Is Now The Time for 2 YR Treasury Bond Funds...for Cash?

[FD1000]

Jun 10, 2022 15:44:00 GMT mozart522 said:

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.

You are funny. The only safe places for cash are MM, CD.
Would you rather have MM and make money or lose money? 
I'm not trolling anybody. I'm a serious investor who made several observations YTD and all/most came true. Let's name several:
1) Sold all months ago and posted why.
2) Posted months ago that if you want to invest, Value+High Div stocks are a a better choice, after years of saying that growth is better
3) Do not diversify to international, SC
4) Recommended commodities months ago.
5) Posted about HY Muni great trade several weeks ago.
6) Warn not to invest in treasuries. At least, wait until the end of June.

You can do what you want.  This is why we have these forums.

Lastly; you said "investing 101: A decline in NAV is not a loss until it is realized through a sale."
What counts is risk-adjusted performance, avoiding the big meltdown is extremely important.  Have a nice day.

I'm out of this thread, no more when/what to do. 

[Chahta]

Agreed that cash must be cash now. I have always thought that. A bond fund is a bond fund is a bond fund these days. Subject to daily decline.

[mozart522]

I agree. Cash is cash. And a bond fund is subject to the same market pressures as are equities; both are subject to "daily declines" or daily increases. They are both investments. I never claimed they were cash substitutes, and I'm not sure R48 was saying that either. I think he was saying that he believes that VGSH will return more than cash over his holding period. So not a substitute but a choice of where to deploy some cash.

Buying ST treasuries now has minimal risk if one is willing to hold a while.

[mozart522]

Jun 10, 2022 21:05:02 GMT FD1000 said:

Jun 10, 2022 15:44:00 GMT mozart522 said:

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.

You are funny. The only safe places for cash are MM, CD.
Would you rather have MM and make money or lose money? 
I'm not trolling anybody. I'm a serious investor who made several observations YTD and all/most came true. Let's name several:
1) Sold all months ago and posted why.
2) Posted months ago that if you want to invest, Value+High Div stocks are a a better choice, after years of saying that growth is better
3) Do not diversify to international, SC
4) Recommended commodities months ago.
5) Posted about HY Muni great trade several weeks ago.
6) Warn not to invest in treasuries. At least, wait until the end of June.

You can do what you want.  This is why we have these forums.

Lastly; you said "investing 101: A decline in NAV is not a loss until it is realized through a sale."
What counts is risk-adjusted performance, avoiding the big meltdown is extremely important.  Have a nice day.

I'm out of this thread, no more when/what to do. 

Wow!  A bad day just got better

[FD1000]

mozart:Wow! A bad day just got better
FD: you are not the first and last and why I will not post when/what about this subject. Just over a year now, I only post some of my trades and when I do, they are after the fact. You are the new guy.
You win, many lose. Life goes on.
Sometimes markets directions are very clear and why I post my thoughts.

[retiredat48]

FD1000 ,…who posted:



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%.

———————————-

On the OP day of 23 March, I did not say I bought…I was opening discussion re future buy of VGSH. Actual purchases started much later…at lower prices (higher yields).

Note…IMay be buying more this week, with 2yr treasury around 3%. I am assisting my brother convert to an income portfolio (was 100% growth stocks until we began conversion 2 January, liquidating the growth funds). For info, the approach we will take is:

Wait until the fed meeting and as soon as rate rise is announced (whether 50 or 75 BP,s), and as soon as 2 yr treasury yields fall (prices rise), we will buy. We may also buy some the day befor. During last fed rate hike, My memory is the 2 yr peaked in yield the day before.

I doubt the 2yr will stay above 3% for long, invertingthe yield curve compared to 10 year, which seem to be holding at around 3%.

I’m posting more on this thread Monday…

R48

[FD1000]

Jun 12, 2022 17:12:29 GMT retiredat48 said:

FD1000 ,…who posted:



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%.

———————————-

On the OP day of 23 March, I did not say I bought…I was opening discussion re future buy of VGSH. Actual purchases started much later…at lower prices (higher yields).

Note…IMay be buying more this week, with 2yr treasury around 3%. I am assisting my brother convert to an income portfolio (was 100% growth stocks until we began conversion 2 January, liquidating the growth funds). For info, the approach we will take is:

Wait until the fed meeting and as soon as rate rise is announced (whether 50 or 75 BP,s), and as soon as 2 yr treasury yields fall (prices rise), we will buy. We may also buy some the day befor. During last fed rate hike, My memory is the 2 yr peaked in yield the day before.

I doubt the 2yr will stay above 3% for long, invertingthe yield curve compared to 10 year, which seem to be holding at around 3%.

I’m posting more on this thread Monday…

R48

On March 23rd FD said: Easy choice = NO. The trend is down, down and more down.

On March 24, R48 said (link): 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......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

===========

It's now at 3.06%. And 3% is way higher than 2.15%, in fact, it's 42+% higher.  And why do I need to worry if the rule is correct for VGSH with currect yield of 0.8% annually and 30 day sec=2.5%? I can buy a guarantee 2 year Treasury at Fidelity who pays me over 3%.

Attachments:

[Deleted]

www.cnbc.com/2022/06/13/us-bonds-2-year-treasury-rate-hits-highest-level-since-2007.html

"Short-term rates jumped on Monday as the 2-year and 10-year Treasury yield curve briefly inverted for the first time since early April."

[FD1000]

2%...mmm...Friday the 2 YR was just over 3% and now it's over 3.2%.  You can buy now 2 YR treasury with 3.2%.

Attachments:

[FD1000]

Wow, what a day, the 2 YR Treasury, finished at 3.35%.

(link). "The 10-year Treasury yield jumped 24 basis points to 3.39%, marking its biggest move since March 2020, while the 2-year rate was last up 32 basis points at 3.37%. Rates popped to session highs after a Wall Street Journal story published in the afternoon said the Fed might surprise markets with a larger-than-expected 0.75-percentage-point interest rate increase at their meeting this week."

[retiredat48]

FD1000,…2.35%  Typo?

[retiredat48]

Posted this in another thread:


6 hours ago alvinthechipmunk said:
WHY is the 10-year (and 5 and 2, I suppose) rate RISING, when, as I suspect, people are flocking into Treasuries for safety at the moment? This is nuts, eh? And a rate hike comes on Tuesday, tomorrow. More DEMAND should be driving rates DOWN, no??


R48 reply:
The two year treasury yield follows closely the fed funds rate.

Until last couple months the rate was consistent. Then the market woke up and priced in exactly what the fed said they would do…raise rates at future meetings, to get to a “neutral rate” est’d at about 2.5% by Q4.

Recent high inflation number has many considering fed will go 50 basis points higher…or 3% on neutral rate. Thus the market is reflecting this new outlook.

However, if economy turns downward fast, the fed may pause and not go to 3%…data dependent stuff. Personally, I do not think the fed will get to 3%. Economy showing several signs of fast slowdown. Inflation likely to reduce from peak numbers. The recession cries will be quite loud…fed will chicken out.

R48

[retiredat48]

Bought more Vanguard's VGSH...Government Short Term Treasury Bond Fund(2 year treasuries), as a cash holding. Bought about five minutes before close.

Last month, the 2year yield peaked the day before fed announcement. I consider the two year is the sweet spot for reasonable yield (3.43%) , low risk due shorter term, and good potential for capital gains within next year.

May buy more Weds. pending 2 yr yield changes following fed announcement…as discussed above.

R48




R48

[Chahta]

Has anyone seen anything close to 3.43% unless purchasing an actual bond? How long for the current rate to work itself into an OEF?

[retiredat48]

Question…for those who buy treasury bonds such as two year, via your broker, such as Fidelity…as treasury direct buys.

Are these bonds carried in your account at face value, or do they fluctuate daily showing a mark to market value of most recent two year treasury bond price??

Tia

R48

[retiredat48]

Jun 15, 2022 13:56:26 GMT Chahta said:

Has anyone seen anything close to 3.43% unless purchasing an actual bond? How long for the current rate to work itself into an OEF?

Good question…I’m trying to work up my actual yield on recent purchases.  Will post.

R48

[bf22]

Jun 15, 2022 18:24:51 GMT retiredat48 said:

Jun 15, 2022 13:56:26 GMT Chahta said:

Has anyone seen anything close to 3.43% unless purchasing an actual bond? How long for the current rate to work itself into an OEF?

Good question…I’m trying to work up my actual yield on recent purchases.  Will post.

R48

I would think that depends on the duration of the fund. More specifically, how much is rolling over soon on the short end.

[fishingrod]

This is a tool I use, at least for Vanguard funds. It shows the SEC yield as it changes daily. One would think that the daily repricing of the existing bonds downward would raise the yield to match. But I don't think it is that efficient.   

personal.vanguard.com/us/funds/tools/pricehistorysearch?radio=1&results=get&FundType=VanguardFunds&FundIntExt=INT&FundId=5132&Sc=1&fundName=5132&fundValue=5132&radiobutton2=1&beginDate=6%2F15%2F2021&endDate=6%2F15%2F2022&year=#res

[falco1]

R48-

I hold 1-3 year Treasuries in taxable accounts at Schwab.  They are marked to market value daily. 

By the way I did not buy them via Treasury Direct.  Mostly I bought existing notes selling below par that Schwab was offering in its CD/Treasury ladder builder tool.  The same marketplace also does offer new Treasury notes, selling without transaction fees.  

Cheers,

Falco1

[retiredat48]

falco1,…thanks…

R48

[retiredat48]

Jun 12, 2022 17:12:29 GMT retiredat48 said:

FD1000 ,…who posted:



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%.

———————————-

On the OP day of 23 March, I did not say I bought…I was opening discussion re future buy of VGSH. Actual purchases started much later…at lower prices (higher yields).

Note…IMay be buying more this week, with 2yr treasury around 3%. I am assisting my brother convert to an income portfolio (was 100% growth stocks until we began conversion 2 January, liquidating the growth funds). For info, the approach we will take is:

Wait until the fed meeting and as soon as rate rise is announced (whether 50 or 75 BP,s), and as soon as 2 yr treasury yields fall (prices rise), we will buy. We may also buy some the day befor. During last fed rate hike, My memory is the 2 yr peaked in yield the day before.

I doubt the 2yr will stay above 3% for long, invertingthe yield curve compared to 10 year, which seem to be holding at around 3%.

I’m posting more on this thread Monday…

R48

Well,this post was spot-on!

I posted buying more VGSH yesterday near closing, to have best chance of getting the highest yield/lowest price.  Indeed that happened.

We had the two year yields slowly fall today…then fed announcement.  Yield seemed stable for awhile, but then plunged, closing at 3.199%.  VGSH up 0.36% for the day.

I call this “step-back buying.”   Meaning when all buyers have stepped back and just watching (like hours before a fed announcement) you often get the best price front-running such buys.  Worked again in this fed move.  (Also works well in stock bear market bottoms).

R48

[FD1000]

Jun 15, 2022 22:02:24 GMT retiredat48 said:

Jun 12, 2022 17:12:29 GMT retiredat48 said:

FD1000 ,…who posted:



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%.

———————————-

On the OP day of 23 March, I did not say I bought…I was opening discussion re future buy of VGSH. Actual purchases started much later…at lower prices (higher yields).

Note…IMay be buying more this week, with 2yr treasury around 3%. I am assisting my brother convert to an income portfolio (was 100% growth stocks until we began conversion 2 January, liquidating the growth funds). For info, the approach we will take is:

Wait until the fed meeting and as soon as rate rise is announced (whether 50 or 75 BP,s), and as soon as 2 yr treasury yields fall (prices rise), we will buy. We may also buy some the day befor. During last fed rate hike, My memory is the 2 yr peaked in yield the day before.

I doubt the 2yr will stay above 3% for long, invertingthe yield curve compared to 10 year, which seem to be holding at around 3%.

I’m posting more on this thread Monday…

R48

Well,this post was spot-on!

I posted buying more VGSH yesterday near closing, to have best chance of getting the highest yield/lowest price.  Indeed that happened.

We had the two year yields slowly fall today…then fed announcement.  Yield seemed stable for awhile, but then plunged, closing at 3.199%.  VGSH up 0.36% for the day.

I call this “step-back buying.”   Meaning when all buyers have stepped back and just watching (like hours before a fed announcement) you often get the best price front-running such buys.  Worked again in this fed move.  (Also works well in stock bear market bottoms).

R48

The whole idea of this thread is not that good. Let's look at several ideas.

1) From the start (OP), we got the impression that soon, rates will peak and why it's good to buy soon. 
FD: The reality is different, the goal post has kept moving. 2 YR TR will peak around 2%, then 2.5%, then 3.0%, then 3.5, then do I hear 4%? once, twice, three. You won the prize.

2) VGSH as a good "cash-sub". 
FD: didn't work well as cash sub. Why would I want to invest in these markets my cash in such a volatile, unpredictable asset.

3) VGSH has 30 day sec = 2.6% and according to the rule, you will get 2.6% in the next 2 years.
FD: why do I need to get 2.6% when I can see 2 YR TR guarantee at 3.3% and soon maybe more?

4) Trying to trade VGSH correctly.
FD: why? First, the chart is going down for months. Second, markets are at high risk, and especially the bond market. It all leads to one thing, stay away. But, if you are a good trader, why look at VGSH? If rates stabilize and go lower + uptrend emerges, other categories will do so much more. Example: if you bought VGSH 2 days ago, yesterday it was +0.36% while BND 1.15% and HYG was up 1.9%.

5) Markets in general. Did anything fundamentally change for me? No, high risk is current, the Fed promised to increase rate. I don't like the gambling odds.

[fishingrod]

Jun 15, 2022 13:56:26 GMT Chahta said:

Has anyone seen anything close to 3.43% unless purchasing an actual bond? How long for the current rate to work itself into an OEF?

Vanguard short term investment grade VFSUX at 3.53% as of close yesterday. Not a pure Treasury fund. Duration 2.8yrs.

personal.vanguard.com/us/funds/tools/pricehistorysearch?radio=1&results=get&FundType=VanguardFunds&FundIntExt=INT&FundId=0539&Sc=1&fundName=0539&fundValue=0539&radiobutton2=1&beginDate=6%2F15%2F2021&endDate=6%2F15%2F2022&year=#res#res#res

[Chahta]

I actually meant receiving dividends that are approaching 3.53%. Of course the 30 day SEC tells us it will come in the future (maybe). I know no one is receiving that much but how long for the higher yield to work into the OEF?

[mozart522]

Chahta,

Distribution went up 43% last month with the .5% hike. We will see the end of this month with the .75% hike. As you know, the distribution will go up mainly based on the very low yielding bonds in the fund maturing and being replaced, so I expect it will take a while. The distribution does not increase quickly when the increase in yield is based only on a decline in price as it was before the first hike, as that doesn't change the bond's coupon rate. It just increases its future return as bonds are replaced. Return and distribution are different.

Traders may not understand that and need immediate rewards. Investors see things differently.

[FD1000]

Jun 16, 2022 14:31:58 GMT mozart522 said:

Chahta ,

Distribution went up 43% last month with the .5% hike. We will see the end of this month with the .75% hike. As you know, the distribution will go up mainly based on the very low yielding bonds in the fund maturing and being replaced, so I expect it will take a while. The distribution does not increase quickly when the increase in yield is based only on a decline in price as it was before the first hike, as that doesn't change the bond's coupon rate. It just increases its future return as bonds are replaced. Return and distribution are different.

Traders may not understand that and need immediate rewards. Investors see things differently.

Smart investors don't care about distributions because they know that only 2 things matter: 1) Total performance and if you care 2) Risk-adjusted performance.  It's the essence of investing for decades. That has nothing to do with a trader or not.
Can you define a trader clearly? The person who started this thread is a trader, and most posters here are traders.
BTW, I started a thread about distributions, but again, it's all about total performance first. How much can you get from a CD/Treasury from VG/Fidelity/Schwab/other?  
We already found out that CEFs who pay 8-11-12% didn't do well for years.

[mozart522]

FD1000 ,
"Smart investors don't care about distributions"

40% of the market return over time has been distributions. The idea that because total return is the ultimate measure of performance that smart investors "don't care" about a significant portion of that return is absurd. There are many here whose main investment focus is distributions. Are you saying they aren't smart?

I doubt that most posters here will self-define as traders. You have.

[FD1000]

Jun 16, 2022 20:12:56 GMT mozart522 said:

FD1000 ,
"Smart investors don't care about distributions"

Perhaps the dumbest comment made on this board. 40% of the market return over time has been distributions. The idea that because total return is the ultimate measure of performance that smart investors "don't care" about a significant portion of that return is absurd. There are many here whose main investment focus is distributions. Are you saying they aren't smart?

I doubt that most posters here will self-define as traders. You have.

Total performance includes everything and distributions too.
I don't care how they define themselves, if they trade, they are traders. This is why I asked you to define it.
BTW, I defined myself as a trader, even when I made just several trades annually for several years.

[mozart522]

Jun 16, 2022 20:19:24 GMT FD1000 said:

Jun 16, 2022 20:12:56 GMT mozart522 said:

FD1000 ,
"Smart investors don't care about distributions"

Perhaps the dumbest comment made on this board. 40% of the market return over time has been distributions. The idea that because total return is the ultimate measure of performance that smart investors "don't care" about a significant portion of that return is absurd. There are many here whose main investment focus is distributions. Are you saying they aren't smart?

I doubt that most posters here will self-define as traders. You have.

If this is the dumbest, then you are an idiot. I suggest you delete your comment. If you do that, I will delete mine.
Total performance includes everything and distributions too.
I don't care how they define themselves, if they trade, they are traders. This is why I asked you to define it.
BTW, I defined myself as a trader, even when I made just several trades annually for several years.

I don't care what you delete.  You said smart investers don't care about distributions.  This is not only false, but dumb.    I said your comment was dumb, you said I am an idiot.  What I don't care about is your opinion of me.

Why don't you start a poll:  Do smart investors care about distributions and you will see how silly your comment is.

[Deleted]

I care very much about distributions. Personally, from the little I know of bonds, I would leave them be. But I have a very good alternative that many don't. To me, what is happening makes it crystal clear why distributions matter - I don't need to worry about short term performance. I don't need to sell low. I have wanted to test my portfolio and risk tolerance during a bear market. I am using dividend stocks in part as bond substitutes - yes, I understand technically they have more risk.

No matter how you slice or dice it - cash is suffering permanent loss. Permanent. A valid choice, but recognize it.

I am buying through this mess.

Could someone simply explain why buying bonds right now is a decent idea?