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Post by yogibearbull on Apr 24, 2022 12:37:10 GMT
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Post by FD1000 on Apr 24, 2022 12:54:52 GMT
Next month will be good for treasuries, remember, we are talking about bonds. Edit/add: there will be no explanation.  Almost 1 month....... Looks like a flop. It was based on history. I'm sitting in cash for months, only very short trades |
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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 24, 2022 19:39:11 GMT
and...as far as SCHO at the short end, and in IT, VGIT, if one has them already, (like me) - having already taken the significant NAV principal hit on them...is there not, likewise some degree of promise for them to rebound. Doesn't seem like there's much else more rational to do with them at this point if you've held them through the downdraft of the last 6 months. I see that as patience being rewarded too unless i'm missing something
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Post by yogibearbull on Apr 24, 2022 19:46:14 GMT
and...as far as SCHO at the short end, and in IT, VGIT, if one has them already, (like me) - having already taken the significant NAV principal hit on them...is there not, likewise some degree of promise for them to rebound. Doesn't seem like there's much else more rational to do with them at this point if you've held them through the downdraft of the last 6 months. I see that as patience being rewarded too unless i'm missing something If in taxable a/c, do tax-swaps into similar funds (there are lots of those). Then, you have tax-loss to offset realized gains now or in future, and beyond those, up to $3K/yr in ordinary income. This preserves any rebound potential. Trades should be commission-free. |
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Post by retiredat48 on Apr 25, 2022 7:11:16 GMT
richardsok ...In another thread, richardsok noted: VGSH still trending bearish.My reply: Yes...treasuries are absorbing the fed (Powell) recently stating he would like to go ABOVE the neutral rate. This is new. The neutral rate is considered about 2.5%. So is "above" 3%? If so, expect 2 year treasury bonds to be 3-3.2%. Getting there is not much of an NAV price decline. But do note that when bond rates peak, they tend to have rates go back down for several months. They simply do not go up and down in straight lines, forever. More like sin wave moves, as the economy adjusts. Personally, I doubt the economy will permit the fed to get above neutral this first go-around. Then we have balance sheet reduction. Further we have the mid-term elections in November where the fed never likes to raise rates the month before any election. Then we have XMAS and the fed does not like to raise rates at that time. I suspect fed will now quickly get to 2.5% by summer...and halt. If so, 2 year treasury should rise in price, as yield falls some, to reflect the "neutral rate". For example, mortgages at or above 6% are simply going to be a shock and a damper on things. If Gundlach liked the two year treasury a month ago at 1.9%, 2.9% seems very attractive to me! R48
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Post by retiredat48 on May 4, 2022 16:40:05 GMT
Want to post this purchase close to "real time."
Decided to buy, as a cash alternative, more 2 yr treasury bonds via VGSH, Vgd entry...splitting purchase to some just before the fed announcement, and some after the fed announcement.
Thus, today bought VGSH. And will watch after fed announcement. If VGSH rallies upward, I will make the second buy. If VGSH goes downward, I will wait.
I'll advise of further actions.
R48
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Post by retiredat48 on May 4, 2022 20:09:57 GMT
Whew...busy day for me today.
The morning purchase of VGSH 2yr treasury (discussed above), paid off, as rates fell (price rose) after fed announcements; also added to VGSH in pm per plan above...positive trend.
Added to SCHD.
Added to PDI
Sold some PSTIX, an inverse market hedge fund.
waffle,...Bought a foothold in waffle's recent buy, FFGCX, Fidelity Global Commodity Fund. I'll buy waffle a waffle if this works out!
R48
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Post by FD1000 on May 4, 2022 20:40:08 GMT
It was "busy" for me too. In my world, 2 trades is busy because each is a large %.
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Post by archer on May 4, 2022 21:17:12 GMT
It was "busy" for me too. In my world, 2 trades is busy because each is a large %. Let me guess....QQQ  |
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Post by FD1000 on May 4, 2022 21:34:45 GMT
It was "busy" for me too. In my world, 2 trades is busy because each is a large %. Let me guess....QQQ A lady doesn't tell....but I noticed several options. |
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Post by retiredat48 on May 13, 2022 15:39:20 GMT
Update...2 yr treasury rate peaked after last buys of VGSH, and yield now down and steady around 2.6%.
Outlook unchanged...expect to capture the yield, and a small capital gain, within 6 months to a year.
A major event...convinced my 102 y/o mother-in-law to switch from a money market fund at Vanguard, into VGSH. (The only other thing this tough was convincing her I should marry her daughter!).
R48
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Post by mozart522 on May 25, 2022 22:02:14 GMT
I'm now up about $.35 in the VGSH I bought at $5.98. I will buy more after the next meeting depending on how it reacts to the .5% bump. On 6/10/21 it was at $61.54 and on 5/3/22 it was at 58.85 or a 4.4% drop. A total 3% rate rise would indicate a price decline of 6% however that is mitigated by the income (buying more shares) and the new bonds bought at higher yields. Seems like a lot of the potential decline is baked in already, the recent rally nowithstanding. This fund won't make me rich but it is a place for some of my cash right now.
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Post by retiredat48 on May 27, 2022 20:02:16 GMT
An update…2yr treasury yield at 2.47 today.
So my accounts show small capital gains, as I also capture the interest from VGSH buys.
Don’t know for sure that rates have peaked; but the economy may be slowing faster than forecast, and bodes well that the fed will not get its base rates to 2.5% or more by the fall.
I like this spot for cash.
R48
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Post by mozart522 on May 27, 2022 21:32:11 GMT
retiredat48 , I think a slowing economy is secondary to taming inflation at this point. The FED knows that high inflation will kill the economy eventually anyway. Just my opinion.
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Post by FD1000 on May 28, 2022 3:35:54 GMT
Easy choice = NO. The trend is down, down and more down. This is the heart of the matter, and perhaps where FD and I see it differently. I am a big believer and user of momentum...FOR STOCK FUNDS. Not so for bond funds. Bonds are contractual instruments and do nothing more than , barring default, pay back an interest rate/dividend, for a set period to maturity, when a specific borrowed sum is returned. Thus, downward prices usually head towards better value for each bond. A "compelling value" price becomes the goal. The fact that momentum is now downward, simply means a march to more compelling value. So re FDs chart... --First, note while a large decline seems apparent, the y axis is only a 3% loss over almost a year. --Second, if Gundlach considered the 2 year a "buy" at 1.92%, then at 2.16% it is likely even a better buy (as the market bakes in a (new info)50 point rise in ff rate in May). --I am OK starting to buy at "compelling value" prices. --Sure, prices may go even lower to an absolute eventual bottom, but if I buy now at 2.15%, hold for up to 2 years, the odds are above 50% that the bond fund price will have stabilized and likely be HIGHER. This is because fed is likely to cause a recessions or stagflation (here now), and yields simply stop rising. History of bonds is yields do not go up/down in straight lines. Changes have an impact...like current mortgage rate of 4.75% is starting to adversely affect housing market...etc. --Lastly folks, remember the BOND RULE OF THUMB. Which is: If you buy a bond fund and hold to its duration (linked to maturity), your total return will closely approximate the starting yield, REGARDLESS OF THE DIRECTION OF INTEREST RATES. Meaning whether rates go up or down from here, ones total return will be close to 2.15%. It is like, if rates continue up, the fund buys more higher coupon bonds, offsetting the decline in bond prices; if rates go down, the bond prices go up, but one cannot buy higher coupon bonds. It all averages out! Enough for now... R48 "I am a big believer and user of momentum...FOR STOCK FUNDS. Not so for bond funds" This is why I live for the big momo after a big decline. If you don't believe in it, just watch what NHMAX has done since last week=attsch 1. Maybe watch attach 2,3 and see that FAGIX made more money than the SP500 since the 2009 bottom in attach 3. I love exception, I live for the exceptions. I don't see any point investing in treasuries, never did. All the way from being 100% in stocks to 100% in bonds. I'm thinking that rates may resume their increase because the Fed will increase rates 50 points twice more. Regardless, I only pay attention to my charts.  |
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Post by retiredat48 on May 28, 2022 5:48:07 GMT
FD1000,…why is it you do not grasp that this thread is about a place to park one’s CASH? It is not about treasuries “as an investment”. Albeit I think those parking money in 2yr treasury will do OK. My cash awaits opportunities! R48
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Post by chang on May 28, 2022 7:18:01 GMT
RPHIX, as always.
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Deleted
Deleted Member
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Post by Deleted on May 28, 2022 10:10:44 GMT
The G fund for the federal thrift savings plan is now at 3%. Guaranteed principal. So I am only losing 5% annually now. If I didn't have that I would be in the short term treasury for cash to avoid losing my purchasing power.
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Post by fishingrod on May 28, 2022 12:19:17 GMT
Conservative me just bought 3 year CD at 2.75% for roughly 7% of portfolio. Still leaves me roughly 7% ready cash for deployment in the investment universe.
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Post by yogibearbull on May 28, 2022 13:23:33 GMT
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Post by FD1000 on May 28, 2022 13:52:44 GMT
FD1000 ,…why is it you do not grasp that this thread is about a place to park one’s CASH? It is not about treasuries “as an investment”. Albeit I think those parking money in 2yr treasury will do OK. My cash awaits opportunities! R48 Your comment about bonds was generic "I am a big believer and user of momentum...FOR STOCK FUNDS. Not so for bond funds." My response was generic too. ============= Other comments I wouldn't invest in ST treasuries when rates are on the rise. Is anybody sure rates stabilize?Someone who waits for opportunities, as I do, wouldn't invest in treasuries either because there is no way to know how they do ST. Do I want to hold ST treasuries longer term from here? If you believe rates are stabilized, then a medium term generic bond fund should do better. Do I want to hold ST treasuries for a trade? Never. I have found better choices in the past and future. Do I want to buy 6-12 months CD? No, they don't pay enough Do I want to buy 3 year CD? Too long to know or forecast 3 years. Chances we will have better choices. Stable Value funds? great if you have access. I don't understand why they don't offer them to all retail investors? The more I think about this unpredictable, risky market we haven't seen for years, I prefer to stay in MM and wait for the fog to clear. If you force me to invest, I agree with Chang, RPHIX. This is the beauty of managed mutual fund, all you need to do is find just one exceptional fund. |
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Post by fishingrod on May 28, 2022 18:21:41 GMT
I have a 5 year CD ladder and I just added a 3 year at 2.75% APY compounded daily. This means I have ready cash If I need it coming due every year. The Weighted average yield of this 5yr CD ladder and the recent 3 year CD combined is 2.68%.
If I compare this to RPHIX performance it is way better.
I don't see anything wrong with this performance. This is done through 2 local credit unions that between the two of them, I can always get the best yield for me.
One thing I love is if interest rates rise on their CDs, they allow me to withdrawal from the lower rate CD and upgrade me to the higher rate CD without any penalty. I think this is done on a one on one basis.
Pentagon Federal and Apple Federal credit unions, just cant beat them.
I still have 7% ready cash making .70%
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Post by FD1000 on May 30, 2022 20:27:45 GMT
This is why I don't use CD.
1) I want the flexibility to sell my CD and buy a fund on the same day. Can't do it with CD.
2) If I break the CD, the penalties are big. I'm a member of Penfed which is great. If you break the CD...quote: "Within 365 days from the open date of the certificate, the penalty will be the last 365 days of dividends earned. After 365 days from the open date of the certificate have elapsed, the penalty will be 30% of gross amount of dividends that would have been earned if the certificate had reached maturity."
3) You have to go with 3 years to get 2.75%. It's too long to tie my money, as I never believed in cash/CD for long term.
4) For months now I preferred MM since risk is elevated. When risk subsided, one can use RPHIX. With 30 day sec=2.3% and duration=0.5 years, there is a good chance for rebound and making 2+% annually. Heck, it made already 0.4% in 2-3 week.
5) RPHIX is an easy choice, but down the road I will find better options. Always did.
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Post by FD1000 on Jun 1, 2022 20:24:25 GMT
On May 28, 2022 I said: I wouldn't invest in ST treasuries when rates are on the rise. In one month, VGSH gained about 0.85%. In just 2 days, it lost almost half of the gains -0.37%. The first sign of reversal for VGSH just showed up today. Rates resume their price up. In the next 2 months, it's likely the Fed will raise rate twice 50 base point. The 2 year treasury picked at 2.8% and went down to 2.5% in May and why VGSH made 0.85%. At a min, I think the 2 years treasury will be back at 2.8%. Attachments:
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Post by mozart522 on Jun 1, 2022 20:37:11 GMT
So you miss getting that .85%, huh? And the distribution went up 43%. |
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Post by FD1000 on Jun 1, 2022 21:44:50 GMT
So you miss getting that .85%, huh? And the distribution went up 43%. I'm not investing in bonds to get peanuts, I got several times more from HY Munis in days. The usual, distributions are important only after performance + controlling risk/SD. But, most of the bond funds I own have high dist anyway. I'm sure, bonds will come back. Rates will go up, stabilize and then it's time to load. Higher rates are great when you are out. We will get better performance from bonds. If the 10 year treasury pays 3-3.5%, it means other categories will pay more. The most profitable is to find bond OEFs big losers with the best rebound and why treasuries don't interest me, even when I used to own mostly stocks. I believe that every fund I own must perform well. I never own bond OEFs to ballast stocks, unless it's allocation funds which have bonds. My first bond fund was PIMIX in 2011. |
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Post by mozart522 on Jun 1, 2022 21:58:36 GMT
FD1000,"The most profitable is to find bond OEFs big losers with the best rebound and why treasuries don't interest me,..." Yet you just can't resist posting about them
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Post by FD1000 on Jun 1, 2022 23:39:15 GMT
FD1000,"The most profitable is to find bond OEFs big losers with the best rebound and why treasuries don't interest me,..." Yet you just can't resist posting about them Mmm...there are several other options that don't interest me as investment, but I have an opinion. Are you saying I can't make educated observations about it? The whole point is to exchange ideas and learn. |
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Post by mozart522 on Jun 2, 2022 0:22:58 GMT
FD1000 ,"The most profitable is to find bond OEFs big losers with the best rebound and why treasuries don't interest me,..." Yet you just can't resist posting about them Mmm...there are several other options that don't interest me as investment, but I have an opinion. Are you saying I can't make educated observations about it? The whole point is to exchange ideas and learn. Just making an observation too. Do you understand the meaning of ? You use it a lot yourself. |
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Post by FD1000 on Jun 3, 2022 13:01:15 GMT
I have a goodly amount of money in cash/short term investments, awaiting deployment. Patience is the code word for this money. A couple days ago, bond fund manager Jeff Gundlach recommended the two year Treasury bond as a good buy. Rate then was about 1.92%...yesterday close was 2.158%, partly in reaction to fed stating may go 50 basis points up in fed funds rate at next meeting. So is this a good buy...and is timing now? Also, what is a good Fund or ETF owning 2 year Treasuries? Gundlach had a graph showing historically, the fed funds rate and the 2 year Treasury followed very closely. Since the fed plans to increase rates 6 more times, and assuming one is 50 basis points, then the fed funds rate gets to 2% this year. Expect a two year treasury to be slightly higher rate. I also expect the ten year Treasury to peak around 2.6%...and note the 2/10 spread is very low; about 0.21% now. Over several decades, when I exited funds, in lieu of parking monies in MM Funds, I mostly bought long term corporate bond funds, taking a higher yield, and accepting that NAV fund price would float. Most of the time, I exited with small price gains, as well as higher interest received. Occasionally not so. But I captured more yield. So going out to two years is not a great risk to me. Like, I'll take the 2.16% interest for a year, and live with a floating fund price. That compares to a money market fund that may be 0.5% yield, and no price change. Your thoughts? Timing now?...a good Fund/ETF? TIA R48 Observations: 1) Gundlach timing wasn't good on March 23rd. R48 comment about waiting for 2.6% was a lot better. 2) R48, I have a question for you. You mentioned several times before the generic formula for bond fund: a bond fund performance would be it's yield per the duration. If this is correct, then why not invest in?... RSIIX: yield > 5%...duration<2. This means you will get 5% annually in the next 2 years. See the list below for several more funds
TICKER...YIELD...DURATION.....CATEGORY (YIELD = TRAILING + 30 DAYS SEC)RSIIX.......5+.........1.9.............UNIQUE HY DBLIX.......5-7........1.2.............MULTI(MOSTLY MBS) EIFAX......4.3-4.7....0.4.............BANK LOANS SPFYX.......4-5........0.3.............BANK LOANS MWFSX......9-10......2.9.............MULTI BTW, rates continue upward. I would still wait, maybe until the next second Fed raise next month. |
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