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Post by mozart522 on Apr 27, 2022 15:24:53 GMT
The FED will raise rates, likely .5% but possibly .75%. Depending on how the bond market reacts, I may start taking some positions in ST bond funds. Equities need to show a lot less volitility for me to play. What about others?
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Post by steelpony10 on Apr 27, 2022 15:50:58 GMT
The FED will raise rates, likely .5% but possibly .75%. Depending on how the bond market reacts, I may start taking some positions in ST bond funds. Equities need to show a lot less volitility for me to play. What about others? Dividend payers as high as you can stomach. Aristocrats, utilities, Reits etc. to further out on the branch to CEF’s and BDC’s. As far as interest rates I lived though Stagflation my reason for a buy and hold dividend section. I’m personally covered for Stagflation up to the average 7.25% from 1970-1979 and prime rates near 20%. This is an expected blip to me resulting from pent up world demand, stimulus checks, huge quick increases in minimum wages etc. Since in the U.S. the economy is consumer driven scare them with headlines like you do markets, a good use for the wall of woe. Crank it up ASAP. Get the pain over with. Of course the non moneyed classes take the biggest hit as always especially if foreign conflicts are more important. |
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Post by Chahta on Apr 27, 2022 16:02:49 GMT
The FED will raise rates, likely .5% but possibly .75%. Depending on how the bond market reacts, I may start taking some positions in ST bond funds. Equities need to show a lot less volitility for me to play. What about others? I just purchased 3 mo. T bills with bond fund money. I consider (unlike many here) that bond funds are in the neighborhood of long-term buys. I like low cost basis in bond funds. My take is that bond funds are way ahead of Fed rate increases. If I need to sell the T bills so be it but I think I have 3 months. But what do I know? I don't really sell equities except in my taxable account to capture opportune CGs. |
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Deleted
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Post by Deleted on Apr 27, 2022 16:10:12 GMT
I am a spectator, not expecting to buy until the FED announces they're done. I may change my mind, but I don't see compelling reasons to do that now.
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Post by mozart522 on Apr 27, 2022 16:36:32 GMT
The FED will raise rates, likely .5% but possibly .75%. Depending on how the bond market reacts, I may start taking some positions in ST bond funds. Equities need to show a lot less volitility for me to play. What about others? I just purchased 3 mo. T bills with bond fund money. I consider (unlike many here) that bond funds are in the neighborhood of long-term buys. I like low cost basis in bond funds. My take is that bond funds are way ahead of Fed rate increases. If I need to sell the T bills so be it but I think I have 3 months. But what do I know? I don't really sell equities except in my taxable account to capture opportune CGs. I thought about doing that myself. But even putting 500K in 13 week treasuries will only net me about 1K if held all the way. If not held all the way, who knows what you get, but my guess is less. I have noticed that the FED is very slow to raise rates most of the time, but very quick to drop them. Bond funds benefit from this while bonds still only get par. And VCSH is already yielding 3.3%. |
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Post by mozart522 on Apr 27, 2022 16:46:06 GMT
steelpony10, Like some others here, I'm getting to the age where simplicity is necessary, and large returns are not. My wife will not be able to change anything on the fly and even a 15% downturn in portfolio value will freak her out and send her in directions I don't want her going. I will eventually settle on funds like SCHD, SCHY, Wellesley, and intermediate bond funds. I highly doubt we will see inflation this high again in my lifetime or hers. I have followed your posts over on M* and I know this your's is a style you have successfully had for a very long time.
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Post by uncleharley on Apr 27, 2022 17:20:47 GMT
I agree that it is unlikely we will see inflation this high in most of our lifetimes, but it could persist at this level to our collective graves. jmho
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Post by steelpony10 on Apr 27, 2022 18:06:02 GMT
mozart522 , Well I have a 40+ year view. I took the worst case scenarios from Stagflation to LTC and hoped everything fell between those extremes which so far everything has including this instance in my opinion. So I sleep well thinking this. Of course I do think this will be a 5-10 year period starting with Covid of undependable market income forcing spending of seed corn or cutting back our lifestyle which is not in the cards for us. I’ve been backpedaling for three years now spreading capital gain taxes from up to 40+ year holdings. If I pass first everything is auto transferred monthly for income I told my wife the basic mechanics, or to go to a financial advisor one of the kids has or cash everything in and divide by a year number pay the big taxes and watch your spending. Nothing about investing. She strokes out now over $4 gas so she probably won’t need her money that long. Investing is only for money you can afford to lose correct? Some have a really low threshold and some are egotistical and clueless. My moms 120k yearly LTC bill removed any remaining sass from me.
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Post by retiredat48 on Apr 27, 2022 18:49:59 GMT
@ mozart522 ,...you know I have recently been accumulating 2 yr treasury bonds via buying VGSH...discussed in a separate thread on the Bond Forum. R48 |
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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 27, 2022 18:54:11 GMT
@ mozart522 ,...you know I have recently been accumulating 2 yr treasury bonds via buying VGSH...discussed in a separate thread on the Bond Forum. R48 , kind of pursuant to my other questions but just off-hand, what is your general feeling about V CSH at this point? (and for that matter SCHO...a large position i have maintained for a number of years)? Thanks! |
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Post by Chahta on Apr 27, 2022 23:48:49 GMT
I just purchased 3 mo. T bills with bond fund money. I consider (unlike many here) that bond funds are in the neighborhood of long-term buys. I like low cost basis in bond funds. My take is that bond funds are way ahead of Fed rate increases. If I need to sell the T bills so be it but I think I have 3 months. But what do I know? I don't really sell equities except in my taxable account to capture opportune CGs. I thought about doing that myself. But even putting 500K in 13 week treasuries will only net me about 1K if held all the way. If not held all the way, who knows what you get, but my guess is less. I have noticed that the FED is very slow to raise rates most of the time, but very quick to drop them. Bond funds benefit from this while bonds still only get par. And VCSH is already yielding 3.3%. I bought T bills to slow me down a bit. I am anxious to get back in at these low prices. At least I will make something if held to maturity or we get a bond rally. The problem I see with VCSH is the NAV is still decreasing (OK, up for a couple of days). I don't see 3.3%. I see 1.6% based on annualizing the April distribution. Sure, SEC yield is 3.3% but where does that come from? What if rates take off again? |
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Post by mozart522 on Apr 28, 2022 1:00:32 GMT
I thought about doing that myself. But even putting 500K in 13 week treasuries will only net me about 1K if held all the way. If not held all the way, who knows what you get, but my guess is less. I have noticed that the FED is very slow to raise rates most of the time, but very quick to drop them. Bond funds benefit from this while bonds still only get par. And VCSH is already yielding 3.3%. I bought T bills to slow me down a bit. I am anxious to get back in at these low prices. At least I will make something if held to maturity or we get a bond rally. The problem I see with VCSH is the NAV is still decreasing (OK, up for a couple of days). I don't see 3.3%. I see 1.6% based on annualizing the April distribution. Sure, SEC yield is 3.3% but where does that come from? What if rates take off again? The average coupon is 3.1. The yield to maturity is 3.1. The price has droped .77% since the April distribution. You are looking at the distribution yield . The SEC yield is an annualized figure based on returns over the most recent 30-day period. If rates take off again, then the maturing bonds are replaced with higher yielding bonds and the cash flow increases. |
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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 28, 2022 1:14:34 GMT
I bought T bills to slow me down a bit. I am anxious to get back in at these low prices. At least I will make something if held to maturity or we get a bond rally. The problem I see with VCSH is the NAV is still decreasing (OK, up for a couple of days). I don't see 3.3%. I see 1.6% based on annualizing the April distribution. Sure, SEC yield is 3.3% but where does that come from? What if rates take off again? The average coupon is 3.1. The yield to maturity is 3.1. The price has droped .77% since the April distribution. You are looking at the distribution yield . The SEC yield is an annualized figure based on returns over the most recent 30-day period. If rates take off again, then the maturing bonds are replaced with higher yielding bonds and the cash flow increases. I'm a little confused, VCSH yield is 3.4%, to my understanding. That seems pretty good for a fund that doesn’t have significant interest rate risk as it invests in investment-grade bonds with maturities of 1 to 5 years- average duration is 2.8 years, far lower than most bond funds. |
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Post by mozart522 on Apr 28, 2022 2:16:30 GMT
The average coupon is 3.1. The yield to maturity is 3.1. The price has droped .77% since the April distribution. You are looking at the distribution yield . The SEC yield is an annualized figure based on returns over the most recent 30-day period. If rates take off again, then the maturing bonds are replaced with higher yielding bonds and the cash flow increases. I'm a little confused, VCSH yield is 3.4%, to my understanding. That seems pretty good for a fund that doesn’t have significant interest rate risk as it invests in investment-grade bonds with maturities of 1 to 5 years- average duration is 2.8 years, far lower than most bond funds. 3.3 SEC yield according to Vanguard. What are you confused about? |
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Post by gman57 on Apr 28, 2022 15:13:12 GMT
Sec yield is confusing... If you look at its distribution is has been paying out 1.4%-1.6% (last 3 months) but sec yield says 3.3%.
distribution % == (div*12)/price
It looks like sec yield is what its assets are capable(supposed?) to produce but what actually gets paid out is a different story.
Whenever I see hypothetical in an explanation I see SWAG. (scientific wild ass guess)
From VG:
A non-money market fund's SEC yield is based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income as a percentage of its assets. A security's income, for the purposes of this calculation, is based on the current market yield to maturity (for bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30-day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience; as a result, income distributions from the fund may be higher or lower than implied by the SEC yield.
The SEC yield for a money market fund is calculated by annualizing its daily income distributions for the previous 7 days.
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Post by Capital on Apr 28, 2022 15:38:11 GMT
FWIW - Yesterday 3-month original issue Brokerage CDs could be bought at a 50bp yield. This morning I saw 55bp and within the last hour 60bp have been posted.
I'm still awaiting next week to invest my next round.
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Post by Chahta on Apr 28, 2022 16:36:08 GMT
Capital , 3 mo. T bills were 95bp. Down to 93bp today. Why CDs? Are you just parking bond money for now?
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Post by Capital on Apr 28, 2022 16:43:35 GMT
Capital , 3 mo. T bills were 95bp. Down to 93bp today. Why CDs? Are you just parking bond money for now? I have $$ set aside to pay college tuition over the next 6 years. Instead of taking 1bp I'm taking a bit more in yield. I can lock it up S/T but not L/T - "Why CDs" -- just cause I like them. FDIC Insured deposits can go on the cash line of my Financial Statement. Lenders like that. |
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Post by retiredat48 on Apr 29, 2022 0:28:38 GMT
@ mozart522 ,...you know I have recently been accumulating 2 yr treasury bonds via buying VGSH...discussed in a separate thread on the Bond Forum. R48 , kind of pursuant to my other questions but just off-hand, what is your general feeling about V CSH at this point? (and for that matter SCHO...a large position i have maintained for a number of years)? Thanks! @ mikes425 ,...I can't review other funds in detail under the hood, or it would overwhelm me. That said, a CURSORY REVIEW results in this: --SCHO is essentially the same as VGSH...both 2 yr treasuries, low ER (0.04%), similar yields, each owns bonds selling below par (average weighted price of about 97.8%). This means if the managers hold every bond to maturity, a capital gain of about 2% will occur (good). I selected VGSH because half my acounts are at Vanguard, and this conclusion from M* reviewer: "It is hard to beat this fund VGSH for short-term Treasury exposure." SCHO would be a keeper to me, also. --VCSH is the same short term bond fund, but with CORPORATE BONDS. Most are AAA. I'm OK with it, but with a recession one may have selected defaults. I like treasuries, at somewhat lower yield, simply because I don't have to be at the manager's mercy of bond selection. Further, many institutions and money managers and BANKS buy treasuries for safety reasons, and per their rules. Like, a bank can make money buying a treasury at 2.6% yield, using checking account deposit money at which it is still paying zero percent. Thus treasuries always in demand. R48 |
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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 29, 2022 2:13:27 GMT
retiredat48, Thanks, I appreciate it. I feel pretty comfortable with both SCHO -for reasons you suggest relative to similarity to VGSH - and VCSH per my advisor friend's rationale. Most other bond holdings are variations of ST with VGIT currently the longest-duration category... as well as several Floating Rate and TIPS funds...and a couple of foreign debt and bond ETFs/CEFs. I plan to maintain about a 49% equity level and would probably look at adding to that on any major downturn.
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