Trump becomes president again, the market could go down by about 4.5%. If Trump plus the Senate and House are controlled by the Republicans, it could drop by about 5%. This means that the bond market would be completely devastated. The bottom line is somewhat of a gut feeling. It depends on Wall Street's outlook and predictions, how much money the Federal Reserve prints, the statements made by the Fed members, and the investment sentiment in the bond market. This is how the so-called bottom is determined. Right now, people find it very difficult to set a benchmark for what's called dollar-cost averaging in the bond market. Even those who have invested in bonds for a long time find it quite challenging to establish this benchmark. However, what's clear is that there is a well-defined high point, which means that people could potentially buy bonds sufficiently.

To evaluate the price, we need to think rationally about what we see. We should consider how much profit we can make. I think around 4.1 to 4.2 or 4.3 is a reasonable range for buying. The reason I consider this range is that if it's roughly between 3.5 and 4.0, I can set my selling price target around 3.7 to 3.8, right? It's about thinking in reverse. Since the Federal Reserve is talking like this, I need to figure out where I can sell bonds and where I think the peak is. If it takes ten years, a peak at 3.7% or 3.8% would be reasonable. Then, I calculate where I need to buy to ensure I achieve a sufficient return. So, I estimate that I need to aim for around the low to mid-4% range. If I buy at 4.2% and sell at 3.7%, I would make a 0.5% profit, right? That means I would be making 0.5%.

Since it's going from 4.2 to 3.7, that's about a 0.5% gain. But this depends on the term of the bond; of course, the 10-year bond isn't entirely clear. Earlier, someone mentioned in the chat about the duration. When it comes to bonds, the yield is simply a number, and the duration is multiplied by that yield. There’s a concept of bond duration, which refers to how many years you receive interest from the bond. To calculate the yield accurately, the duration must be multiplied. For example, the TLT duration comes out to about 17. So, if you want to calculate the yield precisely, if it's 17.3, then multiplying by 20 gives you what? 10%. 0.5 times 20 is 10%. While you should technically multiply by 17, if we’re estimating, it seems like if I can’t buy at the lows or sell at the highs, then I could expect a gain of about 5 to 7%. That line is at 4%.

In the early stages, it is said that to be considered a worthwhile investment, it should yield around 5 to 7%. Insurance companies and other long-term investors often invest in this range. Since they provide very detailed explanations, others also remember that a return of about 5 to 7% is expected. Therefore, it becomes a point where it is worth buying. The threshold for what is considered worthwhile is set around 4.1%, 4.2%, or 4.3%. Since this threshold is established, people can roughly gauge how far it can go. They make bets based on this understanding. Do you see why it moves this way? If you understand this, then from there on, you can grasp the direction of the bond market. After experiencing the 5 to 7% yield once, twice, or three times, what kind of greed can you have? So, in our country, this is how things are progressing.

In this situation, we see a threefold increase of 5 to 7%. So, how much is that? It’s about 15 to 20%. That's why they are moving in this direction now. So, this is not to say that TMF is wrong; it's just that you need to understand this level of investment in leveraged bonds or bond ETFs from a trading perspective. The other day, someone mentioned they cut their losses on TLT. I asked why they made that decision, and the reason was their concern about this. They were worried that with news of rates rising to 4.5% or 5%, the price might drop significantly. Someone shared that they decided to cut their losses because they were worried about the potential for a sharp decline. If their reasoning is within a level that they can manage, then that's acceptable, but if it's about rates reaching 4.5% or 5%, then...

If we assume that this is going to happen, then the yield is going to increase significantly. Roughly 4.5%, if it goes up, then we can expect a 0.7% gain. Even without using leverage, it can come out to around 15% or 10%. As long as there are enough purchases before it goes up, I think it will be difficult for it to reach 4.5% or 5%. The fundamental issue lies with the Federal Reserve's target rate; it could take one or two years, or even five to six years. If that's the case, the actual returns will be severely impacted. Saying that Samsung Electronics will reach 80,000 won in five years is the same thing. From that perspective, it is indeed concerning that Trump might be elected again. The rebound of inflation in the bond market is indeed a significant threat to it. From that standpoint, there are concerns about volatility and price betting in the bond market.

There is definitely a reason why forecasts are being made here. However, the most basic calculation method is to approach it this way. In terms of direction, this is the correct approach. Recently, I've been studying a lot about bonds and my interest has increased significantly. As a result, when I meet many professors, I often ask them questions. Most of them think this way and invest using these formulas. If you know this, you'll make a lot of money. You understand, right? If you look at this, you'll make a lot of money. When you look at it from this perspective, it starts to become clear. I didn't know this before, but once I understood it, it became easier. Before COVID-19, I didn't invest in bonds at all. Prior to COVID-19, even when I went to the bank or securities firms to discuss bonds, I had no interest in them. However, since last year, I've developed a lot of interest in bonds.

Now that I'm investing a lot in bonds, I have to study a lot to put my money in. As I continue to study, it's true that making a lot of money like in stocks is difficult, but I can consistently earn about 5 to 7%, or around 5 to 10%. Since this can be repeated continuously, I can definitely make a profit over time.

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설명왕_테이버

Understanding Bonds and Their Market Dynamics

Bonds are generally low-volatility, stable assets, with U.

Treasury bonds being the most stable due to their dollar denomination and government backing.

When interest rates rise, bond prices fall, and vice versa, creating a range-bound movement in the bond market.

A strategy of making partial purchases during declines and partial sales during rises can yield an investment return of 10% to 20%.

The Fed's Target Rate and Its Impact on the Bond Market

The Federal Reserve announces its target rate in March, June, September, and December, with the neutral rate currently between 2.

The long-term interest rate, based on the 10-year bond, is considered to be at its peak between 3.

The bottom line for the bond market is currently observed around 4.

25%, with potential market drops if political power shifts.

The speaker suggests a buying range of 4.

Bond duration is important for calculating yield, with a TLT duration of about 17 implying a potential 10% gain.

The speaker emphasizes that a 5% to 7% yield is considered worthwhile for long-term investors, setting a threshold around 4.

Investing in Leveraged Bonds and Bond ETFs

There is a threefold increase of 5 to 7% in investment, leading to a total increase of about 15 to 20%.

5% or 5% are causing investors to cut their losses on bond ETFs like TLT.

The Federal Reserve's target rate and its potential timeline for impact raise concerns about volatility and returns in the bond market.

Growing Interest in Bonds and Investment Strategies

The speaker has recently developed a strong interest in bonds and frequently asks professors for their investment approaches.

They believe that understanding bond investment formulas can lead to significant profits.

Since last year, the speaker has been actively investing in bonds and aims to consistently earn 5 to 10% over time.