Going rather OT (but at least the right forum)
GoSeigen wrote:Okay then, rhetorical question based on the above posts: where in all that maths does a term representing the amount of buying or selling in the market appear? Hopefully it becomes crystal clear why dealtn is correct.
There is nothing in the equations. I'm not trying to be argumentative here, just to understand, but the price that is paid is still surely subject to supply and demand? If a large number of people suddenly decide that they wish to sell their shares and buy bonds instead, for those trades to take place, the price of shares must drop, and the price of bonds increase, so that the sellers of shares can find buyers and vice versa? Hence the glib and strictly inaccurate phase "people are selling shares and buying bonds"
GoSeigen wrote:
It is what it is. Your assessment is right; your attitude is right -- but I hope whatever gilts or bonds you have at sub-zero yields are no more than a hedge-sized holding. As someone has pointed out, the main buyer of gilts in the market right now is the BoE. What the UK government is actually selling to the market these days is money, not gilts. So the questions to ask oneself are: why are investors buying that money, and who are those investors? And are they laying it off to other investors once bought? What risks are associated with holding said money? What upside is there? It's not a debate we see very much on TLF.
GS
I hold a little under 20% bonds, commercial and government, as part of multi-asset trackers in my work pension. (I am in my fifties). My bond allocation is decreasing with time as all new money is buying shares, and, for now at least, the shares I already have are appreciating more quickly than the bonds.
I see a lot of risk in bonds - a premium is being paid such that even if held to maturity, my capital will not be returned. If the premium reduces, or even becomes a discount, my capital is most certainly at risk. Just not as much risk as shares, and, debatably, cash. The only upside I see is if premiums grow yet further (as it has in the last week, and over the last decade), and that the bond element of multi-asset funds could be gainfully employed if the share element takes a big hit (rebalanced).