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Post by Norbert on Mar 19, 2023 10:04:24 GMT
For me or anyone in my position, holding MM is the easiest way for the bird in the hand. It gives me all the options. It doesn't matter what the Fed does, I make money. I can also buy any time the bond funds I love that really make money. It's almost never a good idea to hold ST treasuries fund, such as VGSH which fluctuate. MM is a guarantee. If you want to hold longer + getting more then you can select 3-6 months CD/treasury which is also a guarantee. But again, how much more do you get? Right now Fidelity 3 months CD/treasury pays 5%. FZDXX pays 4.46%, VMFXX pays 4.52%, my SNAXX pays 4.62%. So for 3 months the difference is about 0.1%. Do I care about 0.1%? I don't, because I can buy much better performing Mid-LT bond fund that will make me a lot more money. Just because the 2 year is highest in 16 years, it's not an indication about the future. Inflation has been the highest in over 40 years. The Fed wants to fight it. If I'm looking beyond simple funds, I can hold RPHIX(only fund close to MM), or I can hold CBLDX. There is a reason I never held a direct treasury fund. RPHIX certainly has a smooth, MM-like chart. It handled the 2022 rising-rate situation beautifully. But, have you no concerns about the credit quality of its holdings going forward?
(From M*. Click to enlarge.)
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Post by FD1000 on Mar 19, 2023 10:44:51 GMT
Of course it's a concern, when things change, pay attention, especially what happened lately with the banks. When risk is high, be careful. I posted recently there is a good chance I will use Treasury MM instead of a typical MM.
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Post by davidsherman on Mar 20, 2023 19:38:34 GMT
I assume the credit rating chart is cut and pasted from a source such as Morningstar for RPHIX? Not sure credit ratings reflect the underlying risk of a portfolio. For example, FRC and CSFB are/were investment grade. Specifically to RPHIX, an equity or NR position could be a SPAC which is backed by UST. And, do we care about the rating of a bond that has been called/redeemed?
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Post by anitya on Mar 21, 2023 7:43:50 GMT
Agree with davidsherman about credit ratings. There is no substitute for your manager's DD. The three credit agencies' ratings are only for those that want to play the CYA game. As an investor, you are not interested in blame game - you are interested in real time risk management and protection of your principal. Rating agencies are for bonds what sell side analysts are for stocks. I never pay attention to analysts' or rating agencies' ratings.
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Post by Norbert on Mar 21, 2023 10:29:41 GMT
I assume the credit rating chart is cut and pasted from a source such as Morningstar for RPHIX? Not sure credit ratings reflect the underlying risk of a portfolio. For example, FRC and CSFB are/were investment grade. Specifically to RPHIX, an equity or NR position could be a SPAC which is backed by UST. And, do we care about the rating of a bond that has been called/redeemed?
Yes, from M*. it's true that credit ratings are just a starting point. When it comes specifically to banks, it gets more complicated.
SVB: Had received an "A" credit rating from Moodys before the crash; and had just passed a KPMG audit. The crash was mostly about their Long Bond holdings.
Credit Suisse: Was downgraded to BBB+ (outlook negative) last August by Fitch. So, some warning signs here.
First Republic: Was downgraded by S&P Global, but only after the crisis started.
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Post by johntaylor on Mar 21, 2023 13:20:31 GMT
surprising KPMG had been auditing SVB since 1994
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Post by FD1000 on Mar 22, 2023 19:53:14 GMT
I don't understand why rates went down this afternoon after the Fed meeting. The 10 years treasury already is down from 4+% to 3.5% Inflation is still high but persistent, tight labor market, the Fed raised rates and there is another potential one.
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Post by archer on Mar 22, 2023 20:23:09 GMT
My guess is that today it went down in a continuation of the past couple weeks and the Fed did as widely expected.
But with that thinking, why stocks go down? Perhaps it's just the recent pattern of prices going up a few days before the meeting, and then selling off even though there wasn't a surprise announcement. Fed week and day is always a bit crazy. I didn't even listen to all the Q&A afterwards this time.
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Post by fishingrod on Mar 22, 2023 20:38:11 GMT
I don't understand why rates went down this afternoon after the Fed meeting. The 10 years treasury already is down from 4+% to 3.5% Inflation is still high but persistent, tight labor market, the Fed raised rates and there is another potential one. Bond market could be pricing in a harder landing now that the FED is continuing to raise rates.
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Post by FD1000 on Mar 24, 2023 14:01:52 GMT
Observations: 1) In January the high yielders CEFs + Preferred rocked. We had elevated risk later and...they lost all the gains + more. See below SPY + both PFF,PDI are negative for YTD. 2) Risk starts to creep up again. Attachments:
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Post by retiredat48 on Mar 24, 2023 15:25:35 GMT
I don't understand why rates went down this afternoon after the Fed meeting. The 10 years treasury already is down from 4+% to 3.5% Inflation is still high but persistent, tight labor market, the Fed raised rates and there is another potential one. Rates went down because R48 commanded it. He bought treasuries at 4+% yld, stating we would see 3.5% by year end, thus a capital gain to be had. Came a little sooner than I expected! Also helps that the MORE the fed raises rates, the MORE odds are a stronger recession...and the more rates will DECLINE IN THE FUTURE...thus the demand for LT treasuries. So again, if, for the third time, rates on LT treasuries go to 4% or more, buy them...because it may not last long. BTW I doubt we will see 4% again this year. R48
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Post by davidsherman on Mar 25, 2023 19:18:35 GMT
Bond market and forward curve pricing a recession in which Fed will be forced to cut. With the headline news of bank stress and significant layoffs (especially in Tech and Services such as Accenture) creates a reinforcing loop. Further, as I mentioned in my call last week the ugly upside down commercial real estate market is looming.
That said, I suspect the new trend in lending of existing debt will be amend and extend to push out maturities and a day of reckoning. Similar to the "mark-to-market" losses from rising interest rates, the community will hope rates reverse and time heals.
Sticking my neck out .... I still believe the forward yield curve is too extreme in rate expectations. And, I continue to believe that "rates will stay higher for longer" unless systematic risk becomes real. However, the deposit runs on banks is an easy policy fix (but may not be executed). The bigger issue will be the "shadow banking". As of now I am sticking with my guns but reserve the right to be wrong and pivot. Besides, if rates come down quickly, I would rather deal with underperformance and lack of long duration convexity resulting in less performance versus the alternative of being right and betting the opposite.
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Post by FD1000 on Mar 30, 2023 23:16:01 GMT
As promised, comments are late. 1) SPY flashed a strong buy very early of last week based on my LT indicator. 2) QQQ LT indicator signaled earlier, about 2 weeks ago.
Since early 2020, risk/volatility/changes are faster/higher. COVID 19 had a huge affect on the economy and markets. Trading is the new game. 1) Out in 03/2020 2) Back to the easy SPY (or QQQ) after that and all the way to 12/2021 3) Very high risk in early 2022 = sell everything. If you wanted to invest in stocks: value was better than growth. 4) 2023 started with hope, stocks up, then down, then up and...YTD tech leads, value(including HealthCare = big loser) are way behind, actually down for the year.
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Post by FD1000 on Apr 1, 2023 15:58:27 GMT
They told us the MOVE = bond risk...mmm...in March 10-27 it got to be over 170. Last time it was that high in 2008-9. Well, from March 10 bonds did pretty well, see chart. The move is back to 135, based on that you should load, or maybe not . Attachments:
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Post by FD1000 on Apr 14, 2023 12:53:23 GMT
In mid January, it was clear that growth and QQQ lead again, which is the opposite to 2022 and what many analysts recommended in the beginning of 01/2023...and I posted about it. It makes sense that growth has done better when rates go down. The high income preferred+CEFs were good in 01/2023 but faded away. The easy index SPY continues to do well, an easy choice with YTD=8.5%. BTW, every other analyst mentions XLV=HC, but SPY has been a lot better until mid March when XLV was down over 8%, since mid March XLV has done just a bit better, about 9% while SPY made over 8%.. YTD XLV=0.25 far behind SPY, and diversification didn't help you.
Bonds: my favorite category, HY Munis, is doing well and better than treasuries. YTD...ORNAX 5.2%...VGIT 3.45% CPI+PPI+non farm jobs cooled down. Rates should go down, but they didn't. From April 6 to 14, the 10 years went up from 3.3% to 3.45%. ORNAX went up close to 1.5%...VGIT only 0.1%. I don't want my bonds to have high correlation to rates. The economy and inflation cooled down while rates went up. There is only 0.25% raise left for the Fed, that should be the sign to load up on bonds. So now, I'm confused, after a nice rally in bonds in the last several weeks, I sold all my bonds last night and back to 99+% in MM, what, why? MM pay about 0.4% monthly, that's over 3% for the rest of the year. We are going on 3 weeks vacation next week. Both stocks + bonds did well YTD...SPY=8.5%...QQQ=20%...HY Muni 5+%(there are better options than ORNAX YTD)...it's time to take profits, at least for me. How can I lose if I make 8-10% in 2023? This is another proof, that I don't always depend on T/A.
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bruno
Lieutenant
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Post by bruno on Apr 14, 2023 14:17:29 GMT
FD1000 , I know you like HDV with SCHD but have you looked at VTV or VIG with SCHD? I am trying to reduce my FANNG holdings. In the last 5 yr on PV looks like VTV and VIG makes a little more money. Thanks for sharing your knowledge to us newbies trying to learn..Bruno
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Post by FD1000 on Apr 14, 2023 20:29:18 GMT
FD1000 , I know you like HDV with SCHD but have you looked at VTV or VIG with SCHD? I am trying to reduce my FANNG holdings. In the last 5 yr on PV looks like VTV and VIG makes a little more money. Thanks for sharing your knowledge to us newbies trying to learn..Bruno For 4+ years, QQQ wins compared to SPY,VTV or VIG with SCHD( Link) 3 year, SCHD wins, because 2022 was very bad for QQQ and its valuation got better YTD, again tech leads by a lot. As I always say, watch markets to tell you where to go, not an easy task for most. There is always something that leads, even within the same category. If recession is coming than value+higher Div suppose to do better.
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Post by FD1000 on Apr 17, 2023 23:15:07 GMT
In mid January, it was clear that growth and QQQ lead again, which is the opposite to 2022 and what many analysts recommended in the beginning of 01/2023...and I posted about it. It makes sense that growth has done better when rates go down. The high income preferred+CEFs were good in 01/2023 but faded away. The easy index SPY continues to do well, an easy choice with YTD=8.5%. BTW, every other analyst mentions XLV=HC, but SPY has been a lot better until mid March when XLV was down over 8%, since mid March XLV has done just a bit better, about 9% while SPY made over 8%.. YTD XLV=0.25 far behind SPY, and diversification didn't help you. Bonds: my favorite category, HY Munis, is doing well and better than treasuries. YTD...ORNAX 5.2%...VGIT 3.45% CPI+PPI+non farm jobs cooled down. Rates should go down, but they didn't. From April 6 to 14, the 10 years went up from 3.3% to 3.45%. ORNAX went up close to 1.5%...VGIT only 0.1%. I don't want my bonds to have high correlation to rates. The economy and inflation cooled down while rates went up. There is only 0.25% raise left for the Fed, that should be the sign to load up on bonds. So now, I'm confused, after a nice rally in bonds in the last several weeks, I sold all my bonds last night and back to 99+% in MM, what, why? MM pay about 0.4% monthly, that's over 3% for the rest of the year. We are going on 3 weeks vacation next week. Both stocks + bonds did well YTD...SPY=8.5%...QQQ=20%...HY Muni 5+%(there are better options than ORNAX YTD)...it's time to take profits, at least for me. How can I lose if I make 8-10% in 2023? This is another proof, that I don't always depend on T/A. Sold all my bonds at the right time. HY Munis are down in 2 days about 0.8-1%. VGIT down -0.9% Today I was listening to CNBC as usual for about 10 minutes 3 times and the "experts" (people who manage money for others) express lots of BS. For 3 months now they have been invested a lot in value and health care, they owned much higher cash than normal, they claimed that QQQ is too rich, and drumroll...it's stocks picker market where you must use the experts. Wait, be careful, recession + debt ceiling are coming = more cash. YTD: QQQ leads, SPY have done pretty good at 8.65%, value+HC trails, MM made about 1.1% which is way behind stocks, bonds, and you didn't need any expertise to make money. In the last 1-2 weeks they started to sing another song, well, tech companies are so dominated they move the markets. I wouldn't be surprised to see that value starts performing better. These experts use valuation instead of listening to the markets, aka charts, a novice mistake.
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Post by retiredat48 on Apr 18, 2023 13:32:28 GMT
FD1000,...Thanks for these two postings... R48
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Post by FD1000 on Apr 29, 2023 23:11:05 GMT
Nothing much have changed since mid April. SPY is an easy choice, tech is a leader since I posted about it in mid January. Value trails. The Fed influence is lower. Mid-LT rates are lower. MM rates are still high and will continue to be for months. Bonds are doing OK. We have heard loud noises from the "experts" about recession, stagflation, value is the way to go in 2023, and more scary stories but the easy no brainer SPY and even BND are doing fine. Since early 11/2022(about 6 months) my big picture changed from high risk=stay out to risk off=all in. If I was younger and working it means stay invested at 99+% and only switch funds based on momo and risk-adjusted performance. As a retiree who has enough and a trader, I keep trading in/out based on my indicators + sometimes sell to lock performance. So far, I made over 5% trading only HY munis twice YTD in January + March-April. I sold it all on April 13. If I just use MM in 2023, I will make about 8.5+%, all that with extremely low SD.
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Post by FD1000 on May 14, 2023 13:24:19 GMT
See the interview( wealthtrack.com/why-owning-stocks-over-bonds-cyclicals-over-defensive-is-savita-subramanians-contrarian-call/) Quote "Savita Subramanian is the Head of U.S. Equity and Quantitative Strategy at BofA Global Research where her responsibilities include U.S. sector allocations for equities, forecasts for the S&P 500 and other major U.S. indices, quantitative equity strategy and global ESG research. Subramanian has been named a top-ranked analyst by Institutional Investor for the last 10 years. She has also been named to Barron’s list of the 100 Most Influential Women in U.S. Finance for the past three years. In this weekend’s episode Subramanian will explain why, contrary to the vast majority of institutional investors surveyed by BofA, she is recommending stocks over bonds and cyclical sectors over defensive ones. FD: She doesn't recommend Healthcare anymore. ======== BTW, on March 8th 2023 ( link)- Quote " Just 26% plan to buy stocks with excess cash (v. 42% last year), while 29% plan to buy bonds," Subramanian said. "30% are happy to remain in cash. Cash return/dividend strategies are most frequently requested by clients (82%). We concur. We also prefer companies with self-funded growth (cash flow generators) to those that need to borrow to grow." Among other highlights in the survey: In stocks, 78% prefer Value (IWD) (VONV) vs. 12% who like Growth (IWF) (VONG). Respondents are most bullish on Healthcare (XLV), 76% bullish, Energy (XLE), 73% bullish, and Financials (XLF), 67% bullish. They are most bearish on Consumer Discretionary (XLY), 51% bearish, Real Estate (XLRE), 44% bearish, and Info Tech (XLK), 37% bearish." FD: Subramanian has been saying she prefers VALUE over Growth since the beginning of the year. This ( chart) since March 8th shows that IWF=growth continues to outperform IWD=value by more than 9% and GLD did pretty well at 10+% YTD: IWF(growth) leads by "only" 16.5% ( chart). What? Subramanian, a top-ranked analyst, made another bad forecast?
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Deleted
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Post by Deleted on May 14, 2023 16:38:17 GMT
Once I saw street forecaster who had a parrot which will randomly pick an envelope. I trust parrot more than any wall street forecaster.
I think media expect these people to give forecasts so they have to say something as part of their job while sounding very intelligent.
question is why do people listen? out of fear or out of greed?
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Post by steadyeddy on May 14, 2023 20:05:30 GMT
Once I saw street forecaster who had a parrot which will randomly pick an envelope. I trust parrot more than any wall street forecaster. I think media expect these people to give forecasts so they have to say something as part of their job while sounding very intelligent. question is why do people listen? out of fear or out of greed? Fear & Greed drive the market. So, the answer is both.
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Post by archer on May 14, 2023 21:28:17 GMT
The forecasters I trust the most don't forecast. There are some that show technical correlation % over the past, and let the listener draw their own conclusions.
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Deleted
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Post by Deleted on May 14, 2023 23:29:13 GMT
On Value investing, unfortunately when I started investment I thought Buffett is greatest investor and he does and preaches value investing so let me start with it. Huge Huge mistake. Lost many years.
(he also said most people should just invest in sp500. That would have worked a lot better.)
Finally when I learned Graham made most (if not all) his money in growth stock(s) then I realized. When you listen to people's preaching, be discriminate and knowledgeable ....If you are ignorant do not blindly follow a guru or a leader or politician...and if you are discriminate and knowledgeable then only reason to listen to others is to ensure that you consider different points of view so you are not making a mistake...
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Post by FD1000 on May 15, 2023 0:07:54 GMT
On Value investing, unfortunately when I started investment I thought Buffett is greatest investor and he does and preaches value investing so let me start with it. Huge Huge mistake. Lost many years. (he also said most people should just invest in sp500. That would have worked a lot better.) Finally when I learned Graham made most (if not all) his money in growth stock(s) then I realized. When you listen to people's preaching, be discriminate and knowledgeable ....If you are ignorant do not blindly follow a guru or a leader or politician...and if you are discriminate and knowledgeable then only reason to listen to others is to ensure that you consider different points of view so you are not making a mistake... You can use what I do, it has worked over 20 years...2-3 times annually, run a fund screen and select 5 wide range funds with good performance for 3-6 months + 1-3 years, and then look for funds with the lowest SD + highest Sharpe. This process guarantee a good performance The SP500 is probably the best one if you hold for decades, but the SP500 can be off for years, as it lost money for 10 years (2000-2020).
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Post by FD1000 on May 16, 2023 13:21:42 GMT
Observations: 1) Growth beat value for over 10 years 2010-2021. Growth lagged in 2022. At the end of 2022, almost every analyst recommended at least 2 of the following categories VALUE, ENERGY, HIGH INCOME, Healthcare, Commodities, International, EM over Tech (QQQ+VUG). YTD these groups lagged badly after Tech which is up 12+%.But wait, Preferred + CEFs started the year great and are lagging badly too. 2) Interest rates have gone down fast lately, you would think MM yield should be down pretty quickly too...NOPE...FZDXX still pays 4.46% (similar to last week) and SNAXX pays 4.64% which is 0.01% more than last week. 3) My ST+LT indicators for several bond categories were screaming buy early-mid of last week. 4) In my world large position means at least 10%, in most cases it's over 20-30%. So, if you had 5-10% in TLT it hardly helped you with the losses of the SP500 + SCHD. Since 2/1/2023 SPY was down -5.7%, SCHD down -8% and TLT up only 2%. The above was from March 16. I also mention Tech already in 01/2023. Tech continues to lead, SPY an easy choice, XVUS is very close. Value is way behind YTD, after a great 2022, while most analysts keep screaming VALUE for 6 months now. I pay hardly any attention to BlackRock/JPM/BofA/most others, as I have done over 20 years. All you got to do is watch the charts and follow the trends/momentum. ======== I'm in 99+% cash waiting for the debt ceiling to be behind us. Since early 2022, I have been trading only HY Munis. The time has come to start looking at other bond funds/categories. The Fed is mostly done. As usual, I look for smooth ride bond funds. Attachments:
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Post by Mustang on May 16, 2023 13:56:58 GMT
QQQ has a good YTD return. To bad it lost 32.6% last year. SPY lost 18.7% last year. Without looking at compounding both are still down around 10 points (9.7 and 10.3).
Edit: And both are way to volatile for me. Being in the withdrawal phase I tend to focus on volatility. Without the volatility the difference in my funds are: Wellington 9.6 (-14.3 & + 4.7), Wellesley 7.9 (-9.0 & + 1.1) and Balance Fund 8.7. (-12.1 & + 3.4)
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Post by FD1000 on May 16, 2023 14:19:22 GMT
QQQ has a good YTD return. To bad it lost 32.6% last year. SPY lost 18.7% last year. That's why following markets works. I sold it all in early 2022 because my system screamed high risk. In my world, only ST trades allowed in that case. ST=hours to days. In early 11/2022 I posted that the market is no longer in high risk. This is when I can trade longer term = weeks. The end result: I made 9.7% in 2022 staying most of the year in MM. The idea to be in most times, and stay out in very high risk markets. It's all ( here). Looking at the SP500. In 2022 it was mostly lows go lower + highs go lower until 10/2022. Since 10/2022, it's lows go higher + highs go higher. The SP500 need to break 4200 for the bulls. Attachments:
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Post by Chahta on May 22, 2023 13:14:06 GMT
QQQ and SPY "lost" nothing in 2022. Yes the value dropped but those that owned them for many prior years lost nothing. My value is less than it used to be but I have lost nothing.
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