BargainValueHunter Posted August 7, 2011 Share Posted August 7, 2011 http://www.hussman.net/html/longterm.htm By holding the security during a period when the yield-to-maturity is falling, you not only earn a return that is higher than the original yield to maturity, you earn a return that is dramatically higher than the future yield-to-maturity! Link to comment Share on other sites More sharing options...
beerbaron Posted August 8, 2011 Share Posted August 8, 2011 Buffett explained something pretty similar in it's 1999 speech in Sun Valley. Risk free rate is the law of gravity in finance. Stock are just perpetual bonds with variable coupons and principal. The question tough is what to do... if you have bonds then the same effect applies as to stock. Variable rates preferred... maybe. 6.4% is not all that bad if you compare with 30Y treasuries. BeerBaron Link to comment Share on other sites More sharing options...
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