Gary Shilling’s Favorite Investment: 30 Year Treasuries

By on June 23, 2011

Larry Kudlow interviewed Gary Shilling last week.  Shilling continues to see a double dip recession in our future with housing values declining by 20 percent.  Under this scenario, Shilling forecasts the yield on long term bonds to fall from 4% to 3%.  Shilling says 30 year U. S. treasury bonds are his favorite investment and he looks for 20% capital appreciation; with a more generous 30% gain for holders of zero coupon bonds.

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7 Comments

  1. Lou Scuntz

    June 23, 2011 at 12:49 pm

    Certainly the housing market will continue to fall. Don’t know abut the rest.

  2. Normaus Peter

    June 24, 2011 at 3:03 pm

    I second that Lou!

    • Lou Scuntz

      June 28, 2011 at 3:52 pm

      Just like stocks. Some property values will remain perpetually inflated (Silicon Valley), the majority will either fall 10-30% or remain stagnant for years like Rod says. My big fear (and it’s admittedly anecdotal) is how these foreclosure properties are being treated by the big banks. They are in shambles by the time the house hits the auction block. Small, local banks are on the ball. Their houses are well maintained and go for a comparative premium. Unfortunately, the small banks hold only a small fraction of the excess houses.

  3. Hugh Jorgan

    June 27, 2011 at 6:59 pm

    Schilling’s a smart guy, but 20-30% seems quite optimistic.

  4. Rod Gozinya

    June 27, 2011 at 7:32 pm

    It seems to be a toss up. Home prices could fall 20% dramatically or they could remain stagnant for 10 years. Same difference in the long run. It just depends on how you like your medicine.

  5. Hugh Jorgin

    June 27, 2011 at 7:34 pm

    20-30% T-Bond appreciation seems a bit optimistic in my opinion.

  6. Barron Maestro

    June 28, 2011 at 2:17 am

    To get that kind of appreciation in bonds the economy will have to be pretty awful. Not just in the U. S., but worldwide. We’ll just have to wait and see what happens. With stimulus winding down it will be interesting to see how this play out.

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