https://www.financial-planning.com/news/vanguard-files-paperwork-to-launch-a-global-credit-fund-news-scan?feed=00000153-9f90-d098-a37b-dfb9d93c0000
August 15
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Our weekly roundup of industry highlights
Vanguard proposes global credit bond fund
Vanguard filed preliminary registration for a global credit bond fund, which the firm expects to launch in November.

The author seems to have a different notion of risk aversion than I would, especially when he equates financial decisions with sports choices, or draws any conclusion about a $10 gain/loss.
What I'd consider as risk aversion, he dismisses as rational behavior. Well, yeah -- that's why I'm averse to that risk.
The author is a professor of marketing, not a psychologist. He could be very knowledgeable on this subject, but this blog entry is not very convincing. I think it's very difficult to know what motivates people.
David

FYI: Billionaire investor David Einhorn, whose Greenlight Capital is posting some of the hedge fund industry’s worst returns, cut back several long-term holdings, including Apple Inc (AAPL.O), Voya Financial Inc (VOYA.N) and Consol Energy Inc (CEIX.N), a filing made on Tuesday shows.
Regards,
Ted
https://www.reuters.com/article/us-investments-funds/einhorns-greenlight-cuts-back-many-top-holdings-slices-apple-idUSKBN1KZ1K3

MikeW,
Will you be able to keep the Thrift Savings Plan?
Often, at retirement, these plans can no longer be contributed to and may also have to be transferred out of the Thrift Savings Plan. This was the case for a relative who work for a government employer (military) who recently retired a few months ago.

I'm not that familiar with TSP (all I know is what I read in the papers). Still, the situation you're describing sounds unusual.
TSP holds itself out as " similar to a 401(k) plan in the private sector." In the private sector, by law you must be allowed to keep your money in your 401(k) so long as you have at least $5K there.
Many plans allow you to keep your money even if you have a lesser amount. With TSP, "If your vested account balance is $200 or more, you can leave your entire account with the TSP until the account withdrawal deadline." The deadline it's talking about is just the usual rule that RMDs begin the later of age 70.5 or separation from service.
https://www.tsp.gov/PlanParticipation/LoansAndWithdrawals/withdrawals/index.html
It's pretty obvious that someone who is not working for an employer cannot make payroll contributions to that employer's sponsored plan (TSP, 401(k), 403(b), etc.) But TSP seems very flexible in the types of other post-retirement contributions it allows.
It accepts rollovers from IRAs and transfers from retirement plans at other employers. "Not only can you leave your money with the TSP, you can simplify your financial life by moving money from plans into your TSP account." However, it doesn't look like it can accommodate Roth money, as it limits IRA rollovers to traditional IRAs.
https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/RolloversTransfers/index.html

Take a close look at the retirement benefits that are being offered through your government employer. Ten years may be a bit off in the future, but start paying attention to what's being offered now and what might be on the chopping block.
Employers usually have a retirement packet that they share with new retirees. Gather as much information about the retirement process with your employer. I did this and discovered there were many choices I needed to consider with this part of retirement planning. In my case, I selected to move some of my 403b investment to purchase an "extra annuity" through my employer (a somewhat unique option). I shared this option with a few financial planners and they confirmed that using some of these 403b dollars to buy this annuity was a very good option. I fine tuned the amount of the "extra annuity" based on my projected retirement income needs.
These financial planners typically will not be experts on all the options that your employer offers...it's your job to bring these choices/options for discussion.

@MikeW: Hope this is of some help.
Regards,
Ted
Nerd Wallet:
https://www.nerdwallet.com/blog/investing/10-questions-ask-financial-advisor/
Motley Fool:
https://www.fool.com/slideshow/13-smart-questions-everyone-should-ask-their-financial-advisor/
Dave Ramsey:
https://www.daveramsey.com/blog/questions-to-ask-financial-advisor

I was hoping to request some advice. I am meeting with a new financial planner today to do some retirement plannig and review our investment portfolio. I'm about 10 years from retirement and will have a government pension. I'm interested in the planner providing recommendations on asset allocation and steps we should take to achieve our goals. I would value the board's suggestions on questions I should ask the planner or links to such questions. The planner works for Merrill so I'm sure he will be recommending their various products. Our situation is a little complicated in that we have a special needs son that we need to plan for. Thanks so much for your advice.

@davfor
I wandered a bit from your subject post, relating to the Mackinac Bridge in the article photo; which has a 5 mile span connecting the lower and upper peninsulas of Michigan.
As to the subject, I'm not sure why NYT chose this particular piece; but Mr. Lee is likely not wrong about possibilities. There is a very large boat load of money in the form of bond issuance globally.
If one were to envision the financial markets perched upon an eight leg stool of bonds and other cash substitutes; not all legs would have to break to cause a problem.
CDS (credit default swaps); being insurance against bond defaults and other forms of derivatives are still in place, not unlike the market melt 10 years ago. CDS instruments, to the best of my knowledge are still not monitored or under scrutiny by any official agency, U.S. or global. Although I am sure the Fed. and U.S. Treasury know the amounts.
Apologies for the thread drift via the "bridge".....I don't like or appreciate excessive thread drift either.
Regards,
Catch

Nonsense. The global financial markets will crash next Tuesday at exactly 9:03AM EST. If it happens, remember that I predicted it. If it doesn't, David Snowball must have predicted it.

>> I believe in a balanced portfolio with income producing instruments. My personal AA preference is the "pay your bills first" method which requires income producers. All new investors should consult a financial professional.
Many of whom may well suggest, in my experience, not looking at income production first, or even chiefly, at least not in the sense of living off of / paying bills from income stream.

The size of an investors portfolio vs budget is the most important discussion with a financial planner IMHO. This will drive asset allocation and risk tolerance. The age of the investor is the most critical component of that discussion as you noted. 100 % S&P 500 is a very aggressive portfolio. I believe in a balanced portfolio with income producing instruments. My personal AA preference is the "pay your bills first" method which requires income producers. All new investors should consult a financial professional.

... I personally have decided to use the S&P 500 and stop further in depth allocations such as much discussed finer granular reits, mlp's, utilities etc. S&P500 contains all of the aforementioned within the index. ... The argument can be made for more granularity outperforming the S&P500, but i will live with the simple solution. I like the fact mutual funds can easily reinvest dividends/cap gains if needed while some ETF's cannot (easily). I also like the fact that by the nature of the SP500 index it gradually picks the winners for me and discards the losers. just my 2c.

Hi shipwreckedandalone,
Thanks for commenting. (Worth a lot more than 2c). All valid points. It’s not clear to me whether this represents a portion of your total invested assets or all of them. I suspect it’s the former. That said, I don’t think the argument for real estate or any other granular asset class rests only on maximizing return. There may be other considerations like diversifying assets (and hopefully mitigating risk), increasing income stream, hedging against the unexpected (rampant inflation, depression, war, tax law changes, etc.)
If I were age 25-40 and gainfully employed I’d be inclined to put 100% into growth (even possibly the S&P 500) and let her ride come Hell or high-water. A single fund (2 or 3 at most) would work fine. Even at age 40-50 that might make sense - but would require a stronger risk appetite. At 70 or older (with perhaps a 20-year life expectancy I believe an all-growth portfolio foolhearty, unless one is trying to build assets for posterity (estate planning). In that case, long as your own funding is assured for your lifetime, a 100% growth portfolio might still make sense.
To glean an appreciation of how much a 100% S&P 500 investment can fall in a relatively short time we need go back hardly more than a single decade (from Wikepedia): “The US bear market of 2007–2009 was a 17-month bear market that lasted from October 9th 2007 to March 9th 2009, during the financial crisis of 2007-2009. The S&P 500 lost approximately 50% of its value.”
Now - to sit still and endure the pain for 17 consecutive months while watching your total investment egg fall by 50% takes a great deal of intestinal fortitude. And, remember that on March 8, 2009 after 17 months of free-fall, there was no guarantee the market would reverse direction. History has taught that these downturns can persist for much longer. If an index can tumble 50% in 17 months ... it can just as easily fall 60 or 70% over a longer time. No law says it has to stop at 50%. (It’s likely real estate fared even worse during that period.)
In a nutshell, it depends a great deal on your life situation and ability to endure punishment. I think all of us could do a better job relating our age and years to / into retirement when discussing our allocations. One size does not fit all. Such understanding might benefit the younger newbies - if any.
PS: Just my humble mumble. I am not a qualified advisor. Other points of view welcomed.

This New York Times article might be worth considering....
Turkey’s Financial Crisis Surprised Many. Except This Analyst.

Yet he is doubling down on his doomsday message: The river of global cash will dry up, the dollar will spike and there will be a series of financial seizures. Investors, he thinks, will flee developing economies, then Europe and eventually the American stock and bond markets.
“It won’t be a banking crisis this time around — it will be a financial market crisis,” Mr. Lee said. “And I am very confident that it will happen.”

See: https://www.nytimes.com/2018/08/11/business/turkey-lira-crisis.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-news&WT.nav=top-news

https://www.pimco.com/en-us/resources/education/the-case-for-staying-invested-in-bonds
https://www.pimco.com/en-us/resources/education/the-case-for-staying-invested-in-bonds/
As the global expansion begins its 10th year, stocks are approaching full valuation, market volatility has increased and interest rates are rising. In light of these conditions, while some investors may consider exiting the bond market, their long-term financial goals may be better served if they remained invested.

Good! How can you have justice when there’s a financial incentive to put people in jail? The private sector should have no place whatsoever in the criminal justice or court system. Otherwise, you end up with the prison industrial complex we now have.

FYI: Ed's a big Roth IRA proponent, so it’s actually tough to write about the reasons not to go Roth. But, as with any other financial decision, there are drawbacks that must be addressed. When he says “Roths,” he's talking about Roth conversions as opposed to Roth contributions. Roth conversions have no income limits, and there are no limits on how much can be converted. Clients can convert all they wish as long as they can pay the income tax.
Regards,
Ted
https://www.fa-mag.com/news/when-roths-may-not-be-right-39880.html?print

Hi @newgirl,
I probably not the best on the board to walk you through how to start a due diligence process. I think most retail investors need the guidance of a financial advisor and you might do well to seek one out.
There are a lot of things that are unknown about you and with that suggestions are hard to make concerning your investments. That is why I responded in a way as to what I favored about the Sun America Dividend Strategy Fund ... not is so much that it might be right for you.
Some things you might wish to do if not already done is to perform an investment risk tolerance analysis to help determine what type of investments and asset allocation might be of a fit for you. Another thing that I have found beneficial is to do a Morningstar Instant Xray on each of my funds. This is a quick and easy way to see how they are positioned and allocated. Then do an Xray on your portfolio as a whole. In this way you can see how it is positioned and allocated and how the investments owned combine into a portfolio. Then you can change holdings and amounts to see how this bubbles before making rebalance changes. Knowing your risk tolerance level is important because it will help you with finding the right asset allocation and investments. Before tweaking know what you have first and how it fits together into a portfolio and Instant Xray can help determine this.
Once you have done this then you can get down to a review of your funds and comparing them to others that you might find of investment interest. Before, I kick a fund to the curb I've got to have found a better one with strategies that I am comfortable with. Strategies that I favor might not be right for you as I am in the distribution phase in investing while you might be in the accumulation phase.
As you know many made some good and sage comments. Remember, just because a fund has performed well does not mean it will continue to do so and that is why I consider looking at its strategy to see if it is a right fit for me in the first place and that I understand it. A dividend strategy fund simply might not be right for you while it is for me. And, only you can determine that.
Even today after more than fifty years of investment experience and being considered a seasoned retail investor my advisor will ask me to justify why I am making changes within my portfolio. Sometimes they will ask me to revisit and to rethink this including tax considerations as well. Most times, they follow my first thinking.
Wishing you the very best as you continue your due diligence process.
Old_Skeet
Additional comment. Linked below is a post I made back in 2016 about my portfolio and how I have things organized. Although, somethings have changed within the portfolio itself the process has not.
https://www.mutualfundobserver.com/discuss/discussion/24926/old-skeet-s-new-portfolio-asset-allocations-2016#latest

Ah, poor WFC, then, unfairly singled out in headlines.
BoA the most fines too, as of Feb:
https://www.marketwatch.com/story/banks-have-been-fined-a-staggering-243-billion-since-the-financial-crisis-2018-02-20
MF liked its chances last Dec:
https://www.fool.com/investing/2017/11/30/better-buy-wells-fargo-company-vs-bank-of-america.aspx
BoA up ~~10% since then, WFC up ~5%, if my calcs are good.
Should check whether Parnassus still holds BAC.

Phony accounts:

Wells Fargo isn't the only bank where heavy sales pressure led employees to open fake accounts.
A federal review triggered by the Wells Fargo scandal found that "weaknesses" at other banks led employees to open accounts without proof of customer consent — just like Wells Fargo did — according to the Office of the Comptroller of the Currency.
... Citigroup (C), US Bank and Bank of America declined to comment.

https://money.cnn.com/2018/06/06/news/companies/wells-fargo-fake-accounts-banks-occ/index.html
Emission tests fraud:

Collusion Between Germany's Biggest Carmakers
The diesel scandal is not a failure on the part of individual companies, but rather the result of collusion among German automakers that lasted for years. Audi, BMW, Daimler, Volkswagen and Porsche coordinated their activities in more than a thousand meetings.

http://www.spiegel.de/international/germany/the-cartel-collusion-between-germany-s-biggest-carmakers-a-1159471.html

The motor industry was embroiled in a new diesel emissions scandal last night [June 11, 2018] after 774,000 Mercedes-Benz vehicles were found to contain cheating software.

https://www.thetimes.co.uk/article/mercedes-faces-mass-recall-for-cheating-diesel-software-l0378ctf3

The raids on Tuesday, in which about 100 investigators targeted BMW offices in Munich and an engine factory in Austria, suggested that all of Germany’s top domestic automakers may have evaded emissions rules, although perhaps not to the same degree as Volkswagen.

https://www.nytimes.com/2018/03/20/business/energy-environment/bmw-diesel-emissions.html

Ford became the latest company to become embroiled in the issue, with drivers in a U.S. lawsuit claiming some 500,000 Super Duty pickup trucks were rigged to beat emissions tests.

https://www.washingtonpost.com/business/why-carmaker-cheating-probes-stay-in-high-gear-quicktake-qanda/2018/01/10/318b6d5a-f632-11e7-9af7-a50bc3300042_story.html?utm_term=.da98430847ad
It's not so easy to pick and choose less bad from bad.
With respect to the 400 or so WF foreclosures - these were the result of an "automated miscalculation of attorneys’ fees that were included for purposes of determining whether a customer qualified for a mortgage loan modification." (From WF filing.) That's ineptitude, not malice. Not that the government didn't facilitate this:

No Republican sign-off was necessary for Obama’s Home Affordable Modification Program (HAMP). The Treasury Department alone decided to run it through mortgage companies that had financial incentives to foreclose rather than modify loans. Treasury never saw the program as a relief vehicle, but a way to “foam the runway” for the banks, allowing them to absorb inevitable foreclosures more slowly.

Obama Failed to Mitigate America's Foreclosure Crisis
https://www.theatlantic.com/politics/archive/2016/12/obamas-failure-to-mitigate-americas-foreclosure-crisis/510485/
As to how long to hold the companies responsible (I agree with sending the execs to prison), how about at least as long as the effects of their acts endure? Which can be a mighty long time. We still don't know the extent of long term effects of all the fraudulent foreclosures.
Food for thought when considering duration: How Redlining’s Racist Effects Lasted for Decades
https://www.nytimes.com/2017/08/24/upshot/how-redlinings-racist-effects-lasted-for-decades.html

True, but you don't have to look too far to find they've all had dirt on their hands at one point:
https://rollingstone.com/politics/politics-news/bank-of-america-too-crooked-to-fail-232177/
https://nytimes.com/2017/03/30/business/dealbook/new-firms-catching-up-to-banks-in-foreclosure-rankings.html
The question is which is the cleanest now and which is the dirtiest and which will be the cleanest tomorrow and five years from now and which will be the dirtiest? This will weigh on these banks not just from an ethical perspective, but on their future returns. The other question to ask is which ESG mutual fund will be the first to pick up on potential malfeasance? Since this is a MF site and you are obviously unhappy with PRBLX, which ESG fund do you think will do a better job at catching and reacting to this sort of thing? I guess what I'm thinking is that PRBLX is at least trying to do the right thing. The fact that it failed to do so in a timely fashion is a black eye, but I wonder which ESG funds get it right on financial stocks?