Apr 5, 2025 Episode:

Retired Treasury bond manager Robert Kessler has always been skeptical of Wall Street’s “stocks for the long term” mantra. He explains why he is completely out of stocks in his personal portfolio—and why you should consider doing the same.

“…it’s a huge, and usually fatal, mistake to design a portfolio without focusing primarily on those approximately 2% of times that will cause you to lose your nerve and violate Charlie Munger’s prime directive of compounding. As Munger, who is Warren Buffett’s partner, puts it: ‘The first rule of compounding is to never interrupt it unnecessarily.’
…..holding plenty of safe assets—like dull, low-yielding Treasury securities—and being prepared to see your risky assets get periodically, and hopefully temporarily, slaughtered.”
- William Bernstein

Kessler: Nov. 18, '22.

Hey Lewis. You wonder. Reminds me of Robert Kessler recent talk on wealth track. Cash is NOT trash. I remember seeing him maybe 40 years ago on a TV investment show stating to buy 30 year zeros. That's when I was a young buck watching TV after working at the local Texaco.
So who knows like I said prior, I have no idea if the fool is the person in or out of the market at this time. I'm certain there's a fool on one side of that equation though
I'm thinking there is no way fed can pull back on the reins... market would go splat
Best regards
Baseball Fan

LOL - Enjoyed. I don’t watch Consuelo Mack much … however I thought her demeanor during the interview similar to that of a well trained therapist listening quietly and obligingly as the patient on the “couch” (Kessler) vented his pent-up frustrations … (not that I would know). :)
What’s interesting is how divergent the bears seem to be in their “remedies” for the now long anticipated cataclysmic stock selloff. Kessler likes long-dated bonds. Others, including Dalio and Fleckenstein, like gold. Kensler sees either stagnation or deflation while others see hyper-inflation.
One recommendation that troubled me was to own long dated zero coupon bonds. He may, of course, be proven correct. But these are dangerous in the hands of unsophisticated investors. The way they’re issued has the effect of creating enormous leverage. They’re extremely volatile on both the upside and downside. I’m surprised he didn’t sound some note of caution. Personally, I wouldn’t touch a 10-30 year zero with a 10-30 foot pole.
Thanks @bee / My immediate goal now is to get caught up listening to some of Mack’s other recent interviews.
FWIW Here’s a 2012 list of The 10 Most Bearish Stock Market Doomsayers.

While I don't think I'll be buying ZROZ any time soon (long term Treasuries and zeros suggested: 19:30 mark, 20:30 mark), I do agree with Kessler's characterization of savings bonds as savings, not investing (21:20 mark).

There was a difference between a saving bond and investing ...They took it out of your paycheck, that was savings ... I cashed in those savings bonds and I actually paid for the car ... I bought the car with my savings.
Savings are what you know will be there when you want them. You know that they're going to be there. Investments? I don't know, you just don't know.

I count savings bonds as part of my cash allocation. They're very similar to CDs, at least once one gets past the one year holding period during which time one cannot redeem them.
Though CDs generally don't meet the technical definition of cash equivalent because they don't mature within three months, I view them as cash because the maturity date has little import. They are convertible to cash with zero fluctuation in value (aside from an early withdrawal penalty) unlike instruments where how much the value fluctuates depends on the time until maturity.
Likewise, I regard savings bonds as cash equivalents, or as Kessler puts it, "savings".

Okay...
Everyone get together, whenever, and tell me when is a good time to buy WHOSX. I guarantee it F up the universe after I buy. I have superpowers of the wrong kind.
Robert Kessler - gotta hand it to him. My hope is when I retire it will be the right time to buy WHOSX because one is supposed to me more invested in bonds than stocks at that time.

The entire investing world has been telling us to invest in short term bonds since the great recession. It pains me greatly to see how short term bonds have performed against long term bonds.

@VintageFreak...Actually not true...at least one person has been advocating LT Treasuries for some time now.
https://mutualfundobserver.com/discuss/search?Page=p2&Search=kessler

March 20th guest Robert Kessler on Raising Cash and Unappreciated Treasuries:

FYI: In a WEALTHTRACK Exclusive, Treasury Bond manager Robert Kessler warns of recession ahead & which U.S. Treasury securities are the purest play on Federal Reserve interest rate policies
Regards,
Ted
https://wealthtrack.com/treasury-bond-maven-robert-kessler-warns-of-recession-ahead-where-to-take-shelter/
Robert Kessler Website:
https://www.kesslercompanies.com/about/robert-kessler/

FYI: A market warning: Why bond manager Robert Kessler advises extreme caution ahead.
Regards,
Ted

In today's bond environment, I am reminded of the many Robert Kessler interviews with Consuelo Mack:
wealthtrack.com/robert-kessler-bullish-treasuries/

When it comes to Bond strategies I like to reference Wealthtrack's interviews with Robert Kessler:
Here's one from 2014:
investmentnews.com/section/video?playerType=CMWealth&bctid=3708741801001&date=20140801
Here's one from 2013:
https://youtube.com/watch?v=d1iTkEdJXRA

@expatsp: I see another thread, where some Moose has switched into the EDV you mentioned! That's a gutsy/brave call with rates this low, and huge interest rate sensitivity. The Moose, whoever that is, must think the economy will slow from here. The yield is 3.22%. There was a guy named Robert Kessler who was on WealthTrack not long ago who was strongly in favor of long term Treasuries. He and the Moose see eye to eye. Personally, I would never take that much interest rate risk, unless yields were sky high, per my prior post.

This was an excellent interview. Robert Kessler put forth a very intelligent, reasoned and logical case for Treasuries and his view on interest rates. The interviewer, Consuelo Mack, said that Kessler has been correct about Treasuries for the entire 15-year period she has been interviewing him on Wealthtrack

FYI: He's bullish on treasuries.
Regards,
Ted
http://wealthtrack.com/recent-programs/robert-kessler-bullish-treasuries/

Since you said please, here's your video. Enjoy!
wealthtrack.com/recent-programs-ROBERT KESSLER – IN DEFENSE OF BONDS
EDV (Zero Treasuries) vs. IBB (Biotech) over the last 5 years:

If there is one guy who I listen to when it comes to Treasuries it's Robert Kessler. Following this guys commentary is a great way to pay for your Bond education.
His view 10 years ago:
money.cnn.com/magazines/fortune/fortune_archive/2003/09/15/349154/
2012 View:
bondsonline.com/News_Releases/news05021201.php
Recent interview with Robert Kessler:
advisoranalyst.com/glablog/tag/robert-kessler/
Finally, a quote Ted should carefully read the next time he blasts a bond investor (Catch22):
"Treasuries have long been considered a very uninteresting investment due to their relative low yields which some people think of as their return. The reality is that bond returns come from price appreciation as well and as interest rates have been falling for most of the past 30 years, Treasuries have been one of the best performing assets over almost any recent historical time period you observe."

Robert Kessler gives his expert opinion on the topic of US Treasury Bonds - Aug 2012 on Wealthtrack:
robert-kessler--us-treasuries-are-still-the-place-to-be
A previous interview:
investmentnews.com/section/video?playerType=CMWealth&bctid=1369795436001

By circumstance, there is an excellent interview with Robert Kessler, discussing the probable direction of interest rates referenced in a recent post by bee. I highly recommend that you view that in full before making assumptions regarding the possible direction of interest rates. After introductory remarks (and commercials) the actual interview starts about five or so minutes into the video.

I've just watched bee's link to the Robert Kessler interview, and found it to be terribly impressive. Here's one guy who tells you exactly what he is seeing, and why.
With respect to bonds, I've always thought of the similarity to a long-term mortgage on a house. Lets say that a mortgage holder desires to sell the mortgage to a different party. If you were the mortgage buyer, would you rather buy someone's promise (mortgage) to pay 3% for 30 years or 6% for 30 years? Well if it's an income stream that you're looking for, of course you'd want the 6%. But the sellers aren't stupid- and neither are other potential buyers who are competing with you: you are going to have to pay a premium for that 6%, right? So if the current mortgage market rate has gone down, older mortgages are worth more to a buyer.
What if the current mortgage market rate goes up? Well, why would a mortgage purchaser want an older 3% mortgage when you can buy a new one that pays more? So the "resale value" of the older mortgages goes down.
If you've watch the Kessler video, you'll note that he does not see the current rate structure as going up- just the opposite. Is he correct? Not sure, but I think so.
Another consideration is the fact that if a purchaser buys a single mortgage, or a single bond, with the intention of holding it to maturity, there are fewer unknowns: at least you will get back the full amount of your investment at a particular point in time, plus interest along the way. (For simplicity, ignoring the possibilities that the bond may be called early, the mortgage may be paid off early, the bond issuer may go broke, or the mortgage may go into default,)
This situation is fairly easy to see if we talk about the current value, or speculate about the possible future value, of a single mortgage, or bond. It gets really messy with respect to bond funds though, because the valuation of any particular bond fund will of course depend upon the total value of their bond holdings, which may be (and probably are) comprised of many different bonds from many different issuers paying many different rates and due at many different times. This is exactly why some funds try to compartmentalize their bond holdings with respect to who issued them, and the terms: very short, short, medium, or long. Other funds may have an eclectic mix which makes sense to them. This means that you have to be very careful in your selection of a particular bond fund... and this is exactly why there are so many worries about the large numbers of people who are currently moving into bond funds- do they really understand what they are buying?
Both fixed mortgages and US government bonds are, essentially, loans at a specific rate with a promise to repay at a specific time, and secured by either property or "the full faith and credit" of the US government, and generally they will react the same way to changes in markets over time. This underscores the importance of the Fed promise to maintain the current low rates out until, what is it now, 2015? If you buy a new issue now (2 year or less), you have the full faith and credit of Mr. Bernanke that you won't take a major hit before then. Maybe. If inflation stays down. Which it may. Or may not. A lot of "ifs and mays" there...
As far as longer-term (more than 2 year) issues go, "fools rush in" seems appropriate.
The above remarks are from the perspective of an individual investor, and not from that of a professional bond trader. Hope this helps a little.