TIPPING POINT: BUY LTPZ (July 31, 2026): As I had described in my recent postings, U.S. government debt has become unusually undervalued, with many U.S. Treasuries recently dropping to their lowest levels since 2007 or earlier. I am continuing to buy TLT, EDV, and related funds of U.S. Treasuries; there are also closed-end funds in this sector which I will discuss in a future update. A lesser-known and often misunderstood asset class, which also falls under the category of U.S. government-guaranteed securities, are Treasury Inflation Protected Securities. These are often called Tips which should not be confused by the pink-sheets stock which uses that symbol. In particular, I currently favor those Tips which mature in 20 to 30 years which have average fixed yields of just about exactly 3%. I will discuss and attempt to demystify this asset class which is currently at its most compelling undervaluation in history with the sole exception of a number of weeks in the year 2000. Pimco offers the exchange-traded fund LTPZ which I am recommending as an easy way to purchase long-dated Tips. The timing of the unusually low prices for Tips in both 2000 and 2026 is not a coincidence; near all U.S. stock market bubble tops, investors will ignore the best guaranteed bargains of their lifetimes to chase after the trendiest stocks which are set to plummet 80% or 90%.
TIPS CAN BE AMONG THE BEST INVESTMENT CHOICES WHENEVER U.S. EQUITIES ARE TOPPING OUT AT BUBBLE PEAKS AND ARE SET TO DRAMATICALLY UNDERPERFORM: As is true of the vast majority of assets, if you can purchase something at a 26-year bottom then you are probably going to outperform most other assets over the next several years or so. In June 2000, if you were invested in the S&P 500, then if you reinvested all dividends and paid zero management fees you would have lost 15% of your capital by June 2010 even without adjusting for inflation. If you had instead owned the Vanguard broad-based Tips fund VIPSX then you would have doubled your money by June 2010. Obviously different starting points would result in widely varying results. The conclusion is certainly not that Tips always outperform large-cap U.S. stocks, but that if you purchase Tips anywhere near a bubble peak for U.S. stocks then you will probably come out way ahead. One main reason I am currently recommending LTPZ instead of VIPSX is the VIPSX has an average maturity of only 7.0 years, versus 21.56 years for LTPZ. The yield difference between these maturities is currently high.
2000 and 2026 have a lot in common. In both years, Tips were especially compelling bargains. Both years featured slightly different kinds of bubbles featuring all-time record overvaluations for popular U.S. stocks. Investors put slightly over 51% of their money into U.S. stocks at the March 2000 peak and 55.1% at the early June 2026 top, versus the average of 26.0% of U.S. household assets invested in U.S. equities and their funds since 1950 [source: Mark Hulbert]. Just as in 2000, the popular consensus today is that U.S. stocks will keep climbing regardless of valuations, while U.S. government debt will always be unpopular.
TIPS PAY A COMBINATION OF TWO DIFFERENT YIELDS TO GIVE YOU A TOTAL: Whenever you purchase most U.S. government debt, such as ordinary U.S. Treasuries, you are locking in a particular annualized interest rate which continues until the security matures. With Tips, at the time you purchase them, you are locking in what is called the fixed yield which remains constant through maturity; this is added to the urban CPI each month to give you the total yield. In case the urban CPI is negative, you are still guaranteed the fixed yield as a minimum monthly amount to be credited; a negative CPI is never subtracted from it. Thus, the total yield fluctuates each month and the total of each six-month period is credited to your account.
During the past several trading days, I have been repeatedly purchasing U.S. Tips which mature on February 15, 2053 and which have the cusip 912810TP3. The fixed yield on these has varied with each purchase, but has recently been slightly above 3%. For purposes of simplicity, let's assume that the fixed yield is exactly 3%. Each month, this fixed yield is added to the exact percentage increase in the Consumer Price Index for All Urban Consumers, sometimes abbreviated CPI-U. This index is different from the CPI you will hear reported in the media on the second week of each month at 8:30 a.m., because the urban CPI is not seasonally adjusted. You can find the official data for the urban CPI from the U.S. Federal Reserve since 1913 at the following link:
The urban CPI index increased 3.5% for the year ended June 2026. Therefore, if your fixed yield is locked in at exactly 3.0% for 26-1/2 years, your current total yield is 3.0% fixed plus 3.5% urban CPI for a combined total of 6.5% annualized. From the rule of 72, we can see that if you compound your money at 6.5% annualized then it will take 72 / 6.5 or 11 years and 4 weeks to double your money. The actual monthly rate will fluctuate, perhaps considerably, over the 26-1/2-year period, so you can't be certain in advance exactly how much your principal will increase each month. In the worst-case scenario, if U.S. inflation as measured by the urban CPI rapidly drops to zero or negative and remains negative (i.e., deflation) for decades--obviously not likely, but possible--then you will only get the fixed rate of 3.0% annually so it will take 24 years to double your money instead of 11 years. Conversely, if the urban CPI suddenly increases to 6% and stays there, then your total return will be 3% plus 6% or 9% annually and you will double your money in 8 years.
YOU CAN ACHIEVE SUBSTANTIAL CAPITAL GAINS OR LOSSES FROM TIPS, NOT JUST HIGH MONTHLY RETURNS: If you buy Tips with a fixed rate of exactly 3% for 26-1/2 years, as in the above real-life example, then you have the potential for much more than a higher guaranteed yield than almost all other safe investments. When you lock in a rate of 3%, your principal will fluctuate in value depending upon what happens to fixed yields going forward. Let's say that a year from now the fixed rate on the same Tips has climbed from 3.0% to 4.0%. If you then want to sell your Tips prior to maturity (maybe your spouse wants to purchase a sports car or a second home), you will have to accept a significantly lower price than you had originally paid for it. That's because everyone else can get 4%, so there is much less eagerness to buy a piece of paper that only yields 3%. It works the other way also, and here is the key fact that hardly anyone appreciates: the long-term average fixed yield on 30-year U.S. Tips is only 1.14%. If the fixed yield approaches its multi-decade mean, you will be able to sell your Tips for more than double the price you paid for them. That's because investors in the open market will only be able to get half of the yield you have guaranteed, so they will pay you twice your purchase price for it. (The calculations are being slightly rounded off for simplicity; I can give you the exact data to a few decimal places if you want to know it.)
By U.S. federal law, your interest is exempt from income taxation in all U.S. states and localities. In some states including New Jersey, not only is your interest on Tips free of all state and local income taxes, but also all capital gains on those securities and funds of those securities, as long as the securities or funds have nearly all of their capital invested in direct U.S. government debt and not repos or other artificial substitutes. There is a quirk in the Tips rules where you may have to pay tax on some of your principal increase prior to maturity; fortunately, this so-called phantom tax will reduce your ultimate net gain at maturity or whenever you sell your Tips. It is not that different from how you have to pay tax on dividends from most securities even if you don't sell them. Fortunately all necessary tax information by federal law has been automatically reported on your broker's 1099 since the year 2011 so you don't have to do any fancy calculations.
YOU CAN PURCHASE TIPS AT AUCTION, ON THE SECONDARY MARKET, OR USING EXCHANGE-TRADED FUNDS: The easiest way to purchase U.S. Tips are using the auctions established by the U.S. government for this purpose. Just as with 26-week U.S. Treasuries or any other form of U.S. government debt, these auctions are guaranteed to be free of commissions by federal law. You will also receive exactly the same yield as everyone else who participates in non-competitive auctions for the same securities, even if they are the Bank of China or a large hedge fund.
The main problem with U.S. government auctions of Tips is that they don't occur often. There are auctions for 5- and 10-year Tips which are sometimes worthwhile, but don't pay nearly as much at the present time as very unpopular 30-year Tips. Unfortunately the 30-year Tips auction only occurs once every six months. By good fortune, the next auction will be fairly soon on Thursday, August 20, 2026. I definitely plan to participate in this auction, but a lot can happen between now and then, so the yields might or might not still be near 3% or above. Therefore, I would recommend one of the two methods below for purchasing most of your long-dated U.S. Tips.
I OFTEN PURCHASE U.S. TIPS ON THE SECONDARY MARKET, WHICH IS LIKE BUYING U.S. AUTOMOBILES: If you have ever purchased a vehicle of any kind, then perhaps you have gone to an automobile dealership. I assume that after taking a test drive, you don't write a check payable to the dealership, sign it, and leave the amount blank. Hopefully you also don't say to the salesperson: "I'm sure you'll be fair to me, so fill in any amount you choose and I'm fine with it." If you like that method of buying a car then you're probably already placing market orders to buy or sell any security, rather than using a limit order which is far safer especially for anything which is not completely liquid. Since Tips bought in the secondary market are not as liquid as exchange-traded funds like TLT, it takes a little practice learning what price to bid for each purchase, or which price to ask for each sale. Once you have done it several times you will become more adept with it. Start with small purchases to become familiar with how the secondary Tips market works before committing large sums.
A SIMPLE COMPROMISE IS TO BUY THE EXCHANGE-TRADED FUND LTPZ TO SUPPLEMENT THE SECONDARY MARKET: I have purchased roughly half of my total long-term Tips via the Pimco fund LTPZ instead of repeatedly entering the secondary market. As is usual with exchange-traded funds versus direct investment in the components of those funds, this makes it far simpler to place a ladder of good-until-canceled orders (ideally including outside of regular trading hours) at different prices, so that the more the price drops, the more you buy. I purchase all exchange-traded and closed-end funds using this gradual approach. It is especially effective if your broker does not charge commissions, as is the case with nearly all U.S. discount brokers, so that you can have numerous orders filled at no extra cost.
The daily trading volume for LTPZ is over seven million shares. The average effective maturity is 21.56 years which will fluctuate slightly through time and currently captures nearly the highest possible Tips yields of all maturities. This fund dates back to April 30, 1998 so it has dealt with the ups and downs of this sector through those decades. The fund is rebalanced monthly and also pays dividends monthly.
One disadvantage of purchasing LTPZ instead of directly at auction or in the secondary market is that you will pay an annualized management fee of 0.20%. The big advantage of Tips trading at their lowest prices in 26 years has the negative feature of hardly any fund companies wanting to create new funds in this sector until after prices have already doubled. If you look at cryptocurrencies, nearly all of the exchange-traded funds in that sector were created within months and often within weeks of their all-time tops in 2025, prior to cryptocurrencies losing half or more of their value. Similarly, a huge percentage increase in the total number of exchange-traded precious metals funds happened during the first quarter of 2026 when these funds were at or near all-time highs prior to their recent losses (such as GDXJ) of roughly 40% from their peak valuations at 4:00 a.m. on March 2, 2026. Whenever there has been a recent surge of new exchange-traded funds of long-dated Tips, it will probably be a useful sell signal.
I don't want to pretend that I am the only analyst who has noticed the unusually compelling bargains for long-dated Tips, although they are not frequently mentioned in the mainstream media. Randall W. Forsyth penned a useful analysis of this idea in the July 27, 2026 issue of Barron's. The following article by Brett Arends was also recently published on this topic:
Here is an interview with the same analyst:
In news which may not seem immediately to be related but which is absolutely relevant, top corporate insiders haven't experienced such a high ratio of total U.S. dollar selling to total U.S. dollar buying in approximately two decades:
You thus have a choice of buying long-dated U.S. Tips at their highest fixed yields since 2000, or purchasing popular U.S. stocks which are experiencing some of their heaviest recorded selling by those who know the most about these companies.
Disclosure of current holdings:
Below is my nearly current asset allocation as of 4:00 p.m. on Tuesday, July 28, 2026. Each position is listed as its percentage of my total liquid net worth. The long positions should add up to just about exactly 100%, while the short positions all use U.S. Treasury bills as collateral since those count as 99% cash.
I very recently added to TLT, PSQ, EDV, and LTPZ, in addition to purchasing the TIPS which mature on February 15, 2053 with cusip 912810TP3, whenever each of these was at or near a multi-decade low. TLT is heavily shorted, pays just about exactly 5% in annualized dividends, and has been forming marginally higher lows since it had touched 81.92 on October 23, 2023 at 5:40 and 5:41 a.m. Eastern Time.
The order is as follows: 1) U.S. government bonds; 2) shorts; 3) bear funds; 4) precious metals; 5) individual U.S.-listed stocks.
17-Week/52-Week/26-Week/13-Week/2-Year/8-Week/3-Year/5,10,30-Year TIPS/4-Week/6-Week/20-Year: 27.12%;
TLT/VGLT long: 17.25%;
VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 15.37%;
EDV long: 5.33%;
LTPZ long: 4.84%;
I Bonds long: 3.86%;
PMM long: 0.01%;
XLK short: 28.88%;
QQQ short: 24.31%;
GDXJ short: 1.40%;
SMH short: 1.38%;
PSQ long: 10.65%;
Gold/silver/platinum coins: 11.21%;
UTZ long: 3.04%;
CAG long: 0.73%;
GPK long: 0.42%;
WEN long: 0.17%.
