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Post by FD1000 on May 16, 2022 13:11:14 GMT
If I remember correctly, you have about 40,40,20 and just play the edges. Bonds, and especially high-rated bond funds have been losing since 09/2021. The chart of funds such as DODIX,FLAAX and most others is so clear, just losing. So, when you use your cash to add to losing funds, you actually lose even more. In fact, in the last one month, FLAAX lost -5.6%. The performance includes all the dist, which means you still lose money regardless. I sold my munis last year and all my portfolio months ago.
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Post by mozart522 on May 16, 2022 13:34:00 GMT
@sara "Edit - Wow - just looked at BND. Guess it's better than losing double digits in purchasing power holding cash? Crazy times."
Why would it be better to hold BND than cash now? BND is just cash sitting in a fund. If BND declines 10% from say 100K to 90K, that 90K loses purchasing power at the same rate as cash.
Or am I not reading your edit correctly?
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Post by fishingrod on May 16, 2022 15:00:32 GMT
Yields are up sharply in funds that were hardly paying anything before.
3.09% SEC yld on BND, down (15.43%) off 52week high
3.65% SEC yld on VWALX down (17.32%) off 52week high How much more will they decline is the Question.
People have been yield starved for years.
I expect that 3.65% tax free VWALX will look attractive to some any time now.
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Post by win1177 on May 16, 2022 15:34:53 GMT
Yields are up sharply in funds that were hardly paying anything before.
3.09% SEC yld on BND, down (15.43%) off 52week high
3.65% SEC yld on VWALX down (17.32%) off 52week high How much more will they decline is the Question.
People have been yield starved for years.
I expect that 3.65% tax free VWALX will look attractive to some any time now.
I’m starting to get interested! That’s a good yield, especially tax free! Still wont beat inflation, but getting better. Win
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Post by chang on May 16, 2022 16:18:07 GMT
After a slaughter, I would use CEFs first, maximize the easy money, and then shift into OEFs.
CEF discounts need to be > 10-15% to attract me.
Charts are concave down and plunging. Why buy now? At least wait for an inflection point and the possibility of a bottom. NMZ/NEV down 23%/26% YTD and still plummeting. PMF/L/X down 25-30% YTD.
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Post by richardsok on May 16, 2022 18:23:26 GMT
Yields are up sharply in funds that were hardly paying anything before.
3.09% SEC yld on BND, down (15.43%) off 52week high
3.65% SEC yld on VWALX down (17.32%) off 52week high How much more will they decline is the Question.
People have been yield starved for years.
I expect that 3.65% tax free VWALX will look attractive to some any time now.
I’m starting to get interested! That’s a good yield, especially tax free! Still wont beat inflation, but getting better. Win I dunno, win. Doesn't it depend on severity of Fed tightening ahead? Incidentally, PMF is throwing off 6% tax free and chart is currently low like all the other muni funds. I just don't want to be a long term holder in case they CONTINUE lower. I-bonds paying about 10% ! !
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Post by win1177 on May 16, 2022 18:39:14 GMT
I’m starting to get interested! That’s a good yield, especially tax free! Still wont beat inflation, but getting better. Win I dunno, win. Doesn't it depend on severity of Fed tightening ahead? Incidentally, PMF is throwing off 6% tax free and chart is currently low like all the other muni funds. I just don't want to be a long term holder in case they CONTINUE lower. I-bonds paying about 10% ! ! Richard, I’m not adding any yet. I just have been following muni bond rates, and glad to see them coming up (slowly). I think it is still too early to go back into bonds (muni or otherwise), but Im watching them. I am currently essentially OUT of fixed income, have less than a 0.5% position in a foreign bond fund (VTABX), may sell it as it’s been a marginal performer over the years. All that money (~15% of portfolio) is sitting in cash, earning next to nothing. I have a brother in law who was a bond trader at Lehman for years, he also says “wait” for now, I’m basically just watching for now. I am not happy having so much in cash, BUT I was losing even more in bond funds. ESPECIALLY the bond funds I had- higher quality govt./ investment grade and higher quality munis (for their “safety” and equity counter- balance). Glad I got out earlier this year. I- bonds look interesting, but limited in amount you can deploy each year. Haven’t put any money there (yet). Win
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Post by fishingrod on May 16, 2022 19:47:44 GMT
Today looks like it will be the first day UP for munis since 2/25/2022. Not really but it feels like it.
Maybe. Just a little. MUB closed up .13%
I see a trend forming. Lol
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Post by oldskeet on May 18, 2022 7:30:28 GMT
Hi FD1000,, In review and in response to your above comment. My muni fund buy strategy is to raise my position in my muni funds from about 8% to 12%, or better, within my income sleeve. The best time to do this, from my perspective, is in falling asset prices. Currently, FLAAX and NVHAX both have yields of tax free income in the 3.2% range. My fixed income sleeve (at about a 15% weighting) and my hybrid income sleeve (at about a 25% weighting) when combined make up about 40% of my overall portfolio. I have twelve investment positions in each sleeve. I continue to buy muni income with a good bit of the income generation that my portfolio produces. Even though muni fund net asset values have been falling bonds generally mature at face value plus yields are on the rise. Bonds get priced at what they trade at and not what they mature at. Being a long term investor I plan to hold my muni funds for the long term. As bonds mature then the proceeds generally get used to buy new bonds at the higher prevailing yields in a rising interest rate environment. Plus, along the way I get to continue to enjoy the income benefit they provide. If I sell out I lose the income benefit. While falling net asset values seem to trouble you I consider them my friend because as I can buy more shares along the way thus increasing the size of my income sleeve's footprint along with the income that it produces. I have been doing this for years upon years and I have no plans to change my mode of investing. You seem to have a problem in accepting that others do not invest the same way as you. Old_Skeet
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Post by alvinthechipmunk on May 18, 2022 7:48:35 GMT
"Munis? What munis? We don't have no munis. We don't have to show you any munis! ... We don't need no stinking munis." www.youtube.com/watch?v=VqomZQMZQCQ. I suppose if I were to imbibe, I'd go for the yield, with HY munis.
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Post by chang on May 18, 2022 9:29:15 GMT
The best time to do this, from my perspective, is in falling asset prices. I am not opposed to "averaging down". Unlike momentum investors, who never average down, I think it can make sense. If you are a long term value investor, and have calculated the value of company ABC at $50/share, and you buy it at $40, you might decide to add more at $35. (Assuming you are well aware of "value trap" risk.) However, I don't think this applies to buying bonds for income. IMO dividend income rarely, if ever, makes up for rapidly falling prices. Yes, I know the "thumb rule" that bonds should return their initial yield if held (with dividends reinvested) over their duration. But I believe this breaks down in periods of excessive volatility, especially with short duration bonds/funds. (In 2020, some ST funds with 1-2 year durations lost > 30%!) And if you aren't reinvesting dividends, then forget it. Personally, I need to see yields top out before I buy. I don't think anyone knows when and where that will be. ^TNX shows that the 10Y Treasury yield fell from 12% to 0% from 1985-2020, in almost a straight line. Now it's back up to 3%. Where will it end? That's an answer I want to know before I buy. JMO ... I agree there are a hundred roads to Dublin and investing success (except crypto).
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Deleted
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Post by Deleted on May 18, 2022 11:21:43 GMT
I've been out of munis for awhile. Almost all cash in taxable account, half of which will pay for a new home in a few months. I didn't reinvest distributions when I held them, too many tax complications and not always at a good price. I do appreciate the idea of a cash cow to buy more shares, but not necessarily those of the same security.
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Post by anitya on May 18, 2022 17:16:31 GMT
If eager to buy any fixed income that is not for a quick trade, I would buy individual bonds not funds. I probably would say that for equities as well but equities are lower on the balance sheet and may require more skill to evaluate and luck to time buy and sell correctly.
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Post by Chahta on May 24, 2022 1:39:39 GMT
First day in quite a while that munis moved opposite the 10 yr. (TNX).
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Post by fishingrod on May 27, 2022 0:10:53 GMT
VWALX Vanguard High Yield Tax Exempt is up 3.83% since 5/18/2022
Up every day since. That was a little trend and a dead cat bounce. lol
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Post by anitya on May 27, 2022 0:35:25 GMT
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Post by oldskeet on May 27, 2022 10:39:25 GMT
Hi guys. For the rolling week my to muni funds, FLAAX and NVHAX, are up +4.73% and 2.77% respectfully. As Gomer Pyle use to say, Surprise, Surprise, Surprise!
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Post by uncleharley on May 27, 2022 12:41:52 GMT
Maybe the current consensus is that the .5% raise in overnight rates has whipped inflation. The PCE report is due in a couple of hrs. What was that old saying? Buy the rumor, sell the news?? This should be an interesting day.
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Post by Chahta on May 27, 2022 12:52:57 GMT
Maybe the current consensus is that the .5% raise in overnight rates has whipped inflation. The PCE report is due in a couple of hrs. What was that old saying? Buy the rumor, sell the news?? This should be an interesting day. or looking past inflation to a coming recession. Munis should do well in a recession and they are (were) over sold.
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Post by fishingrod on May 27, 2022 13:20:11 GMT
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Post by uncleharley on May 27, 2022 16:29:26 GMT
Well, 6.3% is better than 6.6, but methinks we still are in a rising rate environment. Muni's will do well in a declining rate environment which frequently accompanies a recession.
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Post by FD1000 on May 28, 2022 14:02:09 GMT
Since last week, several HY Muni OEFs made 5-7% But, Muni CEFs had top performance among CEFs. I don't follow CEFs but several made 11+%
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Post by Chahta on May 31, 2022 22:27:56 GMT
Muni funds are on fire. They increase in the face of TNX/TYX increasing at the same time. I realize this rally may end once sanity returns. But they were one of the most over-sold FI assets. Proves Smart Money moves investments.
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Post by Chahta on Jun 19, 2022 14:59:17 GMT
Looking at the M* portfolio page info on muni funds, they seem to have very high (well over par) "Weighted Price" values, even after the rout of the last few months. Many MS funds are low which makes sense. Don't understand that about muni funds.
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Post by fishingrod on Jun 19, 2022 15:46:56 GMT
Looking at the M* portfolio page info on muni funds, they seem to have very high (well over par) "Weighted Price" values, even after the rout of the last few months. Many MS funds are low which makes sense. Don't understand that about muni funds.
Some of the bonds held before the crash were at 15% premium inside some bond funds. And remember that M* info is from March/31/2022 in most cases, more than 3 months behind, and that is if it is updated.
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hondo
Commander
Posts: 145
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Post by hondo on Jun 19, 2022 16:02:04 GMT
I've been reading this thread and I don't think anyone has mentioned 'defaults'. With a recession likely, if not already here, and the financial condition of many large cities, is anyone concerned about defaults of some High Yield Muni Bonds?
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Post by fishingrod on Jun 19, 2022 16:09:09 GMT
I've been reading this thread and I don't think anyone has mentioned 'defaults'. With a recession likely, if not already here, and the financial condition of many large cities, is anyone concerned about defaults of some High Yield Muni Bonds? Some funds would concern me but the Vanguard ones I own are pretty tame.
Although the muni market spread seems to be pricing in a 10% default rate.
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hondo
Commander
Posts: 145
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Post by hondo on Jun 19, 2022 17:09:12 GMT
I also use the Vanguard munis and agree they seem to be pretty tame. They stay on the high end of bond grades. Mostly BBB and above. The 10% predicted default rate is concerning.
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Post by FD1000 on Jun 19, 2022 23:52:24 GMT
If you want to buy "safer" bonds, you use VG. If you want to make more money, you don't. If you want to take more risk, use VWALX, it's HY Munis but with higher rating than any other HY Muni I know.
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Post by steelpony10 on Jun 20, 2022 0:10:59 GMT
I've been reading this thread and I don't think anyone has mentioned 'defaults'. With a recession likely, if not already here, and the financial condition of many large cities, is anyone concerned about defaults of some High Yield Muni Bonds? Acknowledging there’s something wrong with every investment and method including holding large cash reserves most of us should know that. We currently hold VWAHX a fairly long, probably higher risk HY muni fund currently paying out 2.8% getting eaten up by 8% inflation. It has 3500+ holdings. There should be some bad ones in there. The management has been great for years so I’m fairly sure they can handle it. I look forward to locking in higher rates after this rate hike cycle down the line for quite some time.
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