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Post by FD1000 on Mar 29, 2023 0:14:27 GMT
Habsui,
Good post, I'm just behind you using MM and HY munis.
And for me, the one question I always ask myself: if I have all my money in cash now, what 2-3 funds would I invest now? The answer is what I do next. This frees me from being attached to anything I own.
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Post by sortatino2 on Mar 29, 2023 7:01:16 GMT
Vanguard Muni Money Market at 4.04%. Effective yield at top bracket of 6.7%.
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Post by anovice on Mar 29, 2023 16:50:41 GMT
Vanguard Muni Money Market at 4.04%. Effective yield at top bracket of 6.7%. I noticed that as well. On March 15th, the yield was 2.09%. I have watched VMSXX since August 2022. Why so many extreme up and down cycles? |
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Post by mozart522 on Mar 30, 2023 13:39:15 GMT
If you look at your holdings you can see a loss and why the bird in the hand MM (example VFMXX pays now 4.68%) is a better choice. Since I'm a trader based on markets, I don't believe in holding for years in bonds and based the markets in the last several years. I never believed in FAs, as you found out diversification didn't help you because all 4 (VCSH...) were not right IMO, these choices have higher volatility/risk than MM, and made less money because rates were going up. Just because a bond is short term doesn't mean it's the right choice, losing less is still losing. What to do now? I'm out in MM waiting for the next trade. Looks like rates are crawling up again. But, to the point of my question, given the data provided, what would be the pro or con of making any sort of wholesale exit from the holdings "now" into a higher div. MM? It would seem taking a guaranteed loss in exchange for the 'guaranteed/no-risk return, at this point -might be questionable vs maintaining the longer-term perspective that maybe, one day, the div returns in these funds will be such that a loss will not be realized, and per the bond rule of thumb, I will get my original return. Not tomorrow or next week, but, unless everything melts down forever, eventually.(?) Not particularly arguing the case either way - just looking for a rational pro/con perspective for analysis purposes. Mike, You said"-might be questionable vs maintaining the longer-term perspective that maybe, one day, the div returns in these funds will be such that a loss will not be realized, and per the bond rule of thumb, I will get my original return." However, you said you owned these on average for two years, so what was the "original return" based on your date of purchase? It must be very low if purchased two years ago, so you are suggesting you want to wait around for a <1% return, while sitting on a >2% loss? If it was me, I'd sell now, go to MM and wait until the FED pivots and then buy back (if you are still interested). And since these are in taxable accounts with a loss, you should be able to tax loss harvest. |
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mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Mar 30, 2023 19:05:45 GMT
You said"-might be questionable vs maintaining the longer-term perspective that maybe, one day, the div returns in these funds will be such that a loss will not be realized, and per the bond rule of thumb, I will get my original return."
However, you said you owned these on average for two years, so what was the "original return" based on your date of purchase? It must be very low if purchased two years ago, so you are suggesting you want to wait around for a <1% return, while sitting on a >2% loss? If it was me, I'd sell now, go to MM and wait until the FED pivots and then buy back (if you are still interested). And since these are in taxable accounts with a loss, you should be able to tax loss harvest. Yep, have to do the math on that. I was just thinking about perhaps adding to an existing holding of ultra short term MINT as a potentially better parking place for any redemptions in those big NAV loss-ST bond funds mentioned. Also too, I do need to weigh into this, the actual DIV returns being generated by the funds. |
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Post by fishingrod on Mar 31, 2023 12:23:59 GMT
Vanguard Muni Money Market at 4.04%. Effective yield at top bracket of 6.7%. I noticed that as well. On March 15th, the yield was 2.09%. I have watched VMSXX since August 2022. Why so many extreme up and down cycles?
Very good observation. With maintaining $1 dollar share price one would think more stability of the yields. I would expect more or less the yield movements to reflect the Federal money market funds' yield movements. Perhaps yogibearbull or someone else can give some insight into these radical yields.
Perhaps it is just due to demand and supply and different credit quality from the underlying bonds that change within the fund quickly with rapid turnover.
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Post by retiredat48 on Mar 31, 2023 15:02:05 GMT
retiredat48 , Waiting for you to explain why you expect a strong decline in MM to be underway now. +1 ,.. richardsok ,....Reply coming later. Time challenged. BTW to me the answer lies in this question: "If the fed raised the funds rate to 18% at its next meeting, would money market funds go to 18% yields?? If not, why not??Your reply is... R48 |
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Post by anovice on Mar 31, 2023 15:58:57 GMT
I noticed that as well. On March 15th, the yield was 2.09%. I have watched VMSXX since August 2022. Why so many extreme up and down cycles?
Very good observation. With maintaining $1 dollar share price one would think more stability of the yields. I would expect more or less the yield movements to reflect the Federal money market funds' yield movements. Perhaps yogibearbull or someone else can give some insight into these radical yields.
Perhaps it is just due to demand and supply and credit quality from the underlying bonds that change within the fund quickly.
fishingrod, Wednesday, the yield on VMSXX was 4.15%. Yesterday, 4.10%. My guess is that we now see it go into one of its big down cycles. |
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Post by mozart522 on Apr 1, 2023 12:59:02 GMT
mozart522 ,.. richardsok ,....Reply coming later. Time challenged. BTW to me the answer lies in this question: "If the fed raised the funds rate to 18% at its next meeting, would money market funds go to 18% yields?? If not, why not??Your reply is... R48 No, of course not. There will always be some spread between the FED funds rate and MM rate. In 1980 te FFR was 20% and MM went up to 16.4%. CDs a little higher. This in no way suggests that your prediction of lower MM rates soon is reasonable. The raise in MM rates is closely tied to the rise in the FFR. |
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Post by habsui on Apr 1, 2023 20:36:20 GMT
MMs typically invest very short term, e.g. 1-3 month treasuries. Thus, their yield depends on short dated securities, not on FFR. Of course, FFR drive short term yields. For example, 2 month treasuries yield right now about 4.75%.
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Post by mozart522 on Apr 1, 2023 20:42:15 GMT
habsui, VGs MM is about 60% repurchase agreements, IIRC.
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mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Apr 3, 2023 22:47:19 GMT
Much as I want to feel better about holding ST bond FUNDS, those that are puzzling me, in particular are VCSH, SCHO and SHY. Just like last year tho far less radically, these are the definite laggards of my entire 50/50 AA PF. I don't profess -( maybe obviously-- whatever; ) to fully understand bonds but, ballparking it, what's the realistic outlook for these Funds going out say, 1, 2, 5 years from here? The NAV losses in these exceeded all other holdings in '22, but i recognize it was also the worst year in bond history so, there's that.
I've not jumped to individual bonds only because i don't think, for the hassle and seemingly nominal impact it'll make that big a difference in the grand scheme of things vs holding, and hopefully recouping losses in the form of better DIV returns. I'm putting any cash into Schwab/SWVXX Value Advantage MM for now.
I'm getting about 80k a year in div income from this PF right now, and in no small part due to relatively large allocation to these funds. I'm good with that kind of return. If there's no overt reason to worry about these ST funds, I'll leave them alone.
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Post by retiredat48 on Apr 5, 2023 17:20:46 GMT
Posted this elsewhere:
"Really glad I bought VGSH and VGIT Treasury bond funds. Total returns including cap gains are now way up. Treasury rates collapsing sooner than I thought."
Bettered Money Market Funds for cash.
R48
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Post by mozart522 on Apr 7, 2023 13:07:44 GMT
retiredat48, Over what period? VGSH has a one year return of -.6%. VG MM has a one year return of +2.67%. You indicated you bought VGSH in April of 22. Looking at the one year chart, I don't see how you could be ahead of MM even with new buys. I expect the FED to raise .25 next meeting and MM to go to about 5%. If not they will stay at about 4.75% No risk. Better even than T-bills right now. VGIT is not a part of this discussion
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Post by FD1000 on Apr 7, 2023 13:36:19 GMT
retiredat48 , Over what period? VGSH has a one year return of -.6%. VG MM has a one year return of +2.67%. You indicated you bought VGSH in April of 22. Looking at the one year chart, I don't see how you could be ahead of MM even with new buys. I expect the FED to raise .25 next meeting and MM to go to about 5%. If not they will stay at about 4.75% No risk. Better even than T-bills right now. VGIT is not a part of this discussion +1. Last year on April 14 ( big-bang-investors.proboards.com/post/18507)....R48: "IOW I am betting that in 6 months to a year, the total return on 2 yr treasury fund will be positive and exceed money market funds." Below are 2 charts starting on 4/14/2022. The first is 6 months, and the second is up to date, almost one year for VGSH vs VMFXX. Just look at the additional volatility.  And VMFXX(MM) pays now 4.75%, not too shabby for an easy no risk/volatility option. Attachments:
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Post by mnfish on Sept 18, 2023 10:53:36 GMT
Snippet from a MStar article -
Short-Term Bond Funds Stuck in a Sour Spot
Short-term bond funds shed $6 billion in August, extending their record outflow streak to 21 months. Some investors flocked to the higher yields in money market or ultrashort bond funds
According to PortVis, since May 2022 $10k in VGSH has returned $68 with divs reinvested. VMFXX has returned over $500.
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Post by FD1000 on Sept 18, 2023 20:26:59 GMT
mnfish , this thread started at the end of 03/2022. The chart below since 04/01/2022 shows that VGSH made only 0.2% while VMFXX made 4.85%. VMFXX will be higher by 0.45% at the end of this month. Attachments:
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Post by FD1000 on May 10, 2024 12:50:45 GMT
This thread started over 2 years ago on 3-23-2022. We had a long discussion about what to do for the next 2 years. The chart below shows that for about 1.5 years from 3/2022 to 10/2023 VGSH made no money while the very safe, no SD, the bird in the hand, MM made 2.75%. Now, at 2 years plus: MM still doubled VGSH performance. IMO, it is still not the right time to invest in treasuries when you can't predict rates while you can find funds that can make you money regardless. Attachments:
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