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Post by marpro on Jan 18, 2023 19:39:39 GMT
It seems so as it keeps going up everyday by a few cents, as its NAV does?
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Post by uncleharley on Jan 18, 2023 20:12:05 GMT
Given the high level of trading volume, I would say it is headed for the moon.
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Post by marpro on Jan 18, 2023 20:45:58 GMT
Given the high level of trading volume, I would say it is headed for the moon. May be not to the moon, but the recent trading volumes are almost double, all green. I have to pay higher prices for the reinvestment. Yikes. |
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Post by johnsmith on Jan 18, 2023 23:09:53 GMT
interest rates go down, NAV goes up, price follows.
Plus that 13% yield doesn't hurt.
Could it go down, definitely.
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Post by marpro on Jan 19, 2023 1:33:45 GMT
marpro , Don’t fret about 13% distributions. You’ll have your initial investment back in about 6 years, 72/13. It’s all free money after that. We started in the 2008-2010 time period under similar circumstances. Easy money, no work. Keeps the TIRA RMD low longer because the pressure is on the downside with no growth. You can always go with equities for future cap gains instead, I’ve seen that work most of the time in the past. Ours will be ready for LTC. Lol. 🇨🇦 I got it. steelpony10, I am not able to tag the Canadian flag here. Anyway, you know. |
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Post by FD1000 on Jan 19, 2023 4:57:09 GMT
It seems so as it keeps going up everyday by a few cents, as its NAV does? I opened a new thread bond future musings in early 11/2022 with explanation why: 1) Bad losses should turn to a nice rebound 2) we can see the end of rate increase, no need to wait 3) the charts/uptrend gave a clear signal 4) Inflation starts to go down This is why I went all in at 99+% first time in 2022, after I sold it all in early 2022. Since then, I posted several times that bond funds usually recoup most of their losses with 12-18 because they are contractual vehicles + 2023 will be good for bonds, that includes FI CEFs. What I didn't mention. 1) Higher dists, because when the price goes down, dist is higher, but it doesn't mean, it's a green light. PDI had about 10+% annually for 3 years in 2000-1-2 and still lost 18% in 3 years while SPY made 24% with very low distributions( stockcharts.com/h-perf/ui?s=PDI&compare=SPY&id=p88640669906), because total returns = everything, while dist is only a part of it. Dist are never FREE MONEY.Read ( www.investopedia.com/terms/d/distribution.asp)...."Once dividends and distributions are disbursed, the fund’s share price declines by the total of the per-share distribution to the fund’s shareholders. The price falls because the distribution is withdrawn from the fund’s assets, which decreases the net asset value (NAV)." 2) Volume. It can mean something for days but many times, the price will continue going up for months later, regardless. See the PDI chart below in 2017 See 1)volume is low and stable but the price goes up about 20%. 2) Volume went down, the price went up nicely, much faster Attachments:
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Post by marpro on Jan 19, 2023 15:04:48 GMT
It seems so as it keeps going up everyday by a few cents, as its NAV does? I opened a new thread bond future musings in early 11/2022 with explanation why: 1) Bad losses should turn to a nice rebound 2) we can see the end of rate increase, no need to wait 3) the charts/uptrend gave a clear signal 4) Inflation starts to go down This is why I went all in at 99+% first time in 2022, after I sold it all in early 2022. Since then, I posted several times that bond funds usually recoup most of their losses with 12-18 because they are contractual vehicles + 2023 will be good for bonds, that includes FI CEFs. What I didn't mention. 1) Higher dists, because when the price goes down, dist is higher, but it doesn't mean, it's a green light. PDI had about 10+% annually for 3 years in 2000-1-2 and still lost 18% in 3 years while SPY made 24% with very low distributions( stockcharts.com/h-perf/ui?s=PDI&compare=SPY&id=p88640669906), because total returns = everything, while dist is only a part of it. Dist are never FREE MONEY.Read ( www.investopedia.com/terms/d/distribution.asp)...."Once dividends and distributions are disbursed, the fund’s share price declines by the total of the per-share distribution to the fund’s shareholders. The price falls because the distribution is withdrawn from the fund’s assets, which decreases the net asset value (NAV)." 2) Volume. It can mean something for days but many times, the price will continue going up for months later, regardless. See the PDI chart below in 2017 See 1)volume is low and stable but the price goes up about 20%. 2) Volume went down, the price went up nicely, much faster Thanks for your info. The way, steelpony10 and I look at, is this way. At 14% distribution, we can recover the cash in 60 months (about 5 years) and at 12%, we can recover the cash in 68 months. The reinvested shares accumulate monthly and the shares double during this period. I have been collecting the shares for about 4 years first in PCI until last year and PDI only from December 10, 2021. Even if I do not any new cash, I should recover the money in 2 or 3 more years because I have invested new cash in 2021. In fact, some new purchases have CG that I do not want or like because the reinvested cash will bring less number of shares. I still buy shares not only with the distributions but also with some new cash. Your plots will not include the accumulation of the shares with reinvestment.
In fact, the cash distributions that I have taken were very valuable during the pandemic in 2020 and early 2021. It is like an annuity that keeps on paying every month. So, it all depends on how one looks at.
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Post by FD1000 on Jan 21, 2023 17:38:27 GMT
See the article PDI: What Investors Should Know About Its Sensitivity To Interest Rates( seekingalpha.com/article/4571256-pdi-what-investors-should-know-about-its-sensitivity-to-interest-rates?mailingid=30312746&messageid=2850&serial=30312746.6169&utm_campaign=rta-author-article&utm_medium=email&utm_source=seeking_alpha&utm_term=30312746.6169) If it doesn't open for you, you may want to use Brave browser with TOR, or Opera with a build in VPN Summary PIMCO Dynamic Income Fund remains one of the most popular funds across the entire CEF space owing to its high yield and strong historic returns. One of the key performance factors for the closed-end fund since the start of last year has been its sensitivity to interest rates. In this article, we look at the PDI fund's supposed large bucket of short-dated assets and whether it allows the fund to mitigate its interest rate profile. Our takeaway is that this short-dated asset bucket doesn't appear to exist, but even if it did, it wouldn't tell investors much of anything. Investors should instead look to the fund's duration, yield curve, and credit risk profile to understand how it may respond to various rate scenarios. ==================== FD: I call it a black box. I read the article and my head is spinning. This is one of the reasons I haven't held CEFs long term, just traded them from hours to several weeks making several % when I see a good uptrend. |
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Post by marpro on Jan 21, 2023 18:06:34 GMT
See the article PDI: What Investors Should Know About Its Sensitivity To Interest Rates( seekingalpha.com/article/4571256-pdi-what-investors-should-know-about-its-sensitivity-to-interest-rates?mailingid=30312746&messageid=2850&serial=30312746.6169&utm_campaign=rta-author-article&utm_medium=email&utm_source=seeking_alpha&utm_term=30312746.6169) If it doesn't open for you, you may want to use Brave browser with TOR, or Opera with a build in VPN Summary PIMCO Dynamic Income Fund remains one of the most popular funds across the entire CEF space owing to its high yield and strong historic returns. One of the key performance factors for the closed-end fund since the start of last year has been its sensitivity to interest rates. In this article, we look at the PDI fund's supposed large bucket of short-dated assets and whether it allows the fund to mitigate its interest rate profile. Our takeaway is that this short-dated asset bucket doesn't appear to exist, but even if it did, it wouldn't tell investors much of anything. Investors should instead look to the fund's duration, yield curve, and credit risk profile to understand how it may respond to various rate scenarios. ==================== FD: I call it a black box. I read the article and my head is spinning. This is one of the reasons I haven't held CEFs long term, just traded them from hours to several weeks making several % when I see a good uptrend. FD: There is nothing new here. It is all traders' talk. I am not a trader. Everyone is entitled to their opinion. I have no problem with it. In fact, higher interest rate is a boon to PIMCO's fixed income CEFs. So, the NAV went down and prices went down. So, traders lost money. Traders do not have any thinking of fundamentals, but all (trash) talk because they lost money.
One more thing. You know what? Two years ago, traders paid 30% premium to buy PDI, while I was buying PCI around 5-8% premium. I did not want to pay such a big premium for a long term annuity like payouts. I started with a few thousand of investment in PCI and used the distributions to buy a few additional shares of VTI, QQQ, and VGT. Then, I increased to low hundred thousand and bought several shares of the same each month with the monthly distributions. Now, I have high six-figure in the CEFs and stopped buying equity shares for now. It could go to seven figure later this year with reinvestment. I bought a few thousand shares when they became cheap. So, all your plots do not have any effect on me. Market timing. Yes.
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Post by xray on Jan 22, 2023 19:53:20 GMT
Bloomberg
US Bond Market Flouting Inflation Looks Increasingly Vulnerable
Liz Capo McCormick and Michael MacKenzie
Sat, January 21, 2023, 2:09 PM EST
(Bloomberg) -- There’s growing concern that the bond market has written down inflation risk too far. A sharp decline in yields over the past two months is mainly due to falling inflation expectations. That means that so-called real yields, which are protected from inflation, have declined less than their nominal counterparts. Their lagging performance reflects shrinking demand for protection against rising prices.
The broader bond market is also signaling that a Federal Reserve policy rate peak short of 5% will be enough to cause a recession, requiring rate cuts totaling half a point during the second half of the year. Some argue there’s no longer much margin for error. A pick up in demand for this week’s auction of 10-year inflation-protected Treasury notes suggests investors are beginning to listen.
“For months now people have had the conviction that inflation is behind us and so there’s been a big rush into bonds,” said Ben Emons, senior portfolio manager at NewEdge Wealth. If China reopening causes an inflation pop or a recession doesn’t materialize, it’s going to be a problem.
The relative yields of real and nominal Treasuries reveal the expected average rates of increase for consumer prices over the term of the notes. For 10-year notes, they reached the lowest level of the past year this week, 2.09%. The five-year breakeven inflation rate dropped to 2.13%, within a basis point of last year’s low.
“In bonds our kryptonite is inflation,” said Jack McIntyre, portfolio manager at Brandywine. “Our thesis is that peak inflation is in the rear view mirror and we suspect by mid-year or later there will be evidence the economy is really weakening and inflation is melting. A lot of tightening is still set to hit the economy at a time when it is already slowing. At this point I don’t see a reason to be bearish on bonds.”
Those assumptions have helped propel the broader Treasury market to a 3.1% return so far this month, a historic rebound from last year’s 12.5% loss. Yields across the nominal curve have declined as much as 44 basis points, led by the five-year. Five- to 30-year yields are below 3.8%.
“The bond market has got off to a very hot start this year and it should cool down,” said Alan Ruskin, chief international strategist at Deutsche Bank. “There is a constraint on how low Treasury yields can fall from here if the Fed goes to 5%.”
A competing view on inflation is that breakeven rates “once again appear significantly cheap” based on trends in commodity prices and credit spreads, as JPMorgan Chase & Co. inflation strategist Phoebe White said in a Jan. 19 report. Fed Governor Christopher Waller Friday said financial markets were too optimistic on how quickly inflation will recede.
Inflation, Waller said, “is not going to just miraculously melt away.”
In one sign that investors are having second thoughts, they flocked to Thursday’s auction 10-year Treasury Inflation Protected Securities, or TIPS. The auction drew a yield of 1.22% — about 4 basis points below it was trading at the bidding deadline, a sign demand exceeded expectations. Primary dealers were awarded a record low share of 7.6%, sidelined by customer bids. Total bids were 2.79 times the amount on offer, the highest ratio since 2019.
Interest-rate strategists at TD Securities this week recommended investors wager on an increase in the two-year breakeven inflation from around 1.95% to to 2.65%. Progress on inflation reflects mainly goods prices, while the growth rate for services other than housing “is likely to be sticky on the way down,” Priya Misra, TD’s head of global rates strategy said in a note.
The inflation rate for personal consumption expenditures excluding food and energy, which the Fed favors over the consumer price index, rose 4.7% year-on-year in November. The December reading Friday is forecast to fall to 4.4%. TIPS breakevens target the consumer price index, which tends to run hotter than PCE.
“I think yields are a bit too low here, pricing in too severe a recession in 2023,” said Michael Arone, chief investment strategist at State Street Global Advisors’ US SPDR business. “And I buy into the fact that inflation will continue to roll over and pretty strongly this year, but it will remain above the Fed’s target. So I don’t believe the Fed will be cutting rates in 2023.”
What to Watch
Economic calendar
Jan. 23: Leading index
Jan. 24: Philadelphia Fed non-manufacturing; S&P Global manufacturing and services PMIs; Richmond Fed manufacturing index and business conditions
Jan. 25: MBA mortgage applications
Jan. 26: Chicago Fed national activity index; 4Q GDP estimate; advance goods trade balance; wholesale/retail inventories; jobless claims; durable goods orders; new home sales; Kansas City Fed manufacturing index
Jan. 27: Personal income/consumption (with PCE deflator); pending home sales; University of Michigan sentiment/current conditions/inflation; Kansas City Fed survey
No Fed speakers due to pre-FOMC quiet period
Auction calendar:
Jan. 23: 13-, 26-week bills
Jan. 24: 52-week bills; 2-year notes
Jan. 25: 2-year floating rate notes; 17-week bills; 5-year notes
Jan 26: 4-, 8-week bills; 7-year notes
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Live Long and Prosper....
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Deleted
Deleted Member
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Post by Deleted on Feb 5, 2023 5:03:50 GMT
In support of PDI, let me quote someone now who has far more knowledge and experience regarding bondish CEFs than (likely all) those here: --- PDI just paid us a 65c extra because it overearned its regular distribution last year
--- It probably did not just sell off the high yielding assets it has aggregated over the past year
--- Somewhere between 35-50% of assets are floating rate
--- If they were for some (what?) reason cut the distribution by 1c tonight, the distribution yield drops to ONLY 11.84% ... Drop by 2c, 11.29% ... by 3c 10.72%
--- So if the fund board should cut the distribution by 1c or 2c or 3c for any(?) reason or no reason at all, PDI would still stand among the highest yielding well run bondish CEFs.
As for PDI's current price-premium of 13+%, a value significantly higher than its one-year average, that's another matter to think about. How this situation now affects one's PDI buy/sell/hold action is one's personal decision, a decision no one else is in a position to criticize or advise. And for yet more info, see seekingalpha.com/article/4575015-pimco-cef-update-deleveraging-and-swaps-take-a-toll-on-income for head-hurting details on PDI internals. And hopefully, that this is from a respected SA author should not trigger a knee-jerk adverse reaction from our friend in Cookeville, someone supposedly with an educational background that should have an open mind and be interested in learning such, one would think. ( and a personal note to xray: Please place your frequent no-doubt-well-intended very lengthy info-dumps into a thread/forum (or start one) more suited to them so that they don't break up the thread narrative as one skims thru it. Thanks. ) --- Frank |
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sam
Lieutenant
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Post by sam on Feb 5, 2023 5:57:54 GMT
PDI is a bond CEF but it is more closely correlated to stock market ($SPX moves). It bottomed very similar to $SPX and Junk bond leveraged CEF (NCZ) or ETF (HYG).
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