Curious development with regard to new issue CDs available at Fidelity today. I’m setting up another 5-year CD ladder in our taxable account so we’ll have cash available to pay property taxes near the end of each year. Yesterday, there were a bunch of noncallable 2-year CDs available paying about 5.4%. They all disappeared overnight, and I could find only one noncallable 2-year CD paying 5.3%. I ended up buying a 21-month CD yielding 5.4%, but don’t understand why all the 2-years disappeared overnight.

And either spooky or briskly autumnal, depending on your perspective.
Devesh and David Sherman had a sort of eat-and-greet in October. One thread of their discussion is whether stocks are worth owning just now. That seems to build on Howard Marks' "sea change" article. We shared David's thoughts, bits and pieces of Marks' article and then I tried to follow up by looking at the effects of stocks on your portfolio.
The traditional asymmetry would say: returns up, volatility way up, and so risk-adjusted returns down. That's certainly true in the very long run, say 1926-2008. Since 2008, in a period I dubbed The Great Distortion, that relationship dissolved. Stocks boosted both raw returns and risk-adjusted returns as the Fed's action eviscerated cash, punished caution and rewarded speculation. But if you begin factoring in the years beyond The Great Distortion, the 20 year record is the target in my essay, suddenly (a) more risks = falling risk adjusted returns and (b) high-yield bonds start working as a risk-reduced equity substitute. Not sure that "bonds for the long run" is the mantra of the future, but I wanted to share the perspective and a bit of data.
Did a quick study of First Foundation Total Return, mostly at the board's behest. The record is unambiguous but I'm still not 100% sure of why. The change from its performance as Highland TR to its new incarnation is pretty striking. And the managers are pretty ... hmm, restrained in the frequency and bread of their written communication with shareholders?
Lynn did a great piece on short-term momentum and The Shadow did great work on tracking down the reopenings of solid funds, among other bits o' industry intelligence.
I'm intriguing by the impending GMO US Quality ETF, which might be interesting for those of us who'd have to choose between picking up something nice for the holidays or making the $500,000,000 minimum for GMO's lowest cost shares.
David

@stillers : "
I've netted anywhere from a % or 2 to upwards of 4%-5% extra proceeds over the years. For example, one BUY I still have the detail on shows I paid $47,739 (priced at 92.931) for a $50,000 CD for an effective Discount of 4.52%. Yeah, after all of the funds slushed through over the CD's life, that was worth my time and effort! "
First question , how long did you have to hold this CD in order to collect the $50K ?
Holding period would have some bearing on how good of a deal it was.
Wouldn't the brokerage take advantage on this instead of passing it down to it's customers ?
Thanks for your time, much appreciated.

My opinion of brokerage education about CD investing is not that good. When I have engaged in communication with brokerage experts on CDs, they fail to do a good job comparing the differences between brokerage CDs and bank CDs, fail to do a good job of explaining ongoing value fluctuations of brokerage CDs that are reflected at the end of each trading day, fail to explain termination fee information for brokerage CDs, fail to address liquidity concerns for brokerage CDs in taxable accounts vs tax deferred accounts, fail to discuss ways of measuring the financial health of banks offering CDs on the brokerage platform, fail to discuss callable vs. non-callable CDs, etc. etc.
These threads about CDs, started by posters with limited knowledge about brokerage CDs, can be very complicated, especially when the OP provides minimal information about the details of their personal financial situation and investing objectives.

Sold the I-Bonds I bought a couple of years ago, now that the combined yield is less than 4%. Although newly issued I-Bonds are yielding about 5.3%, I’m going to reinvest the money in my CD-Treasury ladder due to its greater flexibility.

@stillers : "
I've netted anywhere from a % or 2 to upwards of 4%-5% extra proceeds over the years. For example, one BUY I still have the detail on shows I paid $47,739 (priced at 92.931) for a $50,000 CD for an effective Discount of 4.52%. Yeah, after all of the funds slushed through over the CD's life, that was worth my time and effort! "
First question , how long did you have to hold this CD in order to collect the $50K ?
Holding period would have some bearing on how good of a deal it was.
Wouldn't the brokerage take advantage on this instead of passing it down to it's customers ?
Thanks for your time, much appreciated.

@stillers : Thanks for the info. Would you mind commenting more on what would be a good buy on the secondary market & how to figure out what one's profit would be. Thanks for your time, Derf

Sure, but keep in mind, there have been very few good opportunities, if any, in the (Fido, at least) Secondary Issues market over the past several months. We'll find out whassup with the current offerings via this exercise! A coupla rungs drop off my ladder this month so let's get it on!
NOTE: There is a LOT to know about all this. I'll try to provide the whole enchilada but will surely miss some stuff that perhaps can be resolved via questions.
NOTE: Fido has a very worthy Fixed Income Desk filled with some of the sharpest minds I've ever encountered on all things Fixed Income. Suggest using them as your ultimate source. Depending on workload, they may very well walk you through the scoping. But better to have done some work yourself in advance, allowing you to compare what you developed as a possible BUY to what they KNOW are the best offerings on the table! And no, I'm not providing their number here - readily available by calling main Fido number.
NOTE: BUYing on the Secondary Issues market is a wee bit different than New Issues as respect to your funds flows. You may BUY a 3.00% CP, 3-yr CD for a whopping discount and earn IN TOTAL more than a New Issue 5.15%. The difference? You will be able to internally book a potentially BIG time interest gain at time of BUY, but you'll have 3.00% interest payments over the life of the CD versus the 5.15%. On the flip side, you'll have the Discount in your pocket at the time of the BUY to invest wisely (sic) elsewhere.
Alright, off we go...
First, you need to have a Fido a/c to even view the Secondary Issues offerings.
(Same CDs are usually available on both Fido and VG. No experience with other platforms.)
On top ribbon, go to News & Research
Then Fixed Income, Bonds & CDs
Then CDs & Ladders
Then Secondary CDs (Link is under the current rates)
Enter your Maturity Dates (I'll use 11/2023 to 12/2026, 3-yr, for this exercise)
Note that the highest rate on New Issue 3-yr Call Protected CDs is currently 5.15%
So that will guide me to look for something better than 5.15%
Enter at least 5.15% as the minimum Ask Yield to Worst
At the Show More Criteria link
Enter a Price & Coupon max of something near but under 100 (I'm using 99.908)
NOTE: Anything above this ain't worth looking at - selling at a Premium!
Select Yes for Call Protection
Enter other desired variables there if any
Press See #### CUSIPS
You are now In The Game!
Sort data in descending order by Ask column, Price and/or Yield to Worst
Note: Anything priced at/above 99 might be a worthy BUY but that's a general line of demarcation (so-to-speak) to gauge the overall opportunities. I'm always trying to score under say 99 and change, but of course that generally means you are living with a pretty low Coupon CD for its life.
NOTE: Some/many following along are likely getting a wee bit confused by now but it all shakes out in the end!
And to address one other part of the question here...
I'm always shooting for something that's worth my time and effort to qualify as a "good buy."
YMMV.
I've netted anywhere from a % or 2 to upwards of 4%-5% extra proceeds over the years. For example, one BUY I still have the detail on shows I paid $47,739 (priced at 92.931) for a $50,000 CD for an effective Discount of 4.52%. Yeah, after all of the funds slushed through over the CD's life, that was worth my time and effort!
Gonna post this much now so this stuff ain't lost.
Will follow-up with another post picking up from here.

@Jan: "I saw a 5.8% yield on a 10 year CD through my Fidelity brokerage account.
The bank can call the rate and I haven’t checked the penalty for early withdrawal but I imagine it would be harsh..."
Unlike CDs issued directly by banks to customers, there is not a "penalty (per se) for early withdrawal" of brokerage CDs. That's not the mechanics of a brokerage CD - you cannot just withdraw your money.
If you want out of a brokerage CD before maturity, you must list it for sale on the "Secondary Issues" market.
There are currently hundreds/thousands (?) of Fido brokerage CDs that owners no longer want to own. Virtually none of them are selling now, and haven't been selling for many months. Owners are generally asking far too much for their unwanted CDs and investors are far more apt to buy "New Issues."
Aside: FWIW, I've made a bunch of easy money over the years playing in the "Secondary Issues" market, but have been unable to score a worthy BUY there all of 2023.
Bottom Line: If you BUY a brokerage CD, be reasonably certain (read "absolutely certain") that you WILL hold it to maturity. Your "penalty" for wanting out of it is effectively the inability to sell it on the "Secondary Issues" market and you being stuck with it until maturity. In a best case scenario, you might be lucky enough in the current market to SELL it for a substantial discount (loss).
And FWIW, "callable" is a proverbial four-letter word to me - I have/would NEVER buy or own one.

@MikeM - I’m not in Warren Buffett’s league. Nor do I expect, or even hope, the 3 equities I hold (3.33% each) will perform better than Buffett’s Berkshire. So, for those who want to duplicate Buffett’s return, they should put 100% into BRK. They would, ISTM, be assured of earning whatever Buffett does.
You also make the case for owning funds over individual equities. I agree on that point as a general rule. 90% of my assets are in funds. What I see in having some limited stock holdings are (1) an opportunity to dampen the volatility of an “all fund” portfolio and (2) a way to reduce average management fees across the portfolio. To be sure, those potential benefits come at increased risk. No two ways about it.
I have no long term record of owning individual stocks (umm …only 2-3 years). So you might be right that “average” retail investors (like you and me) should not own individual stocks - that it’s an area only for professionals like Buffett to participate in. I really can’t say. I was simply trying honestly to answer your earlier questions which I took as:
- Has exposure to individual stocks helped or hurt your overall return? (both)
- Have you compared your individual stocks’ performance to a broader index? (no)
To Mike’s point - Re ”comparative indexes”.
Mike, I track about 20 mutual funds / etfs (and 1 stock) daily for clues about volatility. I especially like to look at VWINX, PRWCX, BRK.B, PRSIX, AOK, ABRZX, TMSRX, BAMBX.
For performance longer term I like to watch TRRIX, PRPFX, VWINX. But - No, I have no objective measure of how I’m doing. Take whatever the market gives me. Keep volatility low. Enjoy the ride.
Hope that answers your question. :)

Yes, 8.5% and 8% respectively for us, back in the 70s. We also survived. The rates for the last ten years or so were so low that everyone now seems to think that that was "normal".

I've been procrastinating forever moving my HSA from a low interest savings account to a Fidelity account to invest long term. This thread was the motivation I needed to make the move, thanks to @bee and others.
My HSA amount isn't great and with being on Medicare the past 5 years I haven't been able to contribute. Bummer. I wish the gov. would change that rule and allow contributions for seniors! I mean, my Medicare advantage plan is no different than the required plans younger folks have.

There has been some talk in DC about changes to HSA and its relationship to Medicare. But it may be more of give & take - get somethings, but give up some other things.
https://ybbpersonalfinance.proboards.com/post/592/thread

I've been procrastinating forever moving my HSA from a low interest savings account to a Fidelity account to invest long term. This thread was the motivation I needed to make the move, thanks to @bee and others.
My HSA amount isn't great and with being on Medicare the past 5 years I haven't been able to contribute. Bummer. I wish the gov. would change that rule and allow contributions for seniors! I mean, my Medicare advantage plan is no different than the required plans younger folks have.

For 15+ years, we have been in a Bull Stock Market, bolstered by government stimulation and zero interest rates. That looks like an artificial set of conditions that was overdue to end. If you are holding your "breath" expecting those conditions to return anytime soon, I don't see that as likely. It appears that Banks are projecting 5% interest rates for quite a few more years, so stocks will likely have a formidable alternative for many investors' cash. I am breathing just fine with 5% interest rates, and I am not interested in "guessing" if we have hit the bottom of the stock market.

@Crash, yes, DCA down each month into BRUFX. A few years ago I migrated some of my HSA to Fidelity from Bruce Fund. About 25% of my HSA is with Bruce.

When I was 8 years old I challenge myself to touch the bottom of the deep end.
We may have felt the bottom of the market this week, but consider this ...
The Fed's Index Finger
When my doctor does this I instantly cringe.
Long term investors need a leap of faith and a healthy dose of lubricate.
Hang in there everybody.

I guess it’s time to sell the I-bonds I bought a couple years ago. The fixed rate was 0.0% at that time, so they are now yielding considerably less than CDs and Treasuries.

Did either of you get the sense that Rieder, for all his smarts, was making the best case for his fund with the goal of attracting assets?

Great question @BenWP
Hard to say. What manager doesn’t want more assets? Nearly included in my earlier post: ”Rieder could sell ice to (the proverbial) Eskimo”
But I felt it would be a bit unfair. Have watched him a few times on Bloomberg Wall Street Week and that’s just the way he typically is. Always seeing the glass ”half full” as BaluBalu said. In my mind, his professional integrity is very high.
Certainly a lot of “experts” extolling bonds in today’s climate. Someone (likely a Barron’s contributor) commented that 1-3 years out they thought bonds would do better than equities, but that 5+ years out they liked equities better. Personally, I’ll side with a Mark Twain comment from Life on the Mississippi when his riverboat mentor asked him what the next bend in the river ahead was called - “I told him I didn’t know.”
Anybody see a likeness to Peter Lynch? Lynch was a glass half-full guy. Always finding something good to invest in. Claimed his wife would return home from shopping for clothing & accessories with valuable insights into what companies to buy. I don’t know whether or not Lynch attracted any new assets into Magellan … Anybody remember? :)

Your comments regarding bond funds in 2022 and 2023 are spot-on.
You have a knack for reporting past performance.
I'm much more interested in future bond fund performance.
Can you tell me which bond funds or bond categories will outperform over the next 5 Yr/10 Yr?
Thanks in advance!

"Nice" comment. I'm a bond trader, not a holder, and I never predict or invest based on that. I do base my investment on what is doing well currently using my own proprietary system that is easy to execute and takes just minutes per week.
I used to open threads annually and keep posting what and how I do it.
The trolls kept interrupting and why I don't do it anymore.
Sometimes, I post what I do and how. BTW, in 2022-3 I posted several hints when I was out, in, and what I traded.
I have talked about bank loans for years for rising rates.
Also posted many times why I have preferred RCTIX over PIMIX for years.
...you just didn't pay attention.
I have been holding 2 bond OEFs for several months and they are nicely up while most others lost money. This can continue 1-4-8-more weeks or ends tomorrow.

Worth watching. Given their huge minimums most of us cannot access their mutual funds. Occasionally, they have co-managed other MF, like one for Vanguard years ago.
Never went anywhere and finally GMO got fired.
Their "Climate Change" fund seems to be outperforming most of the other similar funds I have looked at

I have watched OSTIX for years but never got into it. It has strategic in its name but has never ventured beyond HY. Here is the MFO piece,
https://www.mutualfundobserver.com/2023/04/osterweis-strategic-income-ostix-fund/