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Post by FD1000 on Oct 6, 2022 21:03:45 GMT
@slooow : Please, let's stop saying that a portfolio value going down is "losing money". In this thread and others. It simply is not the case. My gosh - what a loser that lousy investor Buffett is then! When you sell - you lose. That's it. If an investment goes to 0, you sell by default and lose money. If one wants to say a portfolio asset declined with little or no chance of recovery, that may be applicable - i.e. to say "lost money". Saying a purchase is down in value is also correct.
Semantics. If "a portfolio asset declined" or "a purchase is down in value", then you lost money. I think the old adage "you haven't lost anything until you sell" is nonsense. Your portfolio is worth whatever your brokerage company says it's worth as of 4PM. Does it also follow that you haven't made money until you sell? In that case, Buffett hasn't actually made any money, because he owns a zillion shares of BRKA that he never sold. If you have a billion dollars in stock, you are a billionaire. +11111 Someone portfolio is worth as much as it shows by the end of each day. We are talking about a portfolio of stocks,bonds,funds,ETFs,CEFs. IMO, there is no semantic about it. Usually, investors who don't agree are the ones with portfolio losses at that point. Remember, just because you didn't sell, it doesn't mean you are in a better shape. Another investor who sold higher and bought lower beat the LT holder in performance + volatility = Higher Sharps. I know, how can you guarantee successful timing? that's another debate. Many retirees who have enough care more about protecting their capital than better performance, especially in earlier years. haven, I don't care what other investors do, I care about my portfolio risk-adjusted performance. Timing has worked very well for me. There is no way I want to see my portfolio lose hundreds of thousands being in stocks and stay in. What is the worst scenario? My kids will inherit a smaller portfolio, but we will make it comfortably to the end. What can happen if I stay in? We may lose too much, may have to work, may have to lower our standard of living, and staying in means portfolio volatility at 5-6 times higher. Looks to me, it's an easy choice and I sleep like a baby. |
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Post by Deleted on Oct 6, 2022 21:27:29 GMT
@slooow : Please, let's stop saying that a portfolio value going down is "losing money". In this thread and others. It simply is not the case. My gosh - what a loser that lousy investor Buffett is then! When you sell - you lose. That's it. If an investment goes to 0, you sell by default and lose money. If one wants to say a portfolio asset declined with little or no chance of recovery, that may be applicable - i.e. to say "lost money". Saying a purchase is down in value is also correct.
Semantics. If "a portfolio asset declined" or "a purchase is down in value", then you lost money. I think the old adage "you haven't lost anything until you sell" is nonsense. Your portfolio is worth whatever your brokerage company says it's worth as of 4PM. Does it also follow that you haven't made money until you sell? In that case, Buffett hasn't actually made any money, because he owns a zillion shares of BRKA that he never sold. If you have a billion dollars in stock, you are a billionaire. +11111 Someone portfolio is worth as much as it shows by the end of each day. We are talking about a portfolio of stocks,bonds,funds,ETFs,CEFs. IMO, there is no semantic about it. Usually, investors who don't agree are the ones with portfolio losses at that point. Remember, just because you didn't sell, it doesn't mean you are in a better shape. Another investor who sold higher and bought lower beat the LT holder in performance + volatility = Higher Sharps. I know, how can you guarantee successful timing? that's another debate. Many retirees who have enough care more about protecting their capital than better performance, especially in earlier years. haven, I don't care what other investors do, I care about my portfolio risk-adjusted performance. Timing has worked very well for me. There is no way I want to see my portfolio lose hundreds of thousands being in stocks and stay in. What is the worst scenario? My kids will inherit a smaller portfolio, but we will make it comfortably to the end. What can happen if I stay in? We may lose too much, may have to work, may have to lower our standard of living, and staying in means portfolio volatility at 5-6 times higher. Looks to me, it's an easy choice and I sleep like a baby. For crying out loud - this is an investing forum. Please look up the difference between the meaning of semantics and definitions. Then look up the definition of making money - it is in the dictionary. Then look up the definition of profit. Then look up the definition of net worth. Spoiler - the definition of making money doesn't say equals net worth. I have increased my net worth dramatically over the last 10 years. And if I liquidate tomorrow - I will have made money. I am always making some money with distributions and capital gains - i.e. earned income. I have never heard anyone regularly equating fluctuations in net worth with making/losing money except here. Mustang has also made this point very clear. If anyone is looking at financial statements they should know all this - Balance Sheet = net worth; Income Statement = net income aka net profit - EARNED; Cash Flows - cash in and cash out. |
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Post by Deleted on Oct 6, 2022 21:33:29 GMT
Sara...good posts above.I see it differently on one thing. You stated: "Money markets, cash, cds are financial instruments - not claims on real assets. So would agree your (Chang)point might apply for these items.(ie, a loss)." You are correct re these are "financial instruments"...they will pay you interest, over a time period, and then (barring default) you get your principal (money) back. That a brokerage house may "mark to market" in your portfolio is irrelevant to the investor holding for the stated maturity date. They do not lose. Note money market funds have bonds that fluctuate daily mark-to-market...but the gvt has allowed them to use a constant quote of one dollar per share. Because the time period is like up to 150 days in length...short, and reasonable to hold for the duration. Let's consider a person who has a treasury bond ladder...owns a 1yr, 2yr, 3yr , 4yr, and 5yr t-bond of equal amount. Each year that investor takes the bond maturing and rolls it over into a new 5yr t-bond. He/she always gets their principal back, and reinvests at the current new rate for 5 yr t-bonds. All mark-to-market losses can be ignored, in this scheme. Ditto a two year treasury bond fund such as VGSH. The time period is so short that it is reasonable to assume one can hold for the duration. Then, (that bond rule of thumb again) one will have a total return approximating the starting yield. Some will get 3.75% on VGSH; my brother will get 3.95%; but no one will "lose", unless a conscious decision is made to move quickly into a better opportunity...like a long term bond at 4+%, and lock that up for 10 to 20 years. IOW if you followed Gundlach and bought the 2 yr when I did, and the fed surprised with an ADDIONAL 1% added to its terminal rate, your VGSH went down a little, but the 10 year and twenty year treasury bond fund, such as TLT, declined 17%...and a yield above 4%. This opportunity to buy was great, and Gundlach recommended going into the LT Treasury Bonds. LT rate has since fallen and TLT has gone up (way more than VSGH moves). Thus the combination of Gundlach guidance is ahead, and one has secured for themselves a very good yield, for long term. R48 R48 - I believe you. I just can't time either bonds or stocks. I admire those who can and try and pick up a little of what they do and how they think here and there. Thanks. Note that I said "might" with regard to why it could apply. I don't know all the nuances of bonds by any means. I do understand if you hold to maturity you will have the principal returned. |
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Post by retiredat48 on Oct 7, 2022 1:53:17 GMT
Sara...good posts above.I see it differently on one thing. You stated: "Money markets, cash, cds are financial instruments - not claims on real assets. So would agree your (Chang)point might apply for these items.(ie, a loss)." You are correct re these are "financial instruments"...they will pay you interest, over a time period, and then (barring default) you get your principal (money) back. That a brokerage house may "mark to market" in your portfolio is irrelevant to the investor holding for the stated maturity date. They do not lose. Note money market funds have bonds that fluctuate daily mark-to-market...but the gvt has allowed them to use a constant quote of one dollar per share. Because the time period is like up to 150 days in length...short, and reasonable to hold for the duration. Let's consider a person who has a treasury bond ladder...owns a 1yr, 2yr, 3yr , 4yr, and 5yr t-bond of equal amount. Each year that investor takes the bond maturing and rolls it over into a new 5yr t-bond. He/she always gets their principal back, and reinvests at the current new rate for 5 yr t-bonds. All mark-to-market losses can be ignored, in this scheme. Ditto a two year treasury bond fund such as VGSH. The time period is so short that it is reasonable to assume one can hold for the duration. Then, (that bond rule of thumb again) one will have a total return approximating the starting yield. Some will get 3.75% on VGSH; my brother will get 3.95%; but no one will "lose", unless a conscious decision is made to move quickly into a better opportunity...like a long term bond at 4+%, and lock that up for 10 to 20 years. IOW if you followed Gundlach and bought the 2 yr when I did, and the fed surprised with an ADDIONAL 1% added to its terminal rate, your VGSH went down a little, but the 10 year and twenty year treasury bond fund, such as TLT, declined 17%...and a yield above 4%. This opportunity to buy was great, and Gundlach recommended going into the LT Treasury Bonds. LT rate has since fallen and TLT has gone up (way more than VSGH moves). Thus the combination of Gundlach guidance is ahead, and one has secured for themselves a very good yield, for long term. R48 R48 - I believe you. I just can't time either bonds or stocks. I admire those who can and try and pick up a little of what they do and how they think here and there. Thanks. Note that I said "might" with regard to why it could apply. I don't know all the nuances of bonds by any means. I do understand if you hold to maturity you will have the principal returned. Sara...the beauty of bonds is you do not need to "time them." It is not a contest to see who buys them at the exact high point in the interest rate cycle. You buy bonds because of "all things considered" they are a good fit/allocation to your portfolio...at the yield, maturity and credit quality you desire. Gundlach emphasized recently that investors should not be timing bond purchases. That too often they miss out on good value. An example...a pension fund manager needs 3.75%, 20 year bonds in the fixed income side of his allocation, to make the future pensions secure for all employees. Guess what...he recently loaded up on 20 yr Treasury bonds. Retire portfolios typically use 4% as Safe Withdrawal Rates...to last for 30 years. They loaded up on 4% Treasuries, not concerned yields may go to 5% or that FD would tell them how they missed out. To resolve any timing concerns, consider a bond ladder. Google it if unfamiliar with the term. Lastly, if you buy a bond fund that is yielding 4.5% (corporate bonds), and yields go to 6%, you are still OK. Because the fund managers will be over time investing in 6% bonds using maturing bond monies...or selling some existing bonds and buying the higher rated ones. You will eventually get to having a bond fund yielding 6%! And if you ask: What if I accept 4% and inflation keeps roaring? Good question: That's why you use stock funds for the other half of your allocation. Own the means of production to keep up with or beat inflation! R48 |
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Post by habsui on Oct 7, 2022 2:24:54 GMT
R48 - I believe you. I just can't time either bonds or stocks. I admire those who can and try and pick up a little of what they do and how they think here and there. Thanks. Note that I said "might" with regard to why it could apply. I don't know all the nuances of bonds by any means. I do understand if you hold to maturity you will have the principal returned. Sara...the beauty of bonds is you do not need to "time them." It is not a contest to see who buys them at the exact high point in the interest rate cycle. You buy bonds because of "all things considered" they are a good fit/allocation to your portfolio...at the yield, maturity and credit quality you desire. Gundlach emphasized recently that investors should not be timing bond purchases. That too often they miss out on good value. An example...a pension fund manager needs 3.75%, 20 year bonds in the fixed income side of his allocation, to make the future pensions secure for all employees. Guess what...he recently loaded up on 20 yr Treasury bonds. Retire portfolios typically use 4% as Safe Withdrawal Rates...to last for 30 years. They loaded up on 4% Treasuries, not concerned yields may go to 5% or that FD would tell them how they missed out. To resolve any timing concerns, consider a bond ladder. Google it if unfamiliar with the term. Lastly, if you buy a bond fund that is yielding 4.5% (corporate bonds), and yields go to 6%, you are still OK. Because the fund managers will be over time investing in 6% bonds using maturing bond monies...or selling some existing bonds and buying the higher rated ones. You will eventually get to having a bond fund yielding 6%! And if you ask: What if I accept 4% and inflation keeps roaring? Good question: That's why you use stock funds for the other half of your allocation. Own the means of production to keep up with or beat inflation! R48 Yes, and solid corporate bond funds (e.g. VFIDX) have a 30 day SEC yield north of 5%. Just sayin.. |
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Post by FD1000 on Oct 7, 2022 4:03:59 GMT
Sara...the beauty of bonds is you do not need to "time them." It is not a contest to see who buys them at the exact high point in the interest rate cycle. You buy bonds because of "all things considered" they are a good fit/allocation to your portfolio...at the yield, maturity and credit quality you desire. Gundlach emphasized recently that investors should not be timing bond purchases. That too often they miss out on good value. An example...a pension fund manager needs 3.75%, 20 year bonds in the fixed income side of his allocation, to make the future pensions secure for all employees. Guess what...he recently loaded up on 20 yr Treasury bonds. Retire portfolios typically use 4% as Safe Withdrawal Rates...to last for 30 years. They loaded up on 4% Treasuries, not concerned yields may go to 5% or that FD would tell them how they missed out. To resolve any timing concerns, consider a bond ladder. Google it if unfamiliar with the term. Lastly, if you buy a bond fund that is yielding 4.5% (corporate bonds), and yields go to 6%, you are still OK. Because the fund managers will be over time investing in 6% bonds using maturing bond monies...or selling some existing bonds and buying the higher rated ones. You will eventually get to having a bond fund yielding 6%! And if you ask: What if I accept 4% and inflation keeps roaring? Good question: That's why you use stock funds for the other half of your allocation. Own the means of production to keep up with or beat inflation! R48 You are talking about simple vanilla bond funds. There are a lot more options. Timing matters. I'm a private investor, not an insurance company or managing money for others. I don't have any restrictions and rules. In my life, I never owned CDs, treasuries, bond ladder...just bond OEFs(sometimes ETF). First hint: many times, funds that lost more, will also make more on the rebound. See the chart below of MMHAX(HY Muni), DODIX(higher rated), EIFAX(bank loan), LQD(iShares iBoxx $ Investment Grade Corporate Bond ETF, with duration=8.4). Guess who might make more after stabilization and uptrend? You can make at least 10+% with DODIX and 15+% with other choices. Second hint: my LT choice has been HY Munis. Why HY Munis, watch the chart and see they are smoother. I like smooth ride for similar performance (the risk-adjusted thing)...and that's a lot "safer" than stocks, just avoid the big meltdown. Third hint: I predicted months ago that BL would be a good choice in rising rates. But, there is a big difference between funds. See EIFAX vs OOSAX. There are always better opportunities. Not only OOSAX lost less, the rebound in the last week was stronger. Attachments:
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Post by Deleted on Oct 7, 2022 11:08:16 GMT
retiredat48, Thank you. This answers a lot of questions for me and I plan to save your post as a template for bond planning considerations.
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Post by Chahta on Oct 7, 2022 13:35:42 GMT
“Yes, and solid corporate bond funds (e.g. VFIDX) have a 30 day SEC yield north of 5%. Just sayin.”
Please post when you start getting the 5%.
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Post by FD1000 on Oct 7, 2022 14:38:24 GMT
“Yes, and solid corporate bond funds (e.g. VFIDX) have a 30 day SEC yield north of 5%. Just sayin.” Please post when you start getting the 5%. LDQ pays even more...but, the trend is still down and more down...all you got to do is read from the start, more than 6 months ago. The non payroll numbers verified the Fed is on track for raising rates. |
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Post by habsui on Oct 7, 2022 18:25:50 GMT
“Yes, and solid corporate bond funds (e.g. VFIDX) have a 30 day SEC yield north of 5%. Just sayin.” Please post when you start getting the 5%. I estimate in about 3-4 months. |
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Post by retiredat48 on Oct 8, 2022 5:26:59 GMT
@slooow ,..et al...Suggest review Mack interview with Price's David Giroux (PRWCX Manager), on thread on the PD?M Forum.
Note his move from vanilla bonds...into bank loans(short term)...and now into 5 year Treasury bonds...now, as a top investment. He expects yields back down to 2-2.5% range on treasuries in two years.
R48
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Post by Deleted on Oct 8, 2022 9:14:38 GMT
retiredat48 , I did and had posted on another site. Great interview. His discussion on bank loans and the 5 year were interesting. I agree yields will likely come down - based on others' opinions.
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Post by Chahta on Oct 8, 2022 15:17:33 GMT
“Yes, and solid corporate bond funds (e.g. VFIDX) have a 30 day SEC yield north of 5%. Just sayin.” Please post when you start getting the 5%. I estimate in about 3-4 months. How is that possible with a duration of 6.3 years? The fund would need to turn over most of its bonds to reach the current SEC yield in 4 months or the NAV would need to drop a lot. |
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Post by mozart522 on Oct 8, 2022 15:49:15 GMT
Just bought some 6 month T-bills at 4.1%. I don't expect much from bond funds until the pivot, and then it will be mostly price appreciation. How much will depend on how fast the FED drops rates or how fast the market thinks it will drop rates, and the market seems to be wrong a lot.
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Post by marquay on Oct 8, 2022 18:07:55 GMT
Mozart522, do you buy 6 month T-bills at 4.1% for TIRA and Taxable Acct, too? Thanks.
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Post by mozart522 on Oct 8, 2022 19:36:41 GMT
All for TIRA, no real Taxable accounts.
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Post by retiredat48 on Oct 10, 2022 16:22:33 GMT
FD1000 earlier posted his displeasure with a number of bond guru's, and that rather than buy any treasuries now, he is 99% cash now, and he posted he will start buying when:
"FD: I say, wait. We need to see stabilization + uptrends and there is no way to know in advance when."
Investors, this is the essence of what FD is doing. In this regard...I DISAGREE.
Neither the stock market or the bond market "rings a bell" as to the start of market reversals. Bond investors and institutional bond buyers are even more adept than the stock market in anticipating when things will occur. Usually, the bond market leads the stock market.
FD is suggesting you simply wait until the fed announces a pivot...then wait more to see stabilization...then buy.
No way. The bond market will be anticipating such, at least 3 to 6 months in advance. The market will have lowered interest rates greatly. What may be a 4.5% ten year treasury, will be a 3.5% ten yr treasury the day the fed announces a change in direction, or lowering of rates. And if you wait even more for any further "stabilization" the bond market will have passed you buy.
If you see value in an investment in fixed income, secure it. It may be fleeting. And if you think you can wait until the fed announces a pivot, you will miss out on the best rate/maturity values...by a wide margin.
No one is going to ring a bell! Perhaps that is why David Gerioux (TRPrice) and Jeff Gundlach (Doubleline) announced they are buying LT Treasuries...NOW.
R48
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Post by win1177 on Oct 10, 2022 16:57:49 GMT
FD1000 earlier posted his displeasure with a number of bond guru's, and that rather than buy any treasuries now, he is 99% cash now, and he posted he will start buying when: " FD: I say, wait. We need to see stabilization + uptrends and there is no way to know in advance when."
Investors, this is the essence of what FD is doing. In this regard...I DISAGREE. Neither the stock market or the bond market "rings a bell" as to the start of market reversals. Bond investors and institutional bond buyers are even more adept than the stock market in anticipating when things will occur. Usually, the bond market leads the stock market. FD is suggesting you simply wait until the fed announces a pivot...then wait more to see stabilization...then buy. No way. The bond market will be anticipating such, at least 3 to 6 months in advance. The market will have lowered interest rates greatly. What may be a 4.5% ten year treasury, will be a 3.5% ten yr treasury the day the fed announces a change in direction, or lowering of rates. And if you wait even more for any further "stabilization" the bond market will have passed you buy. If you see value in an investment in fixed income, secure it. It may be fleeting. And if you think you can wait until the fed announces a pivot, you will miss out on the best rate/maturity values...by a wide margin. No one is going to ring a bell! Perhaps that is why David Gerioux (TRPrice) and Jeff Gundlach (Doubleline) announced they are buying LT Treasuries...NOW. R48 R48, I wonder if it is still “too early” to move money into bonds. Most if not all of the latest data still seems to indicate Fed will probably increase again at 0.75% in their November meeting. Inflation really has NOT slowed yet. I agree with you about the markets (or the Fed) NOT “ringing a bell” when the direction changes, but it still appears too early now. At least IMHO. Win |
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Post by fritzo489 on Oct 10, 2022 18:22:18 GMT
Does or will the BELL ring if .50 comes out at the next meeting ? Remember, Christmas is coming & I for one don't want to find coal in my sock !
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Post by chang on Oct 10, 2022 19:03:58 GMT
FD1000 earlier posted his displeasure with a number of bond guru's, and that rather than buy any treasuries now, he is 99% cash now, and he posted he will start buying when: " FD: I say, wait. We need to see stabilization + uptrends and there is no way to know in advance when."
Investors, this is the essence of what FD is doing. In this regard...I DISAGREE. Neither the stock market or the bond market "rings a bell" as to the start of market reversals. Bond investors and institutional bond buyers are even more adept than the stock market in anticipating when things will occur. Usually, the bond market leads the stock market. FD is suggesting you simply wait until the fed announces a pivot...then wait more to see stabilization...then buy. No way. The bond market will be anticipating such, at least 3 to 6 months in advance. The market will have lowered interest rates greatly. What may be a 4.5% ten year treasury, will be a 3.5% ten yr treasury the day the fed announces a change in direction, or lowering of rates. And if you wait even more for any further "stabilization" the bond market will have passed you buy. If you see value in an investment in fixed income, secure it. It may be fleeting. And if you think you can wait until the fed announces a pivot, you will miss out on the best rate/maturity values...by a wide margin. No one is going to ring a bell! Perhaps that is why David Gerioux (TRPrice) and Jeff Gundlach (Doubleline) announced they are buying LT Treasuries...NOW. R48 I'm in the "wait" camp. The smartest bond buyers in the universe run PDI and PDO, both of which are at their all-time lows. OK, maybe that's not fair, but XPDOX is at an all-time low, while XPDIX is close. PIMIX is at an 11-year low. Now, you might say, "Exactly! Buy them when they're on sale." But are they on sale? The charts are plunging and concave downward. Never mind the Fed -- the charts are ugly. The irony here is that I'm the incorrigible bottom-fisher who is almost always too early. Personally, I don't have a problem exercising a little patience here. I have 25% of my PV in RPHIX, with a duration of < 6 months and an SEC yield of 3.19%. That works for me, for now. |
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Post by Deleted on Oct 10, 2022 19:19:40 GMT
From what I've read, people are selling treasuries big time, banks, investors both U.S. and non-U.S., and money managers.
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Post by retiredat48 on Oct 11, 2022 3:50:48 GMT
FD1000 earlier posted his displeasure with a number of bond guru's, and that rather than buy any treasuries now, he is 99% cash now, and he posted he will start buying when: " FD: I say, wait. We need to see stabilization + uptrends and there is no way to know in advance when."
Investors, this is the essence of what FD is doing. In this regard...I DISAGREE. Neither the stock market or the bond market "rings a bell" as to the start of market reversals. Bond investors and institutional bond buyers are even more adept than the stock market in anticipating when things will occur. Usually, the bond market leads the stock market. FD is suggesting you simply wait until the fed announces a pivot...then wait more to see stabilization...then buy. No way. The bond market will be anticipating such, at least 3 to 6 months in advance. The market will have lowered interest rates greatly. What may be a 4.5% ten year treasury, will be a 3.5% ten yr treasury the day the fed announces a change in direction, or lowering of rates. And if you wait even more for any further "stabilization" the bond market will have passed you buy. If you see value in an investment in fixed income, secure it. It may be fleeting. And if you think you can wait until the fed announces a pivot, you will miss out on the best rate/maturity values...by a wide margin. No one is going to ring a bell! Perhaps that is why David Gerioux (TRPrice) and Jeff Gundlach (Doubleline) announced they are buying LT Treasuries...NOW. R48 I'm in the "wait" camp. The smartest bond buyers in the universe run PDI and PDO, both of which are at their all-time lows. OK, maybe that's not fair, but XPDOX is at an all-time low, while XPDIX is close. PIMIX is at an 11-year low. Now, you might say, "Exactly! Buy them when they're on sale." But are they on sale? The charts are plunging and concave downward. Never mind the Fed -- the charts are ugly. The irony here is that I'm the incorrigible bottom-fisher who is almost always too early. Personally, I don't have a problem exercising a little patience here. I have 25% of my PV in RPHIX, with a duration of < 6 months and an SEC yield of 3.19%. That works for me, for now. It's quite all right to be in the "wait camp." But don't expect to wait until the fed pivots, changes direction. In fact, don't wait any longer than even a reasonable hint the fed is pausing and will hold for a goodly time. You've heard of the addage that stock markets look out 6 months in advance, for current market actions. So you cannot wait until an official announcement states the economy has gone into recession, or coming out, to buy stocks. Way too late. Ditto for bonds. The bondmarket is swifter than the stock market. This fed change will be one of the most anticipated things viewed in history. The fall in rates could be swift and extensive. R48 |
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Post by retiredat48 on Oct 11, 2022 3:58:40 GMT
From what I've read, people are selling treasuries big time, banks, investors both U.S. and non-U.S., and money managers. For every seller, there is a buyer! What you do have is that many fixed income fund managers are simply waiting to sell some of their bonds which are down in price, to lock in new, higher rates, and maturities. But this game ends on a hurry when they suspect "now is the time"...for any reason. Personally I don't read where there are many "sellers." Rather, many fund managers are celebrating the end of TINA..."There Is No Alternative" to owning stocks. Now, treasuries at 4% are a great alternative. Risk free 4% locked in, compared to 1.5% a year ago. R48 |
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Post by retiredat48 on Oct 11, 2022 4:05:24 GMT
Does or will the BELL ring if .50 comes out at the next meeting ? Remember, Christmas is coming & I for one don't want to find coal in my sock ! In the "olden days", the fed never had press conferences etc. They were purposely secretive/silent. But occasionally they sent a fed rep down to talk to a trusted Wall Street Journal reporter, to provide the reasons for a move. The reporter duly put it in the WSJ (BTW may have happened a couple moths ago re first 75 bp move). So if a 50 bp move comes (instead of 75) will be interesting if it's leaked at all...the intentions. But yes, computer algos are set to buy, buy, buy on the mention of "50" on fed meeting report day. You likely will not be able to beat their speed of execution. R48 |
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Post by retiredat48 on Oct 11, 2022 4:12:30 GMT
FD1000 earlier posted his displeasure with a number of bond guru's, and that rather than buy any treasuries now, he is 99% cash now, and he posted he will start buying when: " FD: I say, wait. We need to see stabilization + uptrends and there is no way to know in advance when."
Investors, this is the essence of what FD is doing. In this regard...I DISAGREE. Neither the stock market or the bond market "rings a bell" as to the start of market reversals. Bond investors and institutional bond buyers are even more adept than the stock market in anticipating when things will occur. Usually, the bond market leads the stock market. FD is suggesting you simply wait until the fed announces a pivot...then wait more to see stabilization...then buy. No way. The bond market will be anticipating such, at least 3 to 6 months in advance. The market will have lowered interest rates greatly. What may be a 4.5% ten year treasury, will be a 3.5% ten yr treasury the day the fed announces a change in direction, or lowering of rates. And if you wait even more for any further "stabilization" the bond market will have passed you buy. If you see value in an investment in fixed income, secure it. It may be fleeting. And if you think you can wait until the fed announces a pivot, you will miss out on the best rate/maturity values...by a wide margin. No one is going to ring a bell! Perhaps that is why David Gerioux (TRPrice) and Jeff Gundlach (Doubleline) announced they are buying LT Treasuries...NOW. R48 R48, I wonder if it is still “too early” to move money into bonds. Most if not all of the latest data still seems to indicate Fed will probably increase again at 0.75% in their November meeting. Inflation really has NOT slowed yet. I agree with you about the markets (or the Fed) NOT “ringing a bell” when the direction changes, but it still appears too early now. At least IMHO. Win Win...the Treasury bond market has fully priced in a 75 bp rise. The terminal rate is about 4.6%. Current fed funds at about 3.25-3.5%. Add in the 75 (and 25-50 dec bp rise) and you get to 4.5%. The 2 yr treasury most closely tracks to the fed rate. SO it has mostly priced this in. Not fully, as a 50 bp is possible. Lastly, the longer term Treasury rates are still below 4%. As I posted before, huge demand exists at 4% or above. They may have trouble going higher, with all the pent up demand that exists. And any severe recession means no long term rate would typically go above 4%. Basically, think of a 4% 20 yr treasury bond, where the fed funds rate is projected(by the fed) to be back down to 2-3% in two years. Buyers locking in a great rate, for 20 years. R48 |
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Post by archer on Oct 11, 2022 4:31:14 GMT
retiredat48 , Are your, and perhaps Gerioux's and Gundlachs ideas to buy now, based on 4.5% being the top? If so this assumes inflation and thus interest rates will not continue to go up. Seems like a gamble to me. While it might be promising that those 2 are taking that gamble, wouldn't be more telling to watch total inflows into long term treasuries as a confirmation. It will take more than 2 gurus to bring the prices up. I would think cash flows would be a more reliable indicator than predicting interest rates. I'm waiting on such signs to re-enter TLT/TMF
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Post by FD1000 on Oct 11, 2022 8:06:14 GMT
If everything is known and markets are looking months ahead then bond funds should be up already. While fund managers can't buy 30% in one day, I can buy 50+% in one day. Last time I checked, the trend is still down.
Traders call it catching falling knives + never fight the trend.
Still on our UK vacation. Keep the markets going down until I come back, at the end of October.
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Post by Deleted on Oct 11, 2022 11:24:07 GMT
From what I've read, people are selling treasuries big time, banks, investors both U.S. and non-U.S., and money managers. For every seller, there is a buyer! What you do have is that many fixed income fund managers are simply waiting to sell some of their bonds which are down in price, to lock in new, higher rates, and maturities. But this game ends on a hurry when they suspect "now is the time"...for any reason. Personally I don't read where there are many "sellers." Rather, many fund managers are celebrating the end of TINA..."There Is No Alternative" to owning stocks. Now, treasuries at 4% are a great alternative. Risk free 4% locked in, compared to 1.5% a year ago. R48 Read Bloomberg News 10/10/22 "The Most Powerful Buyers in Treasuries Are All Bailing at Once." |
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Post by Chahta on Oct 11, 2022 13:38:50 GMT
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Post by retiredat48 on Oct 11, 2022 16:06:47 GMT
For every seller, there is a buyer! What you do have is that many fixed income fund managers are simply waiting to sell some of their bonds which are down in price, to lock in new, higher rates, and maturities. But this game ends on a hurry when they suspect "now is the time"...for any reason. Personally I don't read where there are many "sellers." Rather, many fund managers are celebrating the end of TINA..."There Is No Alternative" to owning stocks. Now, treasuries at 4% are a great alternative. Risk free 4% locked in, compared to 1.5% a year ago. R48 Read Bloomberg News 10/10/22 "The Most Powerful Buyers in Treasuries Are All Bailing at Once."Can't read...requires creating an account.
Can you cut/paste some key highlights? |
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