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Post by chang on Dec 7, 2022 8:07:48 GMT
The title of this thread is “future” musings, not “past” musings. Does anyone have the chart for December 15 - January 15?
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Post by mnfish on Dec 7, 2022 12:05:05 GMT
retiredat48, "BTW for the last decade up to a year ago, most bond funds had underlying bonds trading over par...premiums...thus a built in capital loss (extracted in January). Now most bond funds have a built in cap gain...bonds selling below maturity values. This is good for bond investors. And buy FI CEFs at a discount, you further enhance yields/total returns. Buy leveraged FI CEFs and you may zoom up some day. Oh, that would be PDO and PDI!" My simplistic view. So, the cap gains would only come if/when the Fed cuts interest rates, yes? What if a pause or no cut happens and 2yr bonds that yield 4.5% stick around for a few years? What's the advantage compared to buying 6mo bonds at 4.5% and seeing where we (the Fed) are then? Are the chances right now of a rate cut in 6 mo. better than a pause or a continued raise, albeit smaller? Won't the funds price continue to drop until a cut happens? Have we become entrenched in the idea last 10+ years that the Fed will cut rates at the hint of a slowdown and that it's not different this time?
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Post by Deleted on Dec 7, 2022 12:08:26 GMT
The title of this thread is “future” musings, not “past” musings. Does anyone have the chart for December 15 - January 15? Check out F/m Investments ETF single treasury bond series released in 2022. ustreasuryetf.com
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Post by FD1000 on Dec 7, 2022 13:21:54 GMT
The title of this thread is “future” musings, not “past” musings. Does anyone have the chart for December 15 - January 15? The past has a lot of influence on what I do. The OP was a look into the future. Below is more. Nothing is a guarantee of course. 1) Do the following: Sec, Yield, Par, Duration can tell you what a fund will do in 1-3-6 months? Can they tell you what categories will do better? Can they tell you what funds in the same categories will do? Can they tell you what MANANGED funds, with moving parts, will do? Not much, and why I don't spend time on that. 2) The past is important. I have noticed that many times Munis behave differently and why I'm now at 99+% in HY munis for several weeks. In 2021, I was mostly in HY Munis, while other categories lost. Why Munis are different? I can come up with reasons (taxes, more). The real reasons: the chart goes up + lower SD than similar other categories. 3) Why no VGSH? Because the bird in the hand (MM,CD,Treasuries) is pretty good now + no risk/SD. 4) Why RPHIX over MM? Because RPHIX is unique and proved its risk/reward + for one month ( chart) it made almost 3 times more. If it made just a bit more, I would pass, but as long as it works, I would stay. 5) Treasuries in general? Not for me, they depend on the Fed and rates with higher volatility. Other categories with similar duration will do better and a posibility to have lower SD. SHM vs VGSH ( chart). VGIT vs VWALX ( chart). Why would you use bond ladders or buy single bonds or deal with the secondary market when buying a fund is so easy? It's always big picture first, then the charts must prove it: 1) The Fed blinked 2) Bond funds had one of the biggest loss in decades 3) the charts confirmed the change.
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Post by fishingrod on Dec 7, 2022 14:43:36 GMT
retiredat48 , "BTW for the last decade up to a year ago, most bond funds had underlying bonds trading over par...premiums...thus a built in capital loss (extracted in January). Now most bond funds have a built in cap gain...bonds selling below maturity values. This is good for bond investors. And buy FI CEFs at a discount, you further enhance yields/total returns. Buy leveraged FI CEFs and you may zoom up some day. Oh, that would be PDO and PDI!" My simplistic view. So, the cap gains would only come if/when the Fed cuts interest rates, yes? What if a pause or no cut happens and 2yr bonds that yield 4.5% stick around for a few years? What's the advantage compared to buying 6mo bonds at 4.5% and seeing where we (the Fed) are then? Are the chances right now of a rate cut in 6 mo. better than a pause or a continued raise, albeit smaller? Won't the funds price continue to drop until a cut happens? Have we become entrenched in the idea last 10+ years that the Fed will cut rates at the hint of a slowdown and that it's not different this time?
Here is an article that may bring some more clarity. Capital gains or losses on bonds inside the fund depend on when each bond inside the fund was purchased and if it was purchased at a discount or premium. Each day bonds purchased at a discount will move closer and closer to par until maturity.
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Post by chang on Dec 7, 2022 15:31:32 GMT
The title of this thread is “future” musings, not “past” musings. Does anyone have the chart for December 15 - January 15? Check out F/m Investments ETF single treasury bond series released in 2022. ustreasuryetf.com Those are interesting, but not anything that Vanguard or iShares don't have with lower expense ratios?
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Post by chang on Dec 7, 2022 15:39:48 GMT
I wonder if it wouldn't be relatively simple and reasonable to invest my cash: - 1/4 FZDXX (money Mkt)
- 1/4 6-Month T-bill
- 1/4 VCSH (ST Corps)
- 1/4 VGSH (ST Govt)
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Post by retiredat48 on Dec 7, 2022 16:12:24 GMT
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Post by retiredat48 on Dec 7, 2022 16:30:51 GMT
re seems to be some postings, like from FD1000, that my tresury bond fund purchases that last two months have been problematic, or not the best.
Well, first of all, I AM POSTING MY TRADES REAL TIME, (not after 2-4 weeks have passed).
Second, my returns have been excellent except an early VGSH buy is "about even". In this regard, I also post on the Fidelity Forum. Here is what some top notch bond investors replied to me:
poster sellsputscalls to retiredat48: "Since 11/4/22, your comments have hit it out of the park!"
next post by dickoncapecod Level 30 In response to retiredat48 11-25-2022 09:16 AM
Agreed. Once it can be said with certainty that Fed has completed its tightening cycle, the cap gains party will likely be over.
Regards, Dick
--------------------------------------------------- I now have some huge cap gains in some of my Treasury bond funds, as recognized by these posters on Fidelity Forum. I have recommended same on this forum. I also suggested that at 4+% yields for Longer Term treasuries, buy quickly as they could be gone in a heartbeat. This is what happened.
R48
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Post by Deleted on Dec 7, 2022 16:34:41 GMT
Check out F/m Investments ETF single treasury bond series released in 2022. ustreasuryetf.com Those are interesting, but not anything that Vanguard or iShares don't have with lower expense ratios? The method F/m is using is unique. Read the fund fact sheet for UTEN for example. It has one treasury bond best representing the criteria and rolls it over to a new one at the next auction. So there is constantly maintained maturity.
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Post by retiredat48 on Dec 7, 2022 16:37:51 GMT
retiredat48 , "BTW for the last decade up to a year ago, most bond funds had underlying bonds trading over par...premiums...thus a built in capital loss (extracted in January). Now most bond funds have a built in cap gain...bonds selling below maturity values. This is good for bond investors. And buy FI CEFs at a discount, you further enhance yields/total returns. Buy leveraged FI CEFs and you may zoom up some day. Oh, that would be PDO and PDI!" My simplistic view. So, the cap gains would only come if/when the Fed cuts interest rates, yes? What if a pause or no cut happens and 2yr bonds that yield 4.5% stick around for a few years? What's the advantage compared to buying 6mo bonds at 4.5% and seeing where we (the Fed) are then? Are the chances right now of a rate cut in 6 mo. better than a pause or a continued raise, albeit smaller? Won't the funds price continue to drop until a cut happens? Have we become entrenched in the idea last 10+ years that the Fed will cut rates at the hint of a slowdown and that it's not different this time? mnfish ,...NO, a cap gain does not require a rate cut. Bond funds overshoot/undershoot often...like now. The bond market OVERSHOT on LT treasury bond yields. Now correcting back, giving a cap gain to those who bought. Checkout VGIT or TLT (20 yr treasury bond chart) for this recent cap gain...it is large. More in previous post. R48
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Post by Chahta on Dec 7, 2022 16:39:30 GMT
I wonder if it wouldn't be relatively simple and reasonable to invest my cash: - 1/4 FZDXX (money Mkt)
- 1/4 6-Month T-bill
- 1/4 VCSH (ST Corps)
- 1/4 VGSH (ST Govt)
I know you are sensitive to fees, but CBLDX (SEC yield = 5.8%) can take the place of VGSH and VCSH with shorter duration. Similar to RPHIX with longer duration and higher yield. I am buying when some Treasuries come due.
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Post by mnfish on Dec 7, 2022 17:28:40 GMT
re seems to be some postings, like from FD1000, that my tresury bond fund purchases that last two months have been problematic, or not the best. Well, first of all, I AM POSTING MY TRADES REAL TIME, (not after 2-4 weeks have passed). Second, my returns have been excellent except an early VGSH buy is "about even". In this regard, I also post on the Fidelity Forum. Here is what some top notch bond investors replied to me: poster sellsputscalls to retiredat48: "Since 11/4/22, your comments have hit it out of the park!"
next post by dickoncapecod Level 30 In response to retiredat48 11-25-2022 09:16 AM
Agreed. Once it can be said with certainty that Fed has completed its tightening cycle, the cap gains party will likely be over.
Regards, Dick--------------------------------------------------- I now have some huge cap gains in some of my Treasury bond funds, as recognized by these posters on Fidelity Forum. I have recommended same on this forum. I also suggested that at 4+% yields for Longer Term treasuries, buy quickly as they could be gone in a heartbeat. This is what happened. R48 VGIT - I calculate a 3.69% price gain plus 2 distributions of $.106 and $.11 for a total return of 4%. IF you sold today. Looking back, this fund rebounded from June to Aug by 5% and then continued lower as rates went higher. And Dick's quote is what I was referring to in my other post, that if rates pause the cap gains pause.
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Post by fishingrod on Dec 7, 2022 19:52:13 GMT
re seems to be some postings, like from FD1000, that my tresury bond fund purchases that last two months have been problematic, or not the best. Well, first of all, I AM POSTING MY TRADES REAL TIME, (not after 2-4 weeks have passed). Second, my returns have been excellent except an early VGSH buy is "about even". In this regard, I also post on the Fidelity Forum. Here is what some top notch bond investors replied to me: poster sellsputscalls to retiredat48: "Since 11/4/22, your comments have hit it out of the park!"
next post by dickoncapecod Level 30 In response to retiredat48 11-25-2022 09:16 AM
Agreed. Once it can be said with certainty that Fed has completed its tightening cycle, the cap gains party will likely be over.
Regards, Dick--------------------------------------------------- I now have some huge cap gains in some of my Treasury bond funds, as recognized by these posters on Fidelity Forum. I have recommended same on this forum. I also suggested that at 4+% yields for Longer Term treasuries, buy quickly as they could be gone in a heartbeat. This is what happened. R48 VGIT - I calculate a 3.69% price gain plus 2 distributions of $.106 and $.11 for a total return of 4%. IF you sold today. Looking back, this fund rebounded from June to Aug by 5% and then continued lower as rates went higher. And Dick's quote is what I was referring to in my other post, that if rates pause the cap gains pause.
The cap gains that Dick's quote is referring to is in reference to the people piling into bond funds now driving bond prices up, which will end when people stop buying in bulk. The cap gains that retiredat48 is referring to is the NAV movement due to maturing bonds that are discounted and moving to par upon maturity, causing cap gains within the fund. If rates pause or go down the capital gains have just begun due to valuation of the bonds inside the fund.
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Post by Chahta on Dec 7, 2022 20:17:56 GMT
fishingrod, I’m not sure bond funds are going up due to demand. The 10 year has been steadily going down. Bonds can only fetch what interest rates dictate.
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Post by FD1000 on Dec 7, 2022 20:51:30 GMT
re seems to be some postings, like from FD1000, that my tresury bond fund purchases that last two months have been problematic, or not the best. Well, first of all, I AM POSTING MY TRADES REAL TIME, (not after 2-4 weeks have passed). Second, my returns have been excellent except an early VGSH buy is "about even". In this regard, I also post on the Fidelity Forum. Here is what some top notch bond investors replied to me: poster sellsputscalls to retiredat48: "Since 11/4/22, your comments have hit it out of the park!"
next post by dickoncapecod Level 30 In response to retiredat48 11-25-2022 09:16 AM
Agreed. Once it can be said with certainty that Fed has completed its tightening cycle, the cap gains party will likely be over.
Regards, Dick--------------------------------------------------- I now have some huge cap gains in some of my Treasury bond funds, as recognized by these posters on Fidelity Forum. I have recommended same on this forum. I also suggested that at 4+% yields for Longer Term treasuries, buy quickly as they could be gone in a heartbeat. This is what happened. R48 I didn't suggest anything about your private trades. I discussed the generic idea of investing in 03/2022 in 2 years treasuries. Any time you bought in the next 2 months, you lost money. Even if you bought perfectly in June, you are still behind MM. In June, I recommended treasuries, they beat VGSH. Basically, zero risk/SD was a better choice. We are talking now about 9 months. From early Nov, IT-LT duration bonds were on a tear. If you wanted a ST bond fund, SHM easily beat VGSH. If we look today, VGSH is still not a good choice when the bird-in-the-hand CD/Treasuries are at 4.65-4.75% for 6-12 months. Bottom line, VGSH wasn't the right choice. I haven't used VGSH, MM, and treasuries. BTW, I never held directly a treasury fund for longer than a couple of weeks. Even when I was heavy in stocks, my first bond fund was PIMIX. I don't like treasuries sensitivity to rates and their volatility. The above has nothing to do about what I do or if I post my trades. In the chart below, we can see 1) Any VGSH buy in March,April,May lost money. 2) The best VGSH buy in June, just made very little in the last several days after almost 6 months. 3) MM made more than VGSH from March. Treasuries/CD made more since Junes. All three (MM,CD,Treasuries) had zero risk/SD. Please let's discuss VGSH on your thread.Attachments:
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Post by mnfish on Dec 7, 2022 20:52:23 GMT
fishingrod"mnfish ," "The cap gains that Dick's quote is referring to is in reference to the people piling into bond funds now driving bond prices up, which will end when people stop buying in bulk. The cap gains that retiredat48 is referring to is the NAV movement due to maturing bonds that are discounted and moving to par upon maturity, causing cap gains within the fund. If rates pause or go down the capital gains have just begun due to valuation of the bonds inside the fund." Thanks for straightening me out, after I read what I posted it didn't seem right.
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Post by fishingrod on Dec 7, 2022 21:35:29 GMT
fishingrod , I’m not sure bond funds are going up due to demand. The 10 year has been steadily going down. Bonds can only fetch what interest rates dictate.
Interest rates are going down because people are demanding them, driving their prices up and yields down. Part of that demand are bond funds, I think. We will see when more recent fund flows come out. Investors have certainly been changing from short term bonds to long.
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Post by habsui on Dec 7, 2022 22:43:47 GMT
The title of this thread is “future” musings, not “past” musings. Does anyone have the chart for December 15 - January 15? I do. I'll publish it on Jan 16. (I'll throw in free blue circles.)
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Post by mozart522 on Dec 7, 2022 23:53:30 GMT
VGLT is still banging out good returns almost daily. Continuing to add.
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Post by retiredat48 on Dec 8, 2022 3:16:05 GMT
re seems to be some postings, like from FD1000, that my tresury bond fund purchases that last two months have been problematic, or not the best. Well, first of all, I AM POSTING MY TRADES REAL TIME, (not after 2-4 weeks have passed). Second, my returns have been excellent except an early VGSH buy is "about even". In this regard, I also post on the Fidelity Forum. Here is what some top notch bond investors replied to me: poster sellsputscalls to retiredat48: "Since 11/4/22, your comments have hit it out of the park!"
next post by dickoncapecod Level 30 In response to retiredat48 11-25-2022 09:16 AM
Agreed. Once it can be said with certainty that Fed has completed its tightening cycle, the cap gains party will likely be over.
Regards, Dick--------------------------------------------------- I now have some huge cap gains in some of my Treasury bond funds, as recognized by these posters on Fidelity Forum. I have recommended same on this forum. I also suggested that at 4+% yields for Longer Term treasuries, buy quickly as they could be gone in a heartbeat. This is what happened. R48 VGIT - I calculate a 3.69% price gain plus 2 distributions of $.106 and $.11 for a total return of 4%. IF you sold today. Looking back, this fund rebounded from June to Aug by 5% and then continued lower as rates went higher. And Dick's quote is what I was referring to in my other post, that if rates pause the cap gains pause. mnfish ,...your post says "fed rate cuts", not a fall in LT rates. Yes, if 5 yr treasury bond rates rise, VGIT price will fall. But this move is independent of the fed. Example: The fed has not yet cut rates, but 5 yr treasury rates have fallen, thus the cap gain. BTW I consider there is a very good possibility LT treasury rates will not see 4+% again until a few more years. Too much demand, for one. R48
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Post by retiredat48 on Dec 8, 2022 3:27:47 GMT
fishingrod "mnfish ," "The cap gains that Dick's quote is referring to is in reference to the people piling into bond funds now driving bond prices up, which will end when people stop buying in bulk. The cap gains that retiredat48 is referring to is the NAV movement due to maturing bonds that are discounted and moving to par upon maturity, causing cap gains within the fund. If rates pause or go down the capital gains have just begun due to valuation of the bonds inside the fund." Thanks for straightening me out, after I read what I posted it didn't seem right. No. I was referring to cap gains due long term rates falling and nav fund prices rising. Yes, I have also discussed how internal cap gains due bonds selling below par are accrued and will also be captured. So both. As posted above, I consider LT treasury bond rates may not get to above 4% for a couple years. I had previously suggested that if anyone really wants to buy some long dated tresury bond funds, consider front-running the 4% threshhold...like buy at 3.95%. This is about indeed what happened. Rates went above 4% for a short time,then buying drove rates back down. The next time, investors who missed out, will be wanting to lock in 4%, and buying may be even swifter this time. My gun is ready to buy more, fast, if needed. Host of reasons why 4% is a great long term treasury bond rate. Yes, you can sit in money market funds...for perhaps a year; but when fed lowers rate down some, say goodbye to that yield. Those who locked in 4+% for say ten years, will have that return for a long time. R48
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Post by chang on Dec 8, 2022 7:55:37 GMT
Anyone else think that corporate bonds aren’t showing reasonable extra yield over Treasuries for the credit risk, when there is still a risk of recession?
VGSH duration / yield: 1.9 yr / 4.6% VCSH duration / yield: 3.1 yr / 5.7%
There’s no 3.1 year treasury bill to compare to VCSH, but the difference in yield shown above must be partly due to the increase in VCSH’s duration, leaving very little yield attributable to credit risk.
Since I’m already equity heavy, that’s why I’m looking at government bonds. If corporate bonds showed a bigger spread, I’d be interested.
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Post by Deleted on Dec 8, 2022 11:09:12 GMT
fishingrod "mnfish ," "The cap gains that Dick's quote is referring to is in reference to the people piling into bond funds now driving bond prices up, which will end when people stop buying in bulk. The cap gains that retiredat48 is referring to is the NAV movement due to maturing bonds that are discounted and moving to par upon maturity, causing cap gains within the fund. If rates pause or go down the capital gains have just begun due to valuation of the bonds inside the fund." Thanks for straightening me out, after I read what I posted it didn't seem right. No. I was referring to cap gains due long term rates falling and nav fund prices rising. Yes, I have also discussed how internal cap gains due bonds selling below par are accrued and will also be captured. So both. As posted above, I consider LT treasury bond rates may not get to above 4% for a couple years. I had previously suggested that if anyone really wants to buy some long dated tresury bond funds, consider front-running the 4% threshhold...like buy at 3.95%. This is about indeed what happened. Rates went above 4% for a short time,then buying drove rates back down. The next time, investors who missed out, will be wanting to lock in 4%, and buying may be even swifter this time. My gun is ready to buy more, fast, if needed. Host of reasons why 4% is a great long term treasury bond rate. Yes, you can sit in money market funds...for perhaps a year; but when fed lowers rate down some, say goodbye to that yield. Those who locked in 4+% for say ten years, will have that return for a long time. R48 I agree. If and when I buy bonds it will be only with the expectation of earning the stated yield. 4% long term treasury with perhaps a new long term inflation rate of 3% doesn't sound bad for the fixed income side of the equation.
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Post by fishingrod on Dec 8, 2022 12:59:41 GMT
retiredat48, Sorry for being confusing. I knew you had mentioned both capital gains scenarios, as I did also. I know we are both on the same page.
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Post by mnfish on Dec 8, 2022 13:10:29 GMT
No. I was referring to cap gains due long term rates falling and nav fund prices rising. Yes, I have also discussed how internal cap gains due bonds selling below par are accrued and will also be captured. So both. As posted above, I consider LT treasury bond rates may not get to above 4% for a couple years. I had previously suggested that if anyone really wants to buy some long dated tresury bond funds, consider front-running the 4% threshhold...like buy at 3.95%. This is about indeed what happened. Rates went above 4% for a short time,then buying drove rates back down. The next time, investors who missed out, will be wanting to lock in 4%, and buying may be even swifter this time. My gun is ready to buy more, fast, if needed. Host of reasons why 4% is a great long term treasury bond rate. Yes, you can sit in money market funds...for perhaps a year; but when fed lowers rate down some, say goodbye to that yield. Those who locked in 4+% for say ten years, will have that return for a long time. R48 I agree. If and when I buy bonds it will be only with the expectation of earning the stated yield. 4% long term treasury with perhaps a new long term inflation rate of 3% doesn't sound bad for the fixed income side of the equation. What I did on Tuesday was put 15% of my cash into 6mo notes @ 4.5% as I have taken profits on some div stocks recently.
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Post by chang on Dec 8, 2022 14:53:18 GMT
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Post by fishingrod on Dec 8, 2022 16:25:39 GMT
Treasuries are State tax free and of course guaranteed by the US gov't, not JPM.
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Post by chang on Dec 8, 2022 17:10:25 GMT
fishingrod: that’s a good point, but I have no state tax obligations. That means treasuries are slightly less useful to me. And A-rated blue chips are never going to go bankrupt. I mean, when has that ever happened before?
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Post by marquay on Dec 8, 2022 18:11:53 GMT
Retired 48, As of today. Vanguard website says 10 year US treasury note is 3.486%. (auction). If it gets to 4%, I'll buy some.
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