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Post by Deleted on Apr 9, 2022 13:01:51 GMT
I saw Jim Bianco with Brian Williams the other day. Agree 100%. Agreed this would be the case 16 months ago and is the reason I did not put a substantial part of my portfolio in BND or BIV. "Typical" retirees who did that aren't very happy. This message should have been shouted out loud and clear in my opinion. Why any of this - in the bond market - should be surprising does not make sense to me. And only IF someone sells will it be a loss - not until then. Like any other real asset - nothing is lost/gained until sale. If one doesn't believe that, perceived pain of loss could be awful.
I am also waiting for bonds to settle before I purchase.
More carnage to come - rates are going up until inflation is controlled. One can google how high rates need to usually go to tame a certain rate of inflation. I don't bother, because I don't hold bonds. What does well in an inflationary environment? Real assets. Who pays the inflation tax? Bond holders. I also don't have a strategy to buy bonds and try and analyze if buying 2,5,10s or long term makes sense. So if anyone else is like me, I would highly suggest not buying bonds. If one still has them? No idea.
As far as the S&P going down this year - we have, along with the end of the bond market - talked about multiple contraction for 16 months and how that works. That is also why VALUE will prevail in a transition from quantitative easing and the massive Fed propping up of asset values. Prices are adjusting to their value. Indexes are cap-weighted for the most part. Repricing is thus an issue for them and indiscriminate.
And all of the above I wrote is just talk at the end of the day. The real deal is each investor's portfolio, ability to meet their needs, and quality of life. Wars happens, viruses happen, booms happen, unknown consequences of mass financial manipulation get revealed - systemic risk. This is the reason we have enough "safe" assets to weather such events. Bonds are no longer "safe" and haven't been for some time.
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Post by FD1000 on Apr 9, 2022 15:17:56 GMT
The mythical typical retiree - I saw one yesterday pulling into the Chick-fil-A drive-thru in his Camry... We stopped eating junk fast food years ago. We never like Chick-fil-a any way. We prefer cheap, fast and delicious food from local restaurants. It is part of our LT system of how to live nicely and retire early ( link).
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Post by Norbert on Apr 9, 2022 15:21:42 GMT
Hi @slooow,
Always enjoy your thoughtful posts. Certainly agree about bonds and about paying attention to price (a.k.a. value).
No, the KISS system is not looking very attractive; it would have a retired indexer heavily overweight IG bonds at present, plus exposed to overpriced names.
If you need a good scare, check out the real returns of the S&P 500 during the 1970s. Sit down while you're running the calculation.
We diverge in terms of portfolio allocation. I'm 55% cash because I think bonds will slowly become more attractive relative to stocks. Stocks, in general, are still no bargain. I think we're now in a Bear market. Am waiting for better prices. That may or may not prove to be an error.
I did very well during the 2020-21 COVID-19 Fed-pumped rally, then took a lot of money off the table. (Unfortunately, was a little slow in building a healthy commodities position and selling MS bonds.) Am satisfied banking the profits for now, even recognizing the purchasing power losses.
Am back on Crete since Tuesday, will wrap up the renovation project; which is for fun, not profit. A holiday home for the extended family. Picked up Covid returning from Australia, possibly in Singapore. Ugh.
N.
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Post by retiredat48 on Apr 9, 2022 17:04:06 GMT
I saw Jim Bianco with Brian Williams the other day. Agree 100%. Agreed this would be the case 16 months ago and is the reason I did not put a substantial part of my portfolio in BND or BIV. "Typical" retirees who did that aren't very happy. This message should have been shouted out loud and clear in my opinion. Why any of this - in the bond market - should be surprising does not make sense to me. Hi Sara...I have been "shouting loud and clear" for past three years re bonds...slightly early...and have been beaten up on some forums for this. Have really taken a beating from "balanced fund" supporters. I exited all standard-issue, vanilla bond funds over a year ago. Now planning any re-entries. So far none, except some additions to leveraged FI funds with yields above 10%, namely, PDI. PDI also in decline. R48
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bf22
Commander
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Post by bf22 on Apr 9, 2022 17:31:27 GMT
I saw Jim Bianco with Brian Williams the other day. Agree 100%. Agreed this would be the case 16 months ago and is the reason I did not put a substantial part of my portfolio in BND or BIV. "Typical" retirees who did that aren't very happy. This message should have been shouted out loud and clear in my opinion. Why any of this - in the bond market - should be surprising does not make sense to me. Hi Sara...I have been "shouting loud and clear" for past three years re bonds...slightly early...and have been beaten up on some forums for this. Have really taken a beating from "balanced fund" supporters. I exited all standard-issue, vanilla bond funds over a year ago. Now planning any re-entries. So far none, except some additions to leveraged FI funds with yields above 10%, namely, PDI. PDI also in decline. R48 Agreed.
How do you plan/time your re-entry into bonds? I'm going to wait until rates and inflation are more in balance, or at least we have a better understanding of the terminal rate.
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Post by FD1000 on Apr 9, 2022 19:29:14 GMT
Hi @slooow , Always enjoy your thoughtful posts. Certainly agree about bonds and about paying attention to price (a.k.a. value). No, the KISS system is not looking very attractive; it would have a retired indexer heavily overweight IG bonds at present, plus exposed to overpriced names. If you need a good scare, check out the real returns of the S&P 500 during the 1970s. Sit down while you're running the calculation. We diverge in terms of portfolio allocation. I'm 55% cash because I think bonds will slowly become more attractive relative to stocks. Stocks, in general, are still no bargain. I think we're now in a Bear market. Am waiting for better prices. That may or may not prove to be an error. I did very well during the 2020-21 COVID-19 Fed-pumped rally, then took a lot of money off the table. (Unfortunately, was a little slow in building a healthy commodities position and selling MS bonds.) Am satisfied banking the profits for now, even recognizing the purchasing power losses. Am back on Crete since Tuesday, will wrap up the renovation project; which is for fun, not profit. A holiday home for the extended family. Picked up Covid returning from Australia, possibly in Singapore. Ugh. N. Several good points...but KISS doesn't have to be only indexes. It's easier for younger investors who can be in 80-100% stocks. Retirees who use several allocation funds may do well, starting with VWINX+VWELX+PRWCX. KISS can be off by a few years too, but timing by many can be off by many more years. N: I'm 55% cash because I think bonds will slowly become more attractive relative to stocks. FD: Looks like you are in my camp, not a surprise for a reasonable retiree with enough money. =========== SARA: I saw Jim Bianco with Brian Williams the other day. Agree 100%. Agreed this would be the case 16 months ago and is the reason I did not put a substantial part of my portfolio in BND or BIV. "Typical" retirees who did that aren't very happy. FD: if you are a flexible investor as you claim you are, you could have done very nicely in HY Munis, many of them made 6-8% in 2021. I can never understand why many DIY flexible investors only pay attention to their stocks and not bonds. After I started to invest in 2011 in bond funds, I realized pretty quickly that stocks are much easier (use indexes) than bonds and why I have used only flexible bond funds which don't usually don't use treasuries, because treasuries have the highest correlation to rates.
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Post by bobfl on Apr 16, 2022 23:05:31 GMT
Mustang said: “Hopefully, those who are withdrawing have a plan for situations like this.” The plan should be to have cash or cash-like holding to tide one over. But many people say they are 100% cash so all is well. 😉 The plan is to know what you will buy and when. "What" is easy; "when" is at the bottom or slightly on it's way up. When is the bottom? 1. Now 2. When the fed rate hits 2% 3. A higher than 2% Fed rate 3. During year end selling.
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Post by FD1000 on Apr 17, 2022 23:34:23 GMT
Mustang said: “Hopefully, those who are withdrawing have a plan for situations like this.” The plan should be to have cash or cash-like holding to tide one over. But many people say they are 100% cash so all is well. 😉 The plan is to know what you will buy and when. "What" is easy; "when" is at the bottom or slightly on it's way up. When is the bottom? 1. Now 2. When the fed rate hits 2% 3. A higher than 2% Fed rate 3. During year end selling. My plan has been "easy" over 20 years. Markets tell me what to do. I don't invest based on what might happen. So, you asked when is the bottom? I have no idea, and I will do nothing base on your 4 choices. I will invest when I see my favorite categories/funds create a solid base + an uptrend. I don't have any specific time. If you can't figure out the above, know your goals and risk tolerance and use a steady asset allocation based on that.
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