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Post by mnfish on Jan 10, 2024 12:42:20 GMT
Oct 31, 2022 at 6:28pm FD1000 said:
...all I care is total returns which includes everything. If PDI TR in the next 5 years will be higher than SPY, then it's the winner, if it's not, it will be a loser. It's a pretty simple concept.
Since CEFs volatility is similar to stocks, they must be compared to stocks. Your story maybe interesting but it's unique to you, I'm discussing generic investing concept.
Well, FD, I have $25 to bet that in the next five years, starting tomorrow, PDI will beat SPY(proxy for S&P500), total return, in the next five years.
Are we on?
R48
A little over one year in and PDI trails by 12.4%. They both have similar SD and their total returns have pretty much moved in tandem since PDI inception until 2020. PDI has never recovered to the degree that SPY has since the post Covid crash. If prices stay flattish for both and they continue to move in tandem, then shouldn't the higher PDI payout eventually win out? Is "higher for longer" more or less detrimental to PDI or SPY?
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Post by Chahta on Jan 10, 2024 13:14:20 GMT
--Guilty of under-managing my own portfolio, while excelling at some others portfolios. I am embarrassed to say that my stepson's 2-fund portfolio, which I set up for him and on which I expended about 30 minutes effort during the year, well outperformed my vastly more sophisticated 20-fund portfolio which I monitor daily and have spent hundreds of hours crafting and tinkering with. With all due respect, are you smarter than Bogle? Asking for someone else.  |
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Post by racqueteer on Jan 10, 2024 13:54:07 GMT
Imo. the huge outperformance of PDI during the post-financial crisis years is probably not going to ever be repeated. The fund purchased assets which were seriously mispriced at the time; so the fund was punching way over its weight, and those assets have been gradually rolling off the asset list ever since. To beat the S&P, you have to dependably average an approximate TR on investment of 10% a year. What contractually obligated. dependable asset can PDI purchase which reliably returns more than 10% a year? If I'm missing some nuance in logic, feel free to school me, but I can't see how that is going to happen.
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Post by Broozer on Jan 10, 2024 14:18:23 GMT
Nope. He was offered several times. Trolling for a little reaction here, fellas? No, of course not. (PS: I wouldn't take the bet either.) I was seriously curious, after reading his numerous posts on this board about the subject.
It would be an interesting bet, IMO. Have bonds bottomed out? Will there be a "debt crisis"? World war? (I'll know the answer to all those when I get my crystal ball back next week; it's in for a major overhaul  ). |
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Post by Norbert on Jan 10, 2024 14:37:01 GMT
Imo. the huge outperformance of PDI during the post-financial crisis years is probably not going to ever be repeated. The fund purchased assets which were seriously mispriced at the time; so the fund was punching way over its weight, and those assets have been gradually rolling off the asset list ever since. To beat the S&P, you have to dependably average an approximate TR on investment of 10% a year. What contractually obligated. dependable asset can PDI purchase which reliably returns more than 10% a year? If I'm missing some nuance in logic, feel free to school me, but I can't see how that is going to happen. Leverage? No, seriously, you're right. There were tremendous opportunities in the MBS space and Pimco took advantage. That's history now. |
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Post by rhythmmethod on Jan 10, 2024 15:46:33 GMT
People need to align expectations for these high-yield/high-risk products. If one is counting on high-performance total return, they will likely be disappointed. PIMCO CEFs will most likely deliver if the goal is high cash flow to guard against spending down during market underperformance. Comparing it against S & P is a moot point.
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Post by yogibearbull on Jan 10, 2024 16:03:00 GMT
During the GFC, when the opportunity rose, Ivascyn at Pimco hired 200+ mortgage analysts to go through available mortgages one by one and stuff the good ones into PIMIX, PDI, etc. That was unheard of. The same opportunities were available to others but they didn't jump in like that. Just buying random pools of MBS didn't work.
Yes, it was one time, but If Pimco did this before, it can do it again WHEN THE NEXT OPPORTUNITY COMES ALONG.
Pimco has occasional misfires too.
So, I have exposure to Pimco (basically, Ivascyn & Murata), and OEF PIMIX, ETF PYLD; CEFs PAXS, PDO, PDI are just incidental.
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Post by anitya on Jan 10, 2024 17:57:48 GMT
Which one of PIMCO CEFs has the most special situations/ distressed debt? Pick a CEF with that content and with leverage it can beat SPY. With AI craze to last a few years, it is difficult to beat SPY.
PDO launched in Jan 2021 and PAXS in Jan 2022. From a timing POV, could PDX have had the most opportunity for distressed debt?
Are there equity CEFs that can beat SPY, without massive increase in volatility?
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Post by FD1000 on Jan 10, 2024 18:13:15 GMT
R48, I would not take the 5 years bet? First, I don't bet based on the unknown. I hardly bet in general anyway. Second, I concentrate on what I do best, avoid meltdown in critical moments and making money very safely...which are way more critical. All I know is that I have been trashing PDI since 2019 BASED ON CURRENT market conditions + Charts/price...and the results are clear. In 5 years SPY performance was 5+ times better(not 50% better 5+ times) and SPY SD+Sharpe ratio are better too. Think about it the best FI team in the world generates an incredible low performance for a volatile fund. But wait, your bet already started at the end of 2022(please don't move the goal post)....and "surprise", in 2023 SPY did more than double of PDI. So R48, I'm trying to stay out of this thread as I promised. Just keep discussing PDI and please don't bring me in...again. |
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Post by Broozer on Jan 10, 2024 18:35:05 GMT
R48, I would not take the 5 years bet? So R48, I'm trying to stay out of this thread as I promised. Just keep discussing PDI and please don't bring me in...again. I think I mentioned you first.  |
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Post by archer on Jan 10, 2024 19:00:06 GMT
This thread was first diverted to a discussion on cognitive decline which I admit to taking part in, and later diverted to FD himself rather than his OP. I am finding this thread informative other than the diversions and fear it will be closed soon if we don't stay on topic. Whataya say folks?
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Post by Norbert on Jan 10, 2024 19:15:09 GMT
R48, I would not take the 5 years bet? So R48, I'm trying to stay out of this thread as I promised. Just keep discussing PDI and please don't bring me in...again. I think I mentioned you first. FD has told us about 50 million times that the S&P 500 has been clobbering PDI. Past tense. Given his strong convictions based on past performance, it's reasonable to wonder why he won't take a position about future performance. |
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Post by retiredat48 on Jan 10, 2024 19:53:00 GMT
Imo. the huge outperformance of PDI during the post-financial crisis years is probably not going to ever be repeated. The fund purchased assets which were seriously mispriced at the time; so the fund was punching way over its weight, and those assets have been gradually rolling off the asset list ever since. To beat the S&P, you have to dependably average an approximate TR on investment of 10% a year. What contractually obligated. dependable asset can PDI purchase which reliably returns more than 10% a year? If I'm missing some nuance in logic, feel free to school me, but I can't see how that is going to happen. , Chahta , racqueteer , Broozer , Norbert , rhythmmethod , yogibearbull , anitya , FD1000 , archer ,... What you are missing is your bold assumption S&P500 will return 10% a year or more.S&P now dominated by the magnificent seven. To me, more likely is that the Mag 7 will be FLAT after next five years, thus the S&P having poor performance. Mag seven may be even down after five more years. Doesn't anyone sense this car is running out of gas...and history says stock sectors do not go to the moon, forever!! The savior for the mag 7 may be Artificial Intelligence theme, and why I continue to have a large holding in FSPTX. BTW I lived with a flat market, Dow 1000 in 1966 to Dow 1000, 1981...about a decade and a half. Sure can happen. BTW#2...a decade after the 2001 high tech meltdown, high tech (mag 7) was a laggard for a decade. BTW #3...during the great DEPRESSION, bonds/fixed income actually fared quite well. So I expect PDI with high starting yields currently to be near the top of the class going forward. Place your bets now. R48 Note the thread is about PDI; I have been on-topic and see no need to shut anything down. |
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Post by steelpony10 on Jan 10, 2024 20:47:08 GMT
retiredat48 , Starting under current market conditions with an unknown future shift to the next market step up I’d bet on PDI. 1. Current 14% distributions until they get changed would beat the 1.5% yields of say VOO. That continues after any changes. 2. When happy days are here again which I believe could be more then 5 years down the line PDI and VOO both raise in value. PDI’s normal value would be about 30%+ more but VOO would outpace this. PDI still continues to crank out greater cash by far. 3. With equity values currently rising while the Fed is fighting higher then normal inflation equity values need to be lower from here to follow slowing or decreasing earnings. 4. If/when consumers seize up and the economy in the face of layoffs goes into a recession the average recovery takes 1.5 years. 5. Reinvesting distributions at 14% can create colossal compounding. Not so with VOO.
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Post by archer on Jan 10, 2024 21:01:06 GMT
retiredat48, Do you mean the market will be where it is now in 5 years or will it start a flat period in 5 years? Historically long term bear markets resulting in flat periods as measured from the start of the bear to the new all time high occurs about every 30 years with a ~20 year bull in between. To stay on schedule we are due for another prolonged flat period around 2033. This is just a long term seasonality metric, so probably not as trustworthy as some other indicators, but if history remains constant we have a few more years to go before another flat period. Is the S&P currently under the same stress as year 2000 or 2007 to bring it on sooner? I'm not seeing a concrete reason for the market not to continue up for another 5-10 years. As for PDI, it has done well during strong stock market gains until a few years ago. With interest rates leveling or lowering, and PDI being a riskier asset as are equities, I think both PDI and equities have a good chance of doing well going forward other than a short term pull back as a reset of 2023 gains. Chart goes back to about 1925. 
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Post by racqueteer on Jan 10, 2024 21:35:38 GMT
Imo. the huge outperformance of PDI during the post-financial crisis years is probably not going to ever be repeated. The fund purchased assets which were seriously mispriced at the time; so the fund was punching way over its weight, and those assets have been gradually rolling off the asset list ever since. To beat the S&P, you have to dependably average an approximate TR on investment of 10% a year. What contractually obligated. dependable asset can PDI purchase which reliably returns more than 10% a year? If I'm missing some nuance in logic, feel free to school me, but I can't see how that is going to happen. R48: "What you are missing is your bold assumption S&P500 will return 10% a year or more."
Firstly, I made no such assumption, bold or otherwise, which matches the statement you have attributing to me. That statement logically results in the S&P returning more than 10% on average and never having a down year!?
What I said was: "dependably average an approximate TR on investment of 10% a year". Those two statements are not remotely the same. Secondly, an "assumption" doesn't require evidence, and yet we have a great many decades of evidence that support my statement. Might it not come true during the coming decade? Well, of course; just as your guess might not. I presented irrefutable data, however; where is yours? Thirdly, I'm still not seeing any logical way to generate a 10%, dependable, even best case, average TR, when interest rates are sub-10% for any kind of dependable loan of funds.
steelpony10: "Current 14% distributions until they get changed would beat the 1.5% yields of say VOO."
Which is irrelevant to this discussion, since neither "distributions" nor "yields" equate to TR. One can arbitrarily establish either of these values at any level one desires, but TR is what it is.
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Post by steelpony10 on Jan 10, 2024 22:27:10 GMT
racqueteer , I’m not aware of any other definition but this: www.investopedia.com/terms/t/totalreturn.asp With the economies worldwide in the doldrums including our trading partners And not knowing the future I’d play the most favorable odds at this time. Five years is short term, a flip of the coin.
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Post by racqueteer on Jan 10, 2024 23:48:52 GMT
racqueteer , I’m not aware of any other definition but this: www.investopedia.com/terms/t/totalreturn.asp With the economies worldwide in the doldrums including our trading partners And not knowing the future I’d play the most favorable odds at this time. Five years is short term, a flip of the coin. I'm not sure what that has to do with my discussion with R48, or whether or not you're disputing anything I wrote in response to you (or him)? Fwiw, there's nothing you wrote with which I disagree; I'm just not clear what your point is in relation to what I wrote? |
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Post by habsui on Jan 11, 2024 0:53:29 GMT
To sum up, one argument seems to be that the SP500 may not have the same high average TR that it enjoyed over the last 10-12 years. With higher bond rates, the TR of PDI should be higher as well. So, place your bets.
Personally, none of this makes much sense without blue circles..
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Post by steelpony10 on Jan 11, 2024 1:16:54 GMT
racqueteer , No worries. I was just responding to “place your bets now”. I don’t read any of the other stuff often. Investing isn’t a particular interest but I’ve had experience with equities and CEF’s PDI being a long term holding that has performed well so far. Too much high jingo in the world for equities while bonds have to keep paying something. Sorry for getting into the middle of your discussion by mistake.
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Post by archer on Jan 11, 2024 2:31:24 GMT
Which one of PIMCO CEFs has the most special situations/ distressed debt? Pick a CEF with that content and with leverage it can beat SPY. With AI craze to last a few years, it is difficult to beat SPY. PDO launched in Jan 2021 and PAXS in Jan 2022. From a timing POV, could PDX have had the most opportunity for distressed debt? Are there equity CEFs that can beat SPY, without massive increase in volatility? I too have wondered about equity CEFs. I don't know of any high yielding funds of any kind that have a TR comparable to SPY. The only equity CEF I know of is EXG. It has lagged SPY going back to inception, and only about 25% more volatile, but it is currently at a 12% discount, and at least doesn't have a negative TR. Yields about 9-10%. It doesn't have as stable distributions as PDI. www.morningstar.com/cefs/xnys/exg/quote |
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Post by racqueteer on Jan 11, 2024 2:43:29 GMT
To sum up, one argument seems to be that the SP500 may not have the same high average TR that it enjoyed over the last 10-12 years. With higher bond rates, the TR of PDI should be higher as well. So, place your bets.
Personally, none of this makes much sense without blue circles..
Not meaning to nitpick, but the last ten years averaged 13.1%, not the 9.81% (approximately 10%) that the S&P has returned since inception. One is a very long-term average; the other is quite short-term and obviously deviates from the long-term average. The bet was to be that over five years (now less than four), the TR of PDI would exceed that of the S&P. True, it is unlikely that the S&P repeats its last ten-year average, but no one was claiming it would. As to "higher bond rates", aren't most of us expecting rates to fall over this next four years?
My question remains: Given the average return of the S&P, the dropping of rates, and the existing one-year lead the S&P enjoys, just how does PDI beat the TR of the S&P during this period? What's a reasonable scenario for that to occur without taking a lot of chances with the invested capital? Sure, the S&P might have a bad streak and perform really poorly, but I can't see any other way this could work out.
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Post by Norbert on Jan 11, 2024 3:22:51 GMT
To sum up, one argument seems to be that the SP500 may not have the same high average TR that it enjoyed over the last 10-12 years. With higher bond rates, the TR of PDI should be higher as well. So, place your bets.
Personally, none of this makes much sense without blue circles..
Not meaning to nitpick, but the last ten years averaged 13.1%, not the 9.81% (approximately 10%) that the S&P has returned since inception. One is a very long-term average; the other is quite short-term and obviously deviates from the long-term average. The bet was to be that over five years (now less than four), the TR of PDI would exceed that of the S&P. True, it is unlikely that the S&P repeats its last ten-year average, but no one was claiming it would. As to "higher bond rates", aren't most of us expecting rates to fall over this next four years?
My question remains: Given the average return of the S&P, the dropping of rates, and the existing one-year lead the S&P enjoys, just how does PDI beat the TR of the S&P during this period? What's a reasonable scenario for that to occur without taking a lot of chances with the invested capital? Sure, the S&P might have a bad streak and perform really poorly, but I can't see any other way this could work out.
I think R48 is arguing that stocks might be entering a flat period for several years, not different than the flat periods shown on his chart. I remember 2000-2010, a decade when the S&P 500 had near 0% average returns. It could happen again considering the Mag 7 valuations, tricky geopolitical risks, debt levels, and the crazy polarized political atmosphere. We don't know where interest rates are going, but PDI might actually be the safer bet at this point. Obviously all this is pure speculation based on hunches. But, R48's hunches are sometimes pretty good. |
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Post by anitya on Jan 11, 2024 3:25:31 GMT
Which one of PIMCO CEFs has the most special situations/ distressed debt? Pick a CEF with that content and with leverage it can beat SPY. With AI craze to last a few years, it is difficult to beat SPY. PDO launched in Jan 2021 and PAXS in Jan 2022. From a timing POV, could PDX have had the most opportunity for distressed debt? Are there equity CEFs that can beat SPY, without massive increase in volatility? I too have wondered about equity CEFs. I don't know of any high yielding funds of any kind that have a TR comparable to SPY. The only equity CEF I know of is EXG. It has lagged SPY going back to inception, and only about 25% more volatile, but it is currently at a 12% discount, and at least doesn't have a negative TR. Yields about 9-10%. It doesn't have as stable distributions as PDI. www.morningstar.com/cefs/xnys/exg/quoteYou are right. The discussion does not seem to be geared towards providing or generating useful information for any one. People who invest in PDI for the most part are not total return investors. And even many of those that are total return investors have their reasons for investing in it. So, why bother comparing PDI to SPY. If one is a total return investor, one should care about volatility only to the extent of impairment to meet one 's needs. Not just any volatility or comparing volatility of two investments. Go invest in QQQ if there is no potential for impairment of meeting your needs. PDI did fine until beginning of Covid. So, you have a clear point in time things changed. Ask the right questions about the cause and effect for the past and the future if one is serious. If one is a thorough professional they may not even need to ask about the past but that is not most of us. I hope posters turn serious about evaluating its investability, rather than providing entertainment which is what I see so far. We are not a Church here to shove a mirror in people's faces and tell them to look at themselves and admit that their ways are wrong. (Comment not geared at any specific one but I see many posts in the forum and some in this thread that fit this description.) Any way, I do not own PDI and do not anticipate participating in this thread. I hope you get something out of this thread. |
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Post by Norbert on Jan 11, 2024 4:13:58 GMT
"I do not own PDI and do not anticipate participating in this thread." Too late, anitya! You can't have your cake and also eat it. Personally, I think it's useful to speculate about alternative future investing scenarios. R48's bet may seem a bit wild, but the future may well surprise us. It's wise be prepared for anything. The thread is thought provoking and it's fun; that's what posting here is mainly about for Yours Truly. If you don't find it useful, just move on. No need to scold us. By the way, I don't agree that CEFs like PDI are just for income investors. |
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Post by retiredat48 on Jan 11, 2024 5:57:22 GMT
R48: "What you are missing is your bold assumption S&P500 will return 10% a year or more."
Rac: Firstly, I made no such assumption, bold or otherwise, which matches the statement you have attributing to me. That statement logically results in the S&P returning more than 10% on average and never having a down year!?
R48 reply: Rac, I didn't mean to be argumentative, but I re-read your sentence several times and what else does this sentence mean: "To beat the S&P, you have to dependably average an approximate TR on investment of 10% a year." I offered a bet, which is forward going. You suggested that to beat the S&P you need to beat 10% a year on average. So you are predicting or stating the S&P500 will do 10% each year on average for the next five years.
Rac: What I said was: "dependably average an approximate TR on investment of 10% a year". Those two statements are not remotely the same. Secondly, an "assumption" doesn't require evidence, and yet we have a great many decades of evidence that support my statement. Might it not come true during the coming decade? Well, of course; just as your guess might not. I presented irrefutable data, however; where is yours?
R48 reply: I don't get this. I presented evidence of flat markets, such as Dow 1000 to Dow 1000 for 16 years. So obviously the S&P can or might be flat the next five years!! Yes, the S&P has a historic average to it, but we are now at a high. And the bulk of the S&P500, dominated mag 7, is at a very, very high. I provided evidence (2001 to 2009) of how the mag 7 was very laggard in the past.
Raq: Thirdly, I'm still not seeing any logical way to generate a 10%, dependable, even best case, average TR, when interest rates are sub-10% for any kind of dependable loan of funds.
R48 reply: Let me explain. PDI owns mortgages among other things. With rates doubling, mortgages on a "mark to market" basis are way down...deeply discounted. Thus the PDI NAV decline. HOWEVER, the mortgage holder cannot pay off with a discount; they must pay face value. This is a built in cap gain for PDI. Alternatively, PDI can sell the depressed price mortgage now and buy new ones at double the old mortgage rate. This will result in a rising yield/dividend/distribution. More income. Coupled with the leverage, one sees how the 14% current yield (fixed dividend) can not only be continued but perhaps grows as well.
steelpony10: "Current 14% distributions until they get changed would beat the 1.5% yields of say VOO."
Raq: Which is irrelevant to this discussion, since neither "distributions" nor "yields" equate to TR. One can arbitrarily establish either of these values at any level one desires, but TR is what it is.
R48 reply...I don't understand this also Raq. Distributions are clearly part of "total return", no?? The PDI dividends today are what they are (and BTW no cuts in past year). This will be received regardless of PDI price, until management lowers or raises them. They are simply part of total return. I actually expect from my high yield funds to get a yield MINUS nav price declines. Such as, PDI returns 14% a year, the price will likely decline by 2% a year, or an average annual return of 12%, thus beating the S&P.
R48
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Post by retiredat48 on Feb 7, 2024 16:29:46 GMT
Hmmm. PDI at $19.52/share today. Guess my change to "dividend reinvest" five months ago is paying off.
R48
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