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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Money Market Funds or Bond Funds?
    We haven't heard much from JohnN in quite a while.
    @JohnN was among the kind folks who weighed in on my “burning” question - What’s the most you’d ever invest in a single stock?” last August.
    Here’s the thread
    Sounds like he had 15% in TSLA then. Hope it’s working for him.
    I continue to struggle with the same question. Recently I sold off two stocks, leaving just one that I believe is a good long term hold. Hours of backward looking research (covering more than 15 years). Anyhow … it’s at 5% and “diluted” with a like amount in a short term bond fund (playing name games here). So that combined they comprise a 10% portfolio sleeve. Intend to keep them in relative balance over time as a risk mitigation measure.
    hank in Fund Discussions
  • Buy Sell Why: ad infinitum.
    Had second thoughts about holding ET, so sold out of that 3-month-old position and will replace with WMB once my buy order fires. I'm thinking WMB has a more strategic portfolio and more stable/recurring revenue flows than ET. Paying about a 5.3% QDI right now.
    Also putting in order to re-enter PFE at 27.50. Like INTC a few years ago it's a hated stock that's paying a solid dividend -- I'm hoping it, like INTC, is able to manage a similar turnaround as it reforms its pipeline prospects in the coming years. But at over 6% QDI on DRIP is probably good enough to be paid to wait.
    Also stalking BIZD @ 16 as a rates-play on private equity dealmaking coming back if/when rates go down and potentially ASGI a bit lower for more infrastructure/utes.
    rforno in Fund Discussions
  • Relying On Stock Investments For Income After Retiring
    @davfor ...in an ideal world, the dividends/distributions generated in your IRA would sufficiently cover your RMDs as well.
    I'll take you word for it. But, I don't face any RMD requirements. So, that's an uncharted world to me. About 90% of my investment $'s are invested in a taxable account. That account is the focus of my annual withdrawal ruminations. During most of my working years, available cash was funneled into a weekend real estate investing hobby. The limited $'s that were set aside in a tax deferred retirement account were withdrawn in annual steps from the age of 55 when I retired until the age of 62 when I began to collect social security.
    davfor davfor in Fund Discussions
  • Relying On Stock Investments For Income After Retiring
    Thanks @MikeM ...yes, I believe that article was a part of the conversation. I found the worksheet I had mention which calculates the optimal withdrawal amounts and their source. Not Kitces, but related.
    https://www.i-orp.com/Plans/index.html
    PRESSmUP PRESSmUP in Fund Discussions
  • Relying On Stock Investments For Income After Retiring
    https://www.kitces.com/wp-content/uploads/2014/11/Kitces-Report-March-2012-20-Years-Of-Safe-Withdrawal-Rate-Research.pdf
    I remember that too, @PRESSmUP. Is this the link-report you are referring to?
    MikeM MikeM in Fund Discussions
  • Relying On Stock Investments For Income After Retiring
    @yogibearbull ...indeed. That approach won't work forever. Several studies have concluded that taking only RMDs would leave a boatload of money when we're less likely to enjoy it...which is why I began taking IRA distributions when I was 59.5.
    @bee had generated a post several years back with an attachment from Kitces with a spreadsheet to determine the most efficient withdrawal strategy, and I've adopted it to this day.
    PRESSmUP PRESSmUP in Fund Discussions
  • Anybody use Schwab Financial Advisors?
    Just my opinion, it's difficult to find honest, great CFPs who are fiduciary and put their clients' interests first. If you are a typical investor, a CFP should be able to come up with a detailed plan in 3 hours and charge you a $1000 (maybe $1500) regardless if you have $300K or $500K, and only based on the complexity. This plan should be good for several years to come, until something major changes. If the clients need help, they should be able to pay by the hour. Think CPA. If you use a CPA, you pay by the hour or the job. The CFP plan doesn't change every year, it's even easier.
    That also means, no ongoing annual fee + setting you up with 5-6 funds max, mostly indexes to show you that it's not brain surgery.
    If the CFPs do the above they will starve. Hence, there is no way to put clients' interests first
    FD1000 in Other Investing
  • Estimated taxes
    My tax liability fluctuates significantly from year to year. Every other year I minimize ordinary income (e.g. limit Roth conversions, use tax-free MMFs) so that I can harvest cap gains at 0% tax rate. In the off years, I minimize cap gains and increase ordinary income (e.g. increase Roth conversion amounts).
    MAGI may be similar from year to year but taxes are very different.
    If some cap gains are taxed at 0% and some at 15%, then every dollar added to ordinary income moves a 0% cap gains dollar into the 15% bracket. So that extra dollar of ordinary income effectively gets taxed at 22% (ordinary rate) + 15% (cap gains rate).
    Similar idea to bunching deductions. Maximize deductions in a year when you're itemizing, and minimize deductions in a year when you're taking a standard deduction.
    msf in Other Investing
  • Estimated taxes
    I am in same boat, but don't want to have to pay taxes until I have to, ie 4/15. I paid last years amount.
    You can also mail them a check if it is postmarked today. However, the amount of penalty for missing a day or two of the deadline is pretty minimal.
    EFTPS works but for some reason I had to reset my pw
    sma3 in Other Investing
  • Estimated taxes
    So long as withholding (plus any estimated taxes paid) cover your 2023 taxes, there's no need to do more. The source of your income (e.g. Roth conversion) doesn't matter - just that you paid in enough to cover taxes.
    FWIW, I usually make payments by credit card. No registration required, and I make about 0.8% in the process. That's 2.625% cash rewards less 1.82% processing fee. One comes out ahead even with a 2% cash rewards card like Fidelity's or (ugh) Wells Fargo's.
    https://www.irs.gov/payments/pay-your-taxes-by-debit-or-credit-card
    Years ago, when there was only one game in town, I used EFTPS. I'm likely still registered. But there are alternatives now.
    msf in Other Investing
  • Anybody use Schwab Financial Advisors?
    Thanks or the information and advice. I have a hard time paying a computer even 0.3% for advice. You are also stuck with their version of Asset Allocation. This has been a major drawback for Vanguard for several years now.
    From what I can tell from a family member's account, at least the Intelligent Portfolios are paying a decent MMF rate on the cash
    Another way Schwab makes money on Intelligent Portfolios is channeling the money into dozens of funds that by themselves would not attract much cash.
    sma3 in Other Investing
  • the caveat to "stocks for the long-term"
    There are periods when actively managed funds beat "the market" (aka S&P 500 in this thread). For example, in the 11 years from 1999 through 2009 S&P 500 index funds beat actively managed LC blend funds only once.
    Given a period when stock funds are beating "the market", what can one say about bond sleeves of balanced funds? Certainly if the balanced funds are not beating "the market", then bonds must be pulling down performance. But if typical balanced funds are still beating "the market", you don't know if the bonds are helping performance, or if they are hurting performance but not by so much that the funds don't underperform "the market".
    To make that determination, you could compare typical balanced funds with typical stock funds.
    As to why "everyone" is beating the market at some time, that could be individual security selection as you suggested, or it could be a general tendency to invest slightly differently from the market (e.g. somewhat more growthy stocks or smaller caps, or in bonds perhaps somewhat lower credit quality). Whatever.
    msf in Fund Discussions
  • the caveat to "stocks for the long-term"
    I couldn't find reinvested SP500 TR for that period
    NYU/Stern spreadsheet:
    https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
    https://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls
    From the spreadsheet (it uses S&P 500 TR for years 1957 et seq.):
    12/1964 investment: $2661.02
    12/1974 value: $3023.54
    Nominal ten year cumulative return: positive 13.62%.
    Showing once again that memories and speculation are no match for cold, hard numbers :-)
    The spreadsheet (if you download the xls version) has several sheets containing explanations, raw data, etc. Very helpful in understanding the figures.
    Divs between 1965 and 1973 inclusive tended to run a shade over 3%, and 1974 divs were 5.43%. That seems about right to account for a 32.72% swing in returns between price only and total return.
    Still, losing 32% in real dollars (calculated from spreadsheet) including reinvested divs is painful.
    msf in Fund Discussions
  • the caveat to "stocks for the long-term"
    Market has good times and bad times.
    Indeed. Another venerable balanced fund, PGEOX, outperformed FPURX for 8.5 years starting 12/31/64, before falling behind in the last 1.5 years of that 10 year span.
    Funds are not static, they evolve and adapt.
    For example, in 2008, Puritan explicitly changed from "emphasizing above-average income-producing equity securities, which tends to lead to investments in stocks that have more 'value' characteristics than 'growth' characteristics" to a fund that "is not constrained by any particular investment style. At any given time, FMR may tend to buy 'growth' stocks or 'value' stocks, or a combination of both types."
    Here are descriptions of how a couple of its peers changed over decades:
    Initially focusing on a simple mix of blue-chip stocks and high-grade bonds, [the George Putnam Balanced Fund] has expanded its universe over the years, incorporating international equities, high-yield bonds, and even alternative investments to diversify and enhance returns.
    The management of the fund has also transitioned from a primarily fundamental, research-driven approach to one that incorporates technical analysis and global economic trends. This evolution reflects the fund’s commitment to maintaining its foundational principles while adapting to the complexities of the modern financial world.
    ...
    Originally a hybrid of stocks and bonds, the[Wellington] fund has continually recalibrated its asset mix in response to economic cycles. During periods of market exuberance, such as the post-World War II boom and the late 20th-century bull markets, the fund shifted towards a higher allocation in stocks to capture growth.
    Conversely, in times of economic downturns and uncertainties, like the oil crises of the 1970s and the financial crisis of 2008, the fund increased its bond holdings, prioritizing capital preservation and income. The Wellington Fund’s management has been characterized by a blend of historical wisdom and a forward-looking approach, consistently adapting to the ever-evolving market dynamics.
    https://pictureperfectportfolios.com/what-are-the-oldest-mutual-funds-historic-investments-revealed/
    Whether these and other fund changes have handled markets in good times and bad I leave for others to decide. The point here (since someone keeps asking me what the point is) is that these may not be your father's (or your grandfather's) funds. It's fun to see how they did half a century ago, but is it meaningful?
    msf in Fund Discussions
  • the caveat to "stocks for the long-term"
    \\\FPURX from Jan '73 to summer '82, Ray Gun era, way more than doubles. Granted the end period was a time of 15% inflation
    \\\ Inflation in 1974 (the era of Watergate and Whip Inflation Now) was about the same as inflation in 1980 - a shade over 12%. There was no calendar year with 15% inflation. It peaked at 13¼% in 1979.
    As so often, I cannot tell your point except to be contrary.
    The points are that memories fade, people remember things as worse (or better) than they were (back when I went to school I walked ten miles in the snow uphill both ways), and that it's easy enough to pull up the actual data if the numbers support what people remember. Such as ...

    \\\ three-month CDs in early May 1981 paid about 18.3 percent APY, according to data from the St. Louis Federal Reserve.
    Interesting factoid, but only circumstantial evidence of inflation. Connect the dots. What was the spread between CD rates and inflation? It may be negative now (CDs yielding less than inflation), but that doesn't mean that CDs weren't providing significant real returns in the 80s. They were, and without knowing that spread, we can't say much about the inflation rate from CDs.
    Also, it's easy enough to link to sources if one is so inclined. Since you like the St. Louis Fed, here's its inflation data in tabular and graphic forms.
    to summer '82 ... the end period was a time of 15% inflation
    You questioned my selection of calendar year figures. What would you have preferred? Annual inflation as of the summer of '82? FPURX hit its 1982 peak on June 15th.
    If my point were to be contrary, I'd quibble that this date wasn't in the summer. But my intent is to look at real data, not faded memories. So let's look at June 1982. Prices had risen over the past 12 months (not calendar year) by 7.1%. Less than half of 15%. (Source: BLS)
    You wrote (pardon my paraphrasing) that you couldn't understand how investments such as FPURX could rise so much in nominal terms (1973-1984) while the market just broke even in real terms (Hulbert). By conceding that inflation was high at the "end period" of 1973-summer 1982, you implied that inflation was not so high at other times as to explain the apparent contradiction.
    My response in part was to point out (with actual data) that your memory of inflation was fuzzy. Though inflation in the "end period" was not quite as high as you remembered, it was high throughout the 12 year span and in fact was virtually as high in 1974 as it was in 1980. That goes part of the way to explaining what you saw as a contradiction.
    The rest of the explanation had to do with your selection of reference fund. There were multiple issues there.

    \\\ Adjusted for inflation, the cumulative return of the S&P 500 over the calendar years 1973-1984 was 0.0266%. Unadjusted, it was 148%.
    Yes, why I chose a balanced fund. Is FPURX an outlier? Should I have chosen something other?
    As I showed in the data below, FPURX well outperformed reputable, well known peers. Those peers, VWINX and VWELX still demonstrated your point (that balanced funds could outperform the market) while looking less like cherry picking.

    \\\ In a time when fund managers could get inside information (no Reg FD), it wasn't hard for managers to beat the market. Puritan was especially successful, but lots of well known stock and balanced funds beat that 148% nominal return, such as VWINX (211%), FFIDX (201%), DODGX (193%), VWELX (175%).
    Ah, that must be it. Entirely! Of course the two middle ones are stock funds, no?
    So ... is there a point here?
    The fact that stock funds could perform as well as balanced funds suggests that it might not be stocks vs. bonds, but rather active vs. passive. As I noted, it was not that difficult for well researched and well connected active management to outperform. Merely showing that an outlier balanced fund (or a typical balanced fund) outperformed the market is not sufficient to show that the bond sleeve helped. Not when pure stock funds were achieving similar returns.
    Bonds may not even have helped. It depends on which bonds and how they were used. In nominal terms, S&P 500 returned 148% over12 years, 1983-1984 and 10 year Treasuries just 110%, though Baa corporates returned 168%. Data again from NYU/Stern spreadsheet.
    msf in Fund Discussions
  • Excellent Barron’s Roundtable / 1/15/24 Edition
    Good article, indeed. Interesting that they even mentioned deglobalization and supply chain changes. If this change becomes permanent, the investable universe would becomes much smaller.
    @Crash, Devo, our MFO contributor posted a nice article on oversea investing this month. It pretty much sum up my thinking in recent years. If one ventures into EM, make sure you pick experience fund managers, not indexing.
    Sven in Other Investing
  • the caveat to "stocks for the long-term"
    FPURX from Jan '73 to summer '82, Ray Gun era, way more than doubles. Granted the end period was a time of 15% inflation
    \\\ Inflation in 1974 (the era of Watergate and Whip Inflation Now) was about the same as inflation in 1980 - a shade over 12%. There was no calendar year with 15% inflation. It peaked at 13¼% in 1979.
    As so often, I cannot tell your point except to be contrary.
    Calendar year, huh.
    Undergoing a divorce at the time I cashed in my ex's CDs ...
    \\\ three-month CDs in early May 1981 paid about 18.3 percent APY, according to data from the St. Louis Federal Reserve.

    but I did not want to exaggerate in my post lest I be rebutted.
    \\\ Adjusted for inflation, the cumulative return of the S&P 500 over the calendar years 1973-1984 was 0.0266%. Unadjusted, it was 148%.
    Yes, why I chose a balanced fund. Is FPURX an outlier? Should I have chosen something other?
    \\\ In a time when fund managers could get inside information (no Reg FD), it wasn't hard for managers to beat the market. Puritan was especially successful, but lots of well known stock and balanced funds beat that 148% nominal return, such as VWINX (211%), FFIDX (201%), DODGX (193%), VWELX (175%).
    Ah, that must be it. Entirely! Of course the two middle ones are stock funds, no?
    So ... is there a point here?
    I am still missing the direness of the problem, as I thought perhaps you were too.
    davidrmoran davidrmoran in Fund Discussions
  • the caveat to "stocks for the long-term"
    @crash. Nah, no humble bragging here, to be completely honest I actually typed 30 years and then changed it cause I thought it would be thought as even more out there... LOL!
    I've pre ordered the upcoming Jared Dillian book. No worries stress free...he speaks to a portfolio of 20% equal amounts cash, bonds, stocks, gold, real estate. Kinda like the perm portfolio that hank mentions. Great track record since the early 70s... it's that I don't completely trust the stock market, I can always cut my expenses but mentally I can't accept a draw down where I potentially lose 5 plus years of work compensation...no one can say that the market is cheap here.... you're gambling that Powell cuts and the market reacts the way the crowd thinks it will. Dangerous.
    Baseball_Fan in Fund Discussions
  • the caveat to "stocks for the long-term"
    @davidrmoran et al
    Starting Oct. 2000, chart of SPY v BAGIX, for 10 years, one decade.
    BAGIX is a well run, 'plain jane' intermediate term bond fund. Likely not the best compares of the period, but a curious look starting 7 months after the 'dot com' melt and moving into and through the big melt in the fall of 2008. This is a distributions included graphic.
    NOTE: Chart start date is default that can't be changed.
    catch22 catch22 in Fund Discussions
  • the caveat to "stocks for the long-term"
    FPURX from Jan '73 to summer '82, Ray Gun era, way more than doubles. Granted the end period was a time of 15% inflation
    Inflation in 1974 (the era of Watergate and Whip Inflation Now) was about the same as inflation in 1980 - a shade over 12%. There was no calendar year with 15% inflation. It peaked at 13¼% in 1979.
    Adjusted for inflation, the cumulative return of the S&P 500 over the calendar years 1973-1984 was 0.0266%. Unadjusted, it was 148%.
    In a time when fund managers could get inside information (no Reg FD), it wasn't hard for managers to beat the market. Puritan was especially successful, but lots of well known stock and balanced funds beat that 148% nominal return, such as VWINX (211%), FFIDX (201%), DODGX (193%), VWELX (175%).
    Cumulative fund returns are from 12/29/72 to 12/31/84 and M* charts.
    Other data are from NYU Stern spreadsheet (compound yearly data as needed):
    https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
    https://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls
    (Fed inflation data differs somewhat, though probably not significantly for purposes here.)
    msf in Fund Discussions