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Post by mozart522 on Jun 4, 2022 15:14:47 GMT
FD1000, "So, why not use this fund with much higher monthly dist + Fed tax-exempt(Munis)?" Why? Because the SEC yield is only 2.16 and YTM is only 1.8%, its credit rating is lower, and its average weighted price is over 5% above par, meaning it will lose NAV as the bonds mature. You are the one suggesting income is less important than TR on these boards. The income has to be reinvested in order to get the projected TR based on the rule, so why does a higher distribution matter unless one is spending it. It comes down to whether you pays me now or you pays me later when dealing with premium bonds that high. And, personally, my money is in tax advantaged accounts, so munis wouldn't save me any taxes.
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Post by mozart522 on Jun 4, 2022 15:21:09 GMT
FD1000, "I understand, but many are looking for a fund with much higher dist NOW, others are waiting for rates stabilization and then selecting other funds with better performance." Sure, I'm waiting primarily for that also. Like R48, my investment in VGSH is just a parking place for some cash. But I accept that it may be a year or more before rates stabilize, inflation comes down, and the next recession ends. I'm patient.
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Post by Chahta on Jun 4, 2022 15:48:34 GMT
Why risk principal if you are holding cash? Buy a 2 year treasury at 2.6% or a CD ladder and be done.
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Post by mozart522 on Jun 4, 2022 17:11:46 GMT
Why risk principal if you are holding cash? Buy a 2 year treasury at 2.6% or a CD ladder and be done. Because a 2 year treasury has to be held two years in order not to risk principal, and will never get more that 2.6%. VGSH may present an opportunity for higher yield, or higher return. |
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Post by Chahta on Jun 4, 2022 17:36:13 GMT
Yet you must hold VGSH to TRY and get 2.5% for 2 years.
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Post by FD1000 on Jun 4, 2022 17:50:08 GMT
FD1000 , "So, why not use this fund with much higher monthly dist + Fed tax-exempt(Munis)?" Why? Because the SEC yield is only 2.16 and YTM is only 1.8%, its credit rating is lower, and its average weighted price is over 5% above par, meaning it will lose NAV as the bonds mature. You are the one suggesting income is less important than TR on these boards. The income has to be reinvested in order to get the projected TR based on the rule, so why does a higher distribution matter unless one is spending it. It comes down to whether you pays me now or you pays me later when dealing with premium bonds that high. And, personally, my money is in tax advantaged accounts, so munis wouldn't save me any taxes. TR is the most important but, these are vanilla funds which means distributions are a lot higher % of the TR. Why Munis? Because 1) they lost more and the rebound will be better, already seen it 2 weeks ago. 2) Lower rating = higher risk/SD NOW isn't a big deal since most of the damage has been done. 3) In the next several months, the distributions are almost double than VGSH. 4) Munis is a unique category for a reason. BTW, I can hold Muni funds in deferred accounts at Schwab but not at Fidelity. I think VG doesn't let you either. I think VMLUX will make more money than VGSH in the next several months, some of it will be appreciation. VG MM pays 0.7%, even if VGSH is going from 0.8% to 1.2% annually, still very low monthly difference, in the next several months, why would I take any risk? After several months, the decisions should be easier. Generally, the whole subject for me is irrelevant now and when I was younger. I don't invest in stuff to make 1-1.5% per year, even 2.5% is still low. |
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Post by mozart522 on Jun 4, 2022 20:09:13 GMT
Yet you must hold VGSH to TRY and get 2.5% for 2 years. Possibly, but after the next .5% bump, I can add to my fund probably at a lower price and a higher yield. You can't do that. You have to commit to another 2 year bond if you want to add. And you can't reinvest your income except every 6 months. Six months is a long time in this market. Ask FD if you don't believe me  |
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Post by mozart522 on Jun 4, 2022 20:12:24 GMT
FD1000,"I think VMLUX will make more money than VGSH in the next several months, some of it will be appreciation." How will a fund with an average weighted price of 105.5 appreciate, when the math says it has to lose NAV as the bonds mature?
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Post by anitya on Jun 4, 2022 22:22:38 GMT
Why risk principal if you are holding cash? Buy a 2 year treasury at 2.6% or a CD ladder and be done. Because a 2 year treasury has to be held two years in order not to risk principal, and will never get more that 2.6%. VGSH may present an opportunity for higher yield, or higher return. Your comment implies a 2 yr treasury if not held for 2 yrs is bound to lose principal invested. I am not able to comprehend. May be you can elaborate your thinking. |
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Post by anitya on Jun 4, 2022 22:45:48 GMT
Why risk principal if you are holding cash? Buy a 2 year treasury at 2.6% or a CD ladder and be done. Because a 2 year treasury has to be held two years in order not to risk principal, and will never get more that 2.6%. VGSH may present an opportunity for higher yield, or higher return. "VGSH may present an opportunity for higher yield, or higher return." Higher yield could mean lower NAV, a loss depending upon when one sells - No? Since October 2021, VGSH has lost 3.2% on a total return basis, telling me that VGSH could also lose money. VGSH is presented here as an all weather investment I am not able to comprehend. |
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Post by mozart522 on Jun 5, 2022 0:13:44 GMT
Because a 2 year treasury has to be held two years in order not to risk principal, and will never get more that 2.6%. VGSH may present an opportunity for higher yield, or higher return. Your comment implies a 2 yr treasury if not held for 2 yrs is bound to lose principal invested. I am not able to comprehend. May be you can elaborate your thinking. Sure. My comment only implies that anytime you sell have a bond before maturity it may lose principal. There is a risk. The only way to eliminate the risk is to hold to maturity or to wait until it is at or above par in price. But you can't know that when you buy. In other words, a two year bond holder takes on a similar risk to principal as a two year bond fund holder if one needs to sell before the term is up. |
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Post by mozart522 on Jun 5, 2022 0:22:12 GMT
Because a 2 year treasury has to be held two years in order not to risk principal, and will never get more that 2.6%. VGSH may present an opportunity for higher yield, or higher return. "VGSH may present an opportunity for higher yield, or higher return." Higher yield could mean lower NAV, a loss depending upon when one sells - No? Since October 2021, VGSH has lost 3.2% on a total return basis, telling me that VGSH could also lose money. VGSH is presented here as an all weather investment I am not able to comprehend. I have not seen it presented as an all weather investment. I have seen it presented as a place to stash some cash, AFTER it lost about 4% in NAV since last August. The bet is it will make more than cash from this point on for the holding period as much of the first 4 rate hikes are likely baked in. The holding period is when better opportunities come along for cash. |
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Post by anitya on Jun 5, 2022 1:12:17 GMT
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Post by gman57 on Jun 5, 2022 3:18:42 GMT
Now is the time? Maybe, maybe not. The fed is raising rates AND draining money (QT) as of 6/22. The end result of that is probably lower equity prices AND lower bond prices (higher yields) which are designed to sloooow things down. The short end of the curve may see the highest yield increases. Golden rule: Don't fight the fed. It's not just don't fight the fed on the way up but it's don't fight the fed.... period.
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Post by FD1000 on Jun 5, 2022 12:52:47 GMT
Let's see how we got here FROM THE OP on March 23rd.
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OP: 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.
FD: the 2 year is treasury is at 2.65, much higher than the above. The 10 years also at 2.93 and will cross 3%
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OP: So going out to two years is not a great risk to me. Like, I'll take the 2.16% interest for a year,
FD: you unlikely to get that for one year. So far you lost money in VGSH in 2.5 months + VGSH pays now under 1% annually.
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More
Do I want to commit to 2 years? NO, I would not commit to one year either in this crazy, unknown market.
I would wait after the second Fed raise next month.
Right now VG MM at 0.7% guarantee with no fluctuation is much better than VGSH at 0.8% in the next 1.5 months.
If I must buy something for the next 1.5 months, I prefer VMLUX.
BTW, I saw one year CD at 1.5% and 2.5% for 2 years.
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Post by mozart522 on Jun 5, 2022 14:25:29 GMT
I bought at $5.98, not a huge amount, and I'm still up plus the distribution. Probably will buy more after the 14th, and then again in July. Most of my cash will stay in cash and will likely hit 1.25 to 1.5% by year's end.
There are certainly other choices out there.
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Post by Chahta on Jun 5, 2022 15:29:01 GMT
If you bought at $5.98 you have done extremely well! 😉
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Post by mozart522 on Jun 5, 2022 15:37:15 GMT
If you bought at $5.98 you have done extremely well! 😉 typo; $58.98  |
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Post by FD1000 on Jun 5, 2022 21:05:13 GMT
I bought at $5.98, not a huge amount, and I'm still up plus the distribution. Probably will buy more after the 14th, and then again in July. Most of my cash will stay in cash and will likely hit 1.25 to 1.5% by year's end. There are certainly other choices out there. Absolutely, I bought the best HY Muni fund and in a couple of days made so much more and back to MM. This whole thread about VGSH paying now about 0.8% annually is absurd. Wait, maybe next month it will pay 0.9 annually. |
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Post by mozart522 on Jun 5, 2022 22:39:09 GMT
I bought at $5.98, not a huge amount, and I'm still up plus the distribution. Probably will buy more after the 14th, and then again in July. Most of my cash will stay in cash and will likely hit 1.25 to 1.5% by year's end. There are certainly other choices out there. Absolutely, I bought the best HY Muni fund and in a couple of days made so much more and back to MM. This whole thread about VGSH paying now about 0.8% annually is absurd. Wait, maybe next month it will pay 0.9 annually. Well, something here is certainly absurd. |
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Post by retiredat48 on Jun 8, 2022 16:07:37 GMT
Wall Street journal had an article on the last month huge surge in investors buying treasuries, especially 2 yr and 10 year…and the tr direct bods w 10,000 max limit. Increases of 5x to 10x in flows occurring.
Normally I like to be contrarian and this surge would concern me. However, that concern is for stock funds. Value in bond market is where you find it, as these are contractual instruments. Like huge inflow to treasury directs, getting 8 plus %, does not make it risky. This is a good value. That a flood of money is going to 2 r treasury is not an issue to me.
My Post coming in rebuttal to FD stating low return for VGSH.
R48
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Post by Deleted on Jun 8, 2022 17:01:04 GMT
I've noticed that Managed Future funds have a lot of Treasury notes and short term Treasury bonds. Those funds are positive on days the stock market is down and the 10YR yield is higher. I suspect that professionals are the majority buyers of these rather than retail investors.
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Post by FD1000 on Jun 8, 2022 21:12:20 GMT
Wall Street journal had an article on the last month huge surge in investors buying treasuries, especially 2 yr and 10 year…and the tr direct bods w 10,000 max limit. Increases of 5x to 10x in flows occurring. Normally I like to be contrarian and this surge would concern me. However, that concern is for stock funds. Value in bond market is where you find it, as these are contractual instruments. Like huge inflow to treasury directs, getting 8 plus %, does not make it risky. This is a good value. That a flood of money is going to 2 r treasury is not an issue to me. My Post coming in rebuttal to FD stating low return for VGSH. R48
Normally I like to be contrarian"mmm...so which is it? Since the OP on March 23rd, VGSH is down -0.45%, that includes all the dist. Basically, in 2.5 months, you lost already 0.45%. Observation: Gundlach calls have been wrong several times in the last several years. Gundlach, the king (without cloths) of bonds, predicted in 2016 that the 10 year treasury to be 6% by 2021, see ( article) and again in 2018( link). It's now at about 3%. In the last several days, it's down about 0.5%. If you want to hold 2 years, I don't know what will happen. Looking at the market big picture: my main point was that I don't want to own it while the Fed is raising rates in the next 6 weeks 0.5% twice. We also know the distributions are still low at about 0.8% annually.Attachments:
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Post by Chahta on Jun 9, 2022 3:24:22 GMT
Not for cash
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Post by mozart522 on Jun 9, 2022 12:25:42 GMT
OMG. I'm down to only $.01 above where I bought at $58.98. I could actually be down a few cents today. Oh, the horror!! I need to find a cliff, but I live in Florida. Nothing is going right.
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Post by FD1000 on Jun 10, 2022 12:53:08 GMT
OMG. I'm down to only $.01 above where I bought at $58.98. I could actually be down a few cents today. Oh, the horror!! I need to find a cliff, but I live in Florida. Nothing is going right. Great for you that you (luckily) bought at the right time. I hope you make much more. I don't my cash to lose money. It will be ready to trade when I find a good opportunity. So far, I'm positive every day in 2022 which is one of my LT goals annually. Attachments:
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Post by mozart522 on Jun 10, 2022 13:06:21 GMT
OMG. I'm down to only $.01 above where I bought at $58.98. I could actually be down a few cents today. Oh, the horror!! I need to find a cliff, but I live in Florida. Nothing is going right. Great for you that you (luckily) bought at the right time. I hope you make much more. I don't my cash to lose money. It will be ready to trade when I find a good opportunity. So far, I'm positive every day in 2022 which is one of my LT goals annually. But I won't lose money. |
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Post by FD1000 on Jun 10, 2022 14:01:04 GMT
Great for you that you (luckily) bought at the right time. I hope you make much more. I don't my cash to lose money. It will be ready to trade when I find a good opportunity. So far, I'm positive every day in 2022 which is one of my LT goals annually. But I won't lose money. If you want your money now, the price is 58.81(10 AM) which means you lost money if you sell. If I see a great trade now and want to use the money, I sell my MM where I made some money and buy a new position. This is how a trader preserves their capital at all times. I don't care about the highest performance but the best risk-adjusted performance. It's going on since 2000 and the performance was pretty good too. Since 2018 = retirement it's a lot more important to protect my capital. Remember, I like all my positions to show a profit if I can. I don't play the ballast game. But my main point since the OP in March 23rd was just wait to buy VGSH, rates are going up. So far Gundlach was wrong, and I was right (which is difficult for you to admit) VGSH lost -0.7%.Attachments:
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Post by mozart522 on Jun 10, 2022 15:44:00 GMT
I don't think you are paying attention. I don't really care about YOUR process which I have seen you proclaim over and over. I'm not a trader by your standards; very few are. If you are successful at it, great. I have a very small amount in this fund which I have said several times. I will hold it until I make money. A lot of non-traders hold ST treasury funds all the time as part of their portfolios in lieu of cash and for rebalancing. FD1000,"So far Gundlach was wrong, and I was right (which is difficult for you to admit) VGSH lost -0.7%." You weren't right as far as I'm concerned. I never said "now is the time", and in fact have said I expect it to go down further, as the yields trend up. It is still a relatively safe place for a small amount of cash, while I sit on the other 95+%. Please quit trolling this thread with your "mine is bigger" mentality. I don't think the purpose of these boards is for you to flit around pointing out others' "losses" and extolling your gains. And BTW, investing 101: A decline in NAV is not a loss until it is realized through a sale. |
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Post by Deleted on Jun 10, 2022 16:05:57 GMT
I don't think you are paying attention. I don't really care about YOUR process which I have seen you proclaim over and over. I'm not a trader by your standards; very few are. If you are successful at it, great. I have a very small amount in this fund which I have said several times. I will hold it until I make money. A lot of non-traders hold ST treasury funds all the time as part of their portfolios in lieu of cash and for rebalancing. FD1000 ,"So far Gundlach was wrong, and I was right (which is difficult for you to admit) VGSH lost -0.7%." You weren't right as far as I'm concerned. I never said "now is the time", and in fact have said I expect it to go down further, as the yields trend up. It is still a relatively safe place for a small amount of cash, while I sit on the other 95+%. Please quit trolling this thread with your "mine is bigger" mentality. I don't think the purpose of these boards is for you to flit around pointing out others' "losses" and extolling your gains. And BTW, investing 101: A decline in NAV is not a loss until it is realized through a sale. The Subject Title ..... for Cash? Implies that 2 Yr Treasury Bond Funds are cash equivalents, and the title is posed as a question. So it generated criticisms. |
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