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Post by Deleted on Jul 30, 2022 15:16:43 GMT
Don’t misunderstand this, but … it sure seems like a lot of discussion and analysis for an investment that pays peanuts. I’m seeing a lot of interesting opportunities in equities — of course that’s an entirely different kettle of fish, with greater risk and reward. Nevertheless, yesterday AMZN was up 10% and BABA was down 10%, so all you had to do was buy the former and short the latter, and you would have made in one day the same amount you’ll make from a S/T bond fund in 15 years. I’m not saying that I was smart enough to do that, but there were some fairly easy signals to read from RIO and UBS the last couple weeks that allowed me to pocket an easy 5-10%. It’s JMHHHO but I’m happy leaving my bond money in RPHIX until rates top out, and focus on more interesting opportunities. Once again, no disrespect or denigration intended toward anyone who wants to submerge themselves in bond analysis — I respect that totally (that, after all, is what RPHIX manager David Sherman gets paid to do) — just offering another viewpoint. Amazon's announcement did not seem good to me, From The WSJ: "Shares of Amazon.com were up 11% in Friday morning trading, riding the momentum driven by a second-quarter earnings release yesterday that led to an after-hours jump. The shares were on pace for their largest one-day percentage increase since Feb. 4. The stock was recently enjoying its best three-day run since a stretch in 2015, and its best month since April 2007, according to Dow Jones Market Data. Despite reporting a quarterly loss, the tech-and-retail giant reported sales that exceeded Wall Street’s expectations at $121.2 billion; Amazon also issued a third-quarter revenue outlook that included a range largely above analysts' forecasts.Amazon executives said after its earnings release that the company has been able to manage costs in the face of surging inflation. In a note, Tom Forte, senior research analyst at Davidson Equity Capital Markets, noted that Amazon’s headcount dropped to 1.5 million from 1.6 million in the prior quarter, after management indicated it had more employees than needed to fulfill current e-commerce demand." |
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Post by retiredat48 on Jul 30, 2022 15:44:10 GMT
Please, let's not take this thread off tangent into discussion of stocks, etc. There's a forum place for this.
R48
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Post by retiredat48 on Jul 30, 2022 15:51:33 GMT
Don’t misunderstand this, but … it sure seems like a lot of discussion and analysis for an investment that pays peanuts. I’m seeing a lot of interesting opportunities in equities — of course that’s an entirely different kettle of fish, with greater risk and reward. Nevertheless, yesterday AMZN was up 10% and BABA was down 10%, so all you had to do was buy the former and short the latter, and you would have made in one day the same amount you’ll make from a S/T bond fund in 15 years. I’m not saying that I was smart enough to do that, but there were some fairly easy signals to read from RIO and UBS the last couple weeks that allowed me to pocket an easy 5-10%. It’s JMHHHO but I’m happy leaving my bond money in RPHIX until rates top out, and focus on more interesting opportunities. Once again, no disrespect or denigration intended toward anyone who wants to submerge themselves in bond analysis — I respect that totally (that, after all, is what RPHIX manager David Sherman gets paid to do) — just offering another viewpoint. ,...I'll reiterate for the umpteenth time.. .this thread is about CASH, and where to park it.Of course, most have other long term investments/portfolios etc. Of course if one is trading in the market they can make more...or lose more. Lastly... I expect to earn 3-4% within six months (6-8% annualized) on this VGSH-for-cash investment--not exactly "peanuts." I will withdraw it any time I sense a good opportunity. Like, I consider PDI & PDO to be great investment opportunities, with teriffic (double-digit)yields...and am loaded up. I see where Richardsok is now being rewarded, with the recent rallies in these CEFs. R48 |
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Post by chang on Jul 30, 2022 15:56:07 GMT
I know the thread is about cash, I’m just saying that there’s a limit to how much time and monitoring I will spend thinking about cash subs. I use RPHIX — no watching, no checking, no trading, no worrying. The chart says it all. My point is that with only 24 hours in the day, there are other areas of the landscape that warrant more attention.
PS: You might want to add FBCG to PDI & PDO. I increased my holding last month (actually the OEF version FBGRX).
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Post by FD1000 on Jul 30, 2022 21:59:29 GMT
Don’t misunderstand this, but … it sure seems like a lot of discussion and analysis for an investment that pays peanuts. I’m seeing a lot of interesting opportunities in equities — of course that’s an entirely different kettle of fish, with greater risk and reward. Nevertheless, yesterday AMZN was up 10% and BABA was down 10%, so all you had to do was buy the former and short the latter, and you would have made in one day the same amount you’ll make from a S/T bond fund in 15 years. I’m not saying that I was smart enough to do that, but there were some fairly easy signals to read from RIO and UBS the last couple weeks that allowed me to pocket an easy 5-10%. It’s JMHHHO but I’m happy leaving my bond money in RPHIX until rates top out, and focus on more interesting opportunities. Once again, no disrespect or denigration intended toward anyone who wants to submerge themselves in bond analysis — I respect that totally (that, after all, is what RPHIX manager David Sherman gets paid to do) — just offering another viewpoint. +1 And why I don't use these. Who wants to make 2.5-3% annually for 2 years, based on great trades with 1.5% volatility for 12-24 months? Not a great choice. Either you own 6-12 months treasury that paid 2.6-3% (now a bit lower), or you trade much better bond funds or just stocks. I like to spend my time on investments I can make at least 4-5%. R48, I expect to earn 3-4% within six months (6-8% annualized), let me know when you make 6-8% this year using VGSH. To make 3-4% in 6 months: you had to buy all on June 13-14 (that make 1.3%), if you bought 3 buckets, you are now at around 0.7% total, because anything prior to June 10 made almost nothing. It's also luck that rates are down, inflation is still high, but markets predict months in advance. If inflation goes down from 9% to 5-6%, rates may go up from here. I never want to invest based on predicting rates. Gundlach made terrible predictions about rates, and this was another one. BTW, what % of your money is in VGSH? Nobody should trade VGSH for their cash, just my opinion of course. Treasuries pay now 2.84% for 6 months and no state tax, why take any risk? Attachments:
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Post by fishingrod on Jul 30, 2022 22:33:23 GMT
It is nice to know that retiredat48 , can be open and honest about his moves, and openly state his buys and sells in real time. I am sure FD1000 , will tell us in 6 to 12 months what he did, and I am sure it will be the best funds that he can find that performed over that time period. FD says "Treasuries pay now 2.84% for 6 months and no state tax, why take any risk?" You do know FD1000 , that you don't get 2.84% in 6 months? |
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Post by FD1000 on Jul 30, 2022 22:53:48 GMT
It is nice to know that retiredat48 , can be open and honest about his moves, and openly state his buys and sells in real time. FD: great, just trade when he does. R48 does not post all his trades, he can confirm it.I am sure FD1000 , will tell us in 6 to 12 months what he did, and I am sure it will be the best funds that he can find that performed over that time period. FD: you don't need to believed anything, I posted my REAL portfolio performance and SD for 1-3 years, still there(link). How many did that, including R48?
Why would I post about bond funds instead of "best funds that he can find that performed over that time period". I can easily post I made a lot more in stocks. But hey, I get it, you want to know my trading to make money, not anymore."Treasuries pay now 2.84% for 6 months and no state tax, why take any risk?" You do know FD1000 , that you don't get 2.84% in 6 months? FD: of course not, that is for one year, but if you buy the one year CD, you get over 3%, no-brainer and a guarantee, almost double than MM. |
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Post by Deleted on Jul 30, 2022 23:09:00 GMT
Pretty sure R48 was looking for a place to park cash to then deploy in these volatile times. I don't think contribution to overall portfolio performance was the primary driver here - liquidity and some return. In fact - as above - he has constantly restated this.
I agree with fishingrod - it is very beneficial when posters do real time posts. Cool if one doesn't want to, but of course actual portfolio moves are helpful. Many of us are posting our portfolio performance during this downturn and I hope we will be able to use the data to share lessons learned. At least to me, this type of sharing helps me be a better investor and learn. I appreciate R48 taking us through this maneuver and hope he continues to discuss his thoughts.
I may want to park some cash for a large purchase in several years. I am thinking of a ladder at 6 month increments out to 2 years.
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Post by mozart522 on Jul 31, 2022 0:14:12 GMT
retiredat48, fishingrod, FD1000, R48: "NO, the rule has not been debunked. If you bought A BOND FUND when Gundlach suggested, AND HOLD FOR THE 2 YEAR DURATION, YOU GET YOUR STARTING RATE RETURN. SAME AS IF ONE BOUGHT AN ACTUAL 2 YR TREASURY BOND." This is just not absolute. A rule of thumb (besides being the size of a switch a man was allowed to beat his wife with in days gone by) is an estimation based on what commonly occurs. I believe Fishingrod gave examples when it didn't happen. It is not the same as if one bought an actual 2 year treasury bond. First, VGSH is a constant duration fund. The manager keeps the average duration and average maturity constant. The duration of an actual bond lessens constantly toward maturity. Duration is a measure of interest rate sensitivity. A month before a 2 year Treasury bond matures, it has almost no interest rate sensitivity. A month before your 2 year holding of VGSH is up, it has the same duration and interest rate sensitivity as it did 1 year and 11 months ago. That means the risk of price loss is always there for the fund.
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Post by retiredat48 on Jul 31, 2022 0:33:48 GMT
Just for information re FD assertion:
--I am the one who created the original Buys/Sells/Why thread on M*, and moderated it for about ten years.
--I have ALWAYS tried to post all my trades, real time, on that forum/thread...or here with the new forum whereby Chang kept the B/S/W concept.
R48
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Post by Deleted on Jul 31, 2022 0:45:07 GMT
Yes - and would be interested to hear more from R48 on his plan. Hi...First, I am not a bond expert...just 50 years of following same. I would say it is a strategy versus a plan...goes like this: I find I now have the largest "cash position" in my investing history, coming primarily from large standard-issue bond fund liquidations a year or two ago. This cash was earning zilch in interest for awhile. In seeking a cash haven whereby I could increase yield. I concluded the two year treasury bond was a good place. The convincing was bond manager J. Gundlach showing chart curves and stating the fact that the fed funds rate follows the two year tr yield at good correlation. Gundlach recommended 2 yr at a yield just below 2%. Then fed soon made public it was going 75 versus 50 bp a month ago, and it did. This 25bp more was added into the 2 yr expectations. . I started this threa. Came to pass the two yr yield got above 3%. Since the fed has repeatedly stated their goal is 3% by end 2022, and maybe to 3.5% next year, this seemed the two year had overshot its yield for now. That buying now, a capital gain would also be achieved if held to 6 months to a year, as any recessions or slowdown may limit the fed increase, or actually anticipate fed reducing next year. This seems to be happening now. My experience is that yields will fluctuate around a base point. Powell recently called 2.5% the "neutral rate", a surprise he said that. So at 3%, 2 yr tr has a good yield, and I expect it to fluctuate between 2.5% and 3.25%. If it hits 2.5% (VGSH will be up more in price), I may sell, and wait. Just taking advantage of opportunity. I'm not a trader. But all duration Tr bonds seem hovering around 3% max--market is bearish on economy/recessions etc. We will see. Bigger decision is where/when to deploy this cash...for the long run...both stock and bond funds. R48 I think I understand. I've heard Gundlach say the fed watches the 2 year. So - you bought at least some VGSH when it was yielding 3% - above what we believe the fed neutral rate is. This would mean the 2 year is expected to be closer to 2.5% so increase in principal likely and potential sale. Otherwise you are getting a good enough yield. Wouldn't buy it now would you? What do you think of a bond ladder at 6 month intervals for cash needed in a year? Or wait to see if rates rise on an etf like VGSH? Back to the beginning I guess. |
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Post by FD1000 on Jul 31, 2022 4:03:51 GMT
Hi...First, I am not a bond expert...just 50 years of following same. I would say it is a strategy versus a plan...goes like this: I find I now have the largest "cash position" in my investing history, coming primarily from large standard-issue bond fund liquidations a year or two ago. This cash was earning zilch in interest for awhile. In seeking a cash haven whereby I could increase yield. I concluded the two year treasury bond was a good place. The convincing was bond manager J. Gundlach showing chart curves and stating the fact that the fed funds rate follows the two year tr yield at good correlation. Gundlach recommended 2 yr at a yield just below 2%. Then fed soon made public it was going 75 versus 50 bp a month ago, and it did. This 25bp more was added into the 2 yr expectations. . I started this threa. Came to pass the two yr yield got above 3%. Since the fed has repeatedly stated their goal is 3% by end 2022, and maybe to 3.5% next year, this seemed the two year had overshot its yield for now. That buying now, a capital gain would also be achieved if held to 6 months to a year, as any recessions or slowdown may limit the fed increase, or actually anticipate fed reducing next year. This seems to be happening now. My experience is that yields will fluctuate around a base point. Powell recently called 2.5% the "neutral rate", a surprise he said that. So at 3%, 2 yr tr has a good yield, and I expect it to fluctuate between 2.5% and 3.25%. If it hits 2.5% (VGSH will be up more in price), I may sell, and wait. Just taking advantage of opportunity. I'm not a trader. But all duration Tr bonds seem hovering around 3% max--market is bearish on economy/recessions etc. We will see. Bigger decision is where/when to deploy this cash...for the long run...both stock and bond funds. R48 I think I understand. I've heard Gundlach say the fed watches the 2 year. So - you bought at least some VGSH when it was yielding 3% - above what we believe the fed neutral rate is. This would mean the 2 year is expected to be closer to 2.5% so increase in principal likely and potential sale. Otherwise you are getting a good enough yield. Wouldn't buy it now would you? What do you think of a bond ladder at 6 month intervals for cash needed in a year? Or wait to see if rates rise on an etf like VGSH? Back to the beginning I guess. VGSH doesn't yield 3%, based on the last dist=0.056+NAV=59 and if it stayed the same in the next 12 months you will get about 1.1% yield. The 30 day sec = 3+% but that's potential not actual and may never get there. I never bought CD/treasuries, but if I want to invest my cash for one year and I like the 3% I can get it NOW from CD, which is almost double than many MM, why do I need a ladder or wait? Or, I can buy 6 months treasuries at about 2.8+% per year and decide after 6 months. KISS, why complicate things? |
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Post by chang on Jul 31, 2022 5:53:38 GMT
Keep it civil, please. I had to delete a couple of posts with snipes and jabs.
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Post by fishingrod on Jul 31, 2022 11:00:03 GMT
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Post by Deleted on Jul 31, 2022 11:21:36 GMT
Keep it civil, please. I had to delete a couple of posts with snipes and jabs. That's great Chang. It might also help if you remind posters to stay on topic and not unintentionally derail threads. I see that happening more and more in this forum. Seems to me the topic was pretty clear from the outset. If one wants to disagree with a poster's thread, maybe they should just do that, keeping it to the points raised. I notice some posters who had valuable input posting less. This has been a good forum and it might be helpful to restate its intent and ask that to be respected. This is a good example of a thread that started out well that devolved. Perhaps we should all be asking why. Cheers. |
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Post by Deleted on Jul 31, 2022 11:26:57 GMT
I think I understand. I've heard Gundlach say the fed watches the 2 year. So - you bought at least some VGSH when it was yielding 3% - above what we believe the fed neutral rate is. This would mean the 2 year is expected to be closer to 2.5% so increase in principal likely and potential sale. Otherwise you are getting a good enough yield. Wouldn't buy it now would you? What do you think of a bond ladder at 6 month intervals for cash needed in a year? Or wait to see if rates rise on an etf like VGSH? Back to the beginning I guess. VGSH doesn't yield 3%, based on the last dist=0.056+NAV=59 and if it stayed the same in the next 12 months you will get about 1.1% yield. The 30 day sec = 3+% but that's potential not actual and may never get there. I never bought CD/treasuries, but if I want to invest my cash for one year and I like the 3% I can get it NOW from CD, which is almost double than many MM, why do I need a ladder or wait? Or, I can buy 6 months treasuries at about 2.8+% per year and decide after 6 months. KISS, why complicate things? Thanks FD. I am hoping to also hear the opinions of folks who do buy treasuries on a regular basis. VGSH at this point in time or treasuries? Not interested in CDs or MM funds for this purpose. |
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Post by chang on Jul 31, 2022 11:45:07 GMT
@slooow Good point, and I have been guilty of that myself (including in this thread above). In fairness, it is the nature of internet discussions to digress and wander, especially after they have reached a mature stage. Sometimes an incisive, thoughtful digression can prove to be very valuable. Key point #1 is to keep it civil and avoid personal sniping, and #2 to use reasonable judgment as to when to start a new conversation if you really want to branch out from an ongoing discussion. Unfortunately, it’s not always easy to know when a brief digression is going to turn into a long one.
Note: you can always ask me to move the last XX posts out of an existing thread and into a new one. We’ve done that several times in the past, when a good conversation started incubating within a thread where it didn’t really belong.
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Post by FD1000 on Jul 31, 2022 11:51:19 GMT
VGSH doesn't yield 3%, based on the last dist=0.056+NAV=59 and if it stayed the same in the next 12 months you will get about 1.1% yield. The 30 day sec = 3+% but that's potential not actual and may never get there. I never bought CD/treasuries, but if I want to invest my cash for one year and I like the 3% I can get it NOW from CD, which is almost double than many MM, why do I need a ladder or wait? Or, I can buy 6 months treasuries at about 2.8+% per year and decide after 6 months. KISS, why complicate things? Thanks FD. I am hoping to also hear the opinions of folks who do buy treasuries on a regular basis. VGSH at this point in time or treasuries? Not interested in CDs or MM funds for this purpose. Just because I don't buy treasuries or VGSH, doesn't mean I can't make common sense posts. I never had bond funds, until I did. I posted about retirement years before I retired. When I started using bonds and retired, my opinions and actions stayed the same. Similar to LTC, buckets and other subjects.  |
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Post by mozart522 on Jul 31, 2022 12:13:48 GMT
@slooow,
" I am hoping to also hear the opinions of folks who do buy treasuries on a regular basis. VGSH at this point in time or treasuries? Not interested in CDs or MM funds for this purpose."
I buy treasuries at auction through Vanguard. If you are trying to protect a certain amount of cash for a future purchase at a known date, then appropriate duration T-bills would be your best choice, IMO. VGSH has no maturity and it is impossible to tell what you might have when your time period expires. As FD points out, the current distribution yield is low compared to the SEC yield. This is because the average coupon is not 3% but only 1.4%. If the rule works in this case, you won't ever get a 3% distribution, but rather a combination of distributions, and price appreciation equalling 3%. If the rule doesn't work, who knows?
My guess is R48 would agree that for a known expense at a given time period, a T-Bill would be a better choice. R-48 is using VGSH for a different purpose with a variable time frame.
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Post by Fearchar on Jul 31, 2022 13:08:42 GMT
I put together the following comparison chart:  VGSH and VCSH are highly correlated with each other. The recent rise in rates has clobbered both. Both are "Low Risk", but VCSH is more volatile and has greater long term returns. So, it's suffered more over the past year than VGSH. However, going forward it will likely provide greater returns. VMFXX on the other hand has not done well over the past decade due to ZIRP. But, as we all know, the FED is changing that. VMFXX tends to yield pretty close to the FED fund rate. Its SEC yield is already creeping higher than the previous rate and is on its way to ~2.33% with another hike predicted later this year. Potentially, it could be yielding over 3% by December; that's not peanuts! Notice however, that VGSH, VCSH and buying treasuries directly carry more risk than VMFXX. #1; what's going to happen to VGSH and VCSH as rates rise??? |
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Post by Deleted on Jul 31, 2022 13:18:37 GMT
I thought the same regarding VGSH right now of course. Will look into VMFXX. Short term Treasuries/VGSH seem risky really. Yes? Maybe the strategy is to buy VGSH/treasuries if yields shoot up again?
My expense is a plan - not set in stone. So I have some leeway.
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Post by chang on Jul 31, 2022 14:08:59 GMT
I put together the following comparison chart: 
Note for RPHIX (duration 0.52 yrs): ============================ YTD 0.97% (M* as of 7/29) 1YR 1.73% (M* as of 7/29) 10yr 2.58% (M* as of 7/29) Inception 2.78% (as of 6/30) SEC Yield 2.37% (Vanguard stat as of 6/30) |
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Post by mozart522 on Jul 31, 2022 14:32:49 GMT
I thought the same regarding VGSH right now of course. Will look into VMFXX. Short term Treasuries/VGSH seem risky really. Yes? Maybe the strategy is to buy VGSH/treasuries if yields shoot up again? My expense is a plan - not set in stone. So I have some leeway. How are short term treasuries risky? You buy a 6 month t-bill and you know exactly what you will get in 6 months no matter what. If you worry about opportunity costs if rates rise in September, buy a 2 month t-bill instead. In any event, you will almost certainly be ahead of a MM fund. |
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Post by Deleted on Jul 31, 2022 15:03:35 GMT
M - maybe I am looking at this wrong? I looked at a 5 day 6 mo treasury chart and it seemed like a fairly large drop for a "safe asset". I was thinking it coul$ just as easily shoot up in this market. I will look at shorter durations.
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Post by Chahta on Jul 31, 2022 15:13:38 GMT
I get info from CrossingBridge Advisors. RPHIX has 30-50% of holdings maturing each month and CBLDX has 15-30% maturing each month. They are very short duration bond funds (.5 and .9, respectively). It gives you the feel for how fast yield might go up which is what SEC yields are trying to convey. Compare that to VGSH if that info is even available. But I estimate that to be 7-15% each month.
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Post by mozart522 on Jul 31, 2022 15:26:48 GMT
M - maybe I am looking at this wrong? I looked at a 5 day 6 mo treasury chart and it seemed like a fairly large drop for a "safe asset". I was thinking it coul$ just as easily shoot up in this market. I will look at shorter durations. ok, but it doesn't matter what the day to day does, if you buy a 3%, 6 month t-bill you will get that in 6 months for sure. It is safe because the assumption is one will hold it to maturity. If you are suggesting that the 6 month may be higher, say 4% in 2-3 months, then you may want to go shorter and possibly buy then. But it is a bet. |
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Post by Deleted on Jul 31, 2022 15:39:18 GMT
I doubt that I will set up a bond ladder this fall as I had planned to do. Instead I will consider other investment (capital appreciation) possibilities for the current money market funds. It's a taxable account, and I don't need or want more income there than the federal money market is generating.
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Post by retiredat48 on Jul 31, 2022 15:48:10 GMT
FD posted: "VGSH doesn't yield 3%, based on the last dist=0.056+NAV=59 and if it stayed the same in the next 12 months you will get about 1.1% yield. The 30 day sec = 3+% but that's potential not actual and may never get there."
To me, this is a complete misrepresentation. You get total return from the distribution dollars, and the daily accrued increase in NAV price as bonds that are below par, mature, and are redeemed. The SEC does not casually give yields that are non-existant. In fact, most of the time the SEC yield is below the M* published yields. So a 3% SEC yield has value...and an expectation.
I'm off to the gym...more tonight on the Bond Rule of Thumb, since many do not trust it.
R48
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Post by Deleted on Jul 31, 2022 16:25:51 GMT
FD posted: "VGSH doesn't yield 3%, based on the last dist=0.056+NAV=59 and if it stayed the same in the next 12 months you will get about 1.1% yield. The 30 day sec = 3+% but that's potential not actual and may never get there." To me, this is a complete misrepresentation. You get total return from the distribution dollars, and the daily accrued increase in NAV price as bonds that are below par, mature, and are redeemed. The SEC does not casually give yields that are non-existant. In fact, most of the time the SEC yield is below the M* published yields. So a 3% SEC yield has value...and an expectation. I'm off to the gym...more tonight on the Bond Rule of Thumb, since many do not trust it. R48 There was a major discussion on the Bond Rule of Thumb on M* years ago - Vanguard article, assumptions, limited applications... |
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Post by mozart522 on Jul 31, 2022 16:51:10 GMT
FD posted: "VGSH doesn't yield 3%, based on the last dist=0.056+NAV=59 and if it stayed the same in the next 12 months you will get about 1.1% yield. The 30 day sec = 3+% but that's potential not actual and may never get there." To me, this is a complete misrepresentation. You get total return from the distribution dollars, and the daily accrued increase in NAV price as bonds that are below par, mature, and are redeemed. The SEC does not casually give yields that are non-existant. In fact, most of the time the SEC yield is below the M* published yields. So a 3% SEC yield has value...and an expectation. I'm off to the gym...more tonight on the Bond Rule of Thumb, since many do not trust it. R48 I think this is a misunderstanding. FD is saying you will not likely get a 3% yield, meaning distribution yield according to his example. You are talking about total return with includes distribution yield, CGs, price appreciation and so on. The two of you are using the word "yield" with different meaning; FD meaning % based on distibutions, and you meaning yield to maturity which is 3% and includes everything. |
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