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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.
  • High yield long term CDs

    OK, so since I can't say I will never withdraw from a brokerage CD, I will transfer them from the 401k to a Bank IRA.
    Nothing against your advisor, and this may well have been discussed, but if it was not... This point is a cornerstone of CD ownership that a client should have learned in even ONE fee-based hour.
    EDIT: I've bought plenty of Secondary Issue CP CDs for Discounts. I hope to never be in a position to have to TRY to sell one, unless of course for a Premium!
    I will make sure all CD are call protected
    CP is a CD ladder holders friend.
    I don't quite understand the 3 month to 1 year rates holding up better and building the far end of the ladder. With the info I've given can you show me how that would look?
    All comments here are about brokerage, CP CDs. Bank CP CD data may/will vary.
    Up to one year rates are not very far down from their respective peaks and still at/above 5%. To wit, 3-month rates peaked around 5.50% and are still at 5.35%. On the far end, 5-yr rates peaked around 5.05% but are now DOWN to 4.40%. They are consistently dropping 0.05% and their Available Quantities are significantly DOWN. (FWIW, I've been pointing this up for months on these threads.)
    Same for the next line - not sure what current BUYs on farthest end of ladders.
    Farthest end of the ladder for this discussion is 5 years, or IF you plan to go out further, 10 years. To wit, the "short end of the curve" is the % closest to ZERO.
    I think I understand not bothering the Jan and March BUY's - wait until a couple of weeks before they expire to decide as it's a guessing game until then.
    Don't bother with the specifics until then. We have only educated guesses as to what respective rates and quantities will be available then. With interest rates, I always try to deal with what we know NOW. We know the current rates, available quantities and the current trend(s). We did have that period over the past coupla years where we were reasonably certain the Fed was going to raise rates. We're still in the guessing stage on what happens next and when.
    I don't understand the last paragraph. I currently have a one year no penalty CD and a another one penalty CD for the amounts shown. Not sure how to make them non-taxable.
    Seems to be a misunderstanding on this. I did NOT suggest anything in your txbl a/c could be made non-txbl. Suggest re-reading what I posted and quote the line(s) you don't understand.
    Can you modify my plan above to show me what you would do it.
    Hmm...I've kinda put a wee bit of effort in here already, no? If you re-read my post and factor in these responses, you should be able to do that. Seems kinda clear to me, no?
    I realize you are not giving me advice - it's only an example. I know you don't know all of the facts. Are you an advisor (just curious). Thanks in advance!
    You're welcome. No, not an advisor. Life-time bean counter, governmental and private audit manager. Grew up as many did wanting to "be able to live off the interest." Life-long manager of portfolios of several, never-paying* friends and relatives. Owned CD ladders for ~15 years.
    * = And I have never asked them!
    stillers stillers in Fund Discussions
  • High yield long term CDs
    @Jan:
    Disclaimer: You likely gave your advisor the detail of your current investments and your projected income gap upon retirement, along with risk profile information. That is all needed for anyone here or elsewhere to provide quality advice.
    Without all that, here's what I'd offer you as suggestions/ideas:
    Know that predicting the future of interest rates, their rates and the magnitude of their moves, is a fool's game.
    Only BUY brokerage CDs IF you reasonably KNOW you will NOT need the proceeds before their respective maturity dates. Selling them as Secondary Issues will cost you dearly at this point in time (and likely for months/years to come), IF you can be lucky enough to find a BUYer.
    Only BUY CP CDs to eliminate the guessing game on your holdings and risk of them being Called before their normal Maturity Date.
    Know that 3-month-to-1-yr rates are holding up the best, and LT rates (out to 5-10 years) are taking weekly, if not daily hits. Consider that trend is likely-to-very likely to continue, which should cause you to consider building the far end of the ladder as soon as possible.
    The "do now" stuff appears fine but I would make any current the BUYs on the farthest ends of your ladder.
    I'd not bother with trying to define any specific BUYs in Feb and Mar '24, or even Jan '24. (See my first comment about predicting the future interest rates.) We can guess what's gonna be available then, but we have no certainty those guesses will be anywhere near accurate. You can have a general plan for future dates, but leave the specifics TBD by your research in the week-to-two weeks leading up to getting those proceeds.
    I have no idea why he recommended the last item related to CDs in your taxable a/c best serving you IF at 2-yr intervals. I have no CDs in taxable a/c's. If I did, I would want them to be the ones at the shorter end of my ladder for the very reason he gave, to "give you added financial flexibility in retirement." 2-year CDs does NOT give you the flexibility (not the interest rates!) that 6-month, 1-yr and 18-month CDs would.
    stillers stillers in Fund Discussions
  • High yield long term CDs
    Admitting that I have a lack of knowledge, I decided to hire an advisor who was recommended to me by a couple of friends who have used him for many years. I pay him by the hour and he is charging me 3 hours which I feel is reasonable.
    I am 71 and will retire in 6 months to one years time so this isn't a retirement advice. I am very conservative with money. My objective is to generate as much as income as possible form the interest .I have a decent amount of social security in addition to this as I have worked for 50 plus years and didn't claim SS until I was 70.
    My question: I think it would be good to lock in 5 or even 10 year CD's rates as they are north of 4% and that would yield a decent amount of returns. I am concerned if I use CD ladders, the rates which are going to fall sooner than later might end up losing me money in the end.
    I will meet with him soon and he will answer any questions/concerns I have. I would greatly appreciate your opinion and or advice as this would enable me to ask him questions.
    His comments:
    Goal:
    To move cash to longer maturity CDs/Treasuries to take advantage of relatively high interest rates over a longer period of time.
    Things that can be done now:
    In your Company 401k Brokerage link:
    Buy a $100k 2-year CD. (Non-callable)
    Buy a $90k 3-year CD. (non-callable)
    Buy a ~$87k 4-year CD. (non-callable)
    In Feb ’24 when the Bank CD in the IRA matures:
    Invest 100k in a 1-year CD.
    Invest $100k in an 5 year CD.
    Leave ~$17k in cash.
    In March ’24 when the CDs in the Bank taxable account mature:
    Buy a $70k 1-year CD.
    Buy a $70k 2-year CD. (no penalty)
    Other things to note:
    If we build this CD ladder, eventually you will get the average 5-year rate. When a 1-year CD matures, you can buy a 5-yearCD. There should be at least one CD maturing every 12 months.
    I have intentionally left cash in the IRA and “non-CD” funds in the 401k. This because at some stage you will have RMDs and we don’t want the CD ladder to interfere with taking them.
    I think the taxable CDs should be in 24-month intervals. This will give you added financial flexibility in retirement.
    Jan in Fund Discussions
  • Fidelity Conservative Income FCNVX - small tweaks to risks
    While tweaking is under discussion, M* notes that TRP’s TRRIX has been “on the tweek” so to speak.
    ”The team (that manages TRRIX) has made several changes to the underlying holdings over the past several years, adding both T. Rowe Price Hedged Equity PHEFX and T. Rowe Price Dynamic Credit RPELX to the portfolio in 2023. Both strategies add an element of volatility hedging and dynamic risk adjustment to their respective asset classes. Although hedging won’t necessarily improve the portfolio’s average risk-adjusted return, the hedges may cushion losses and reduce the maximum drawdown during bear markets, in exchange for reducing the potential upside.”( Excerpted from Morningstar)
    @msf has referenced a Fidelity income fund. While TRRIX now calls itself a “balanced (40/60) fund” that was not always the case. At inception about 20-25 years ago it eas actually called the: “T. Rowe Price Retirement Income Fund”.
    TRRIX suffered double digit losses in 2022. That’s a lot for this fund. Glad TRP is tweaking. Perhaps they should have been quicker on the stick. YTD the fund is up +7.8%. That’s still a long way from making up for last year’s loss.
    hank in Fund Discussions
  • Fidelity Conservative Income FCNVX - small tweaks to risks
    Prospectus Supplement, Dec 1, effective Dec 6
    Monthly Fact Sheet
    Max average maturity - Was 0.75 years, now 1 year max (as of 11/30/23 actual avg maturity is 0.53 years)
    Max security maturity - Was 2 years (3 years for floating rate securities), now 4 years
    Max pct invested in lower quality IG securities - Was 5%, now unlimited (possibly subject to the 20% restriction for investing outside of its "normal" investment)
    Judging from the 10/31/23 composition of the portfolio (28% A rated, 6% BBB rated), it looks like "lower quality IG securities" means BBB, while A-rated securities are considered higher quality.
    msf in Fund Discussions
  • High yield long term CDs
    A few years back & I was happy to get 3% on a two year CD. I see 3 year notes are on the firing line & will put forth a few $$'s that way.
    Have a good weekend, Derf
    Derf in Fund Discussions
  • "Green Investors Have New Room to Grow"
    @Baseball_Fan, excellent points on the portfolios of many "ESG" funds. They're shaky on the E, and often cra crummy on the S and G.
    Sure, BIAWX had a good year. But you're paying 79 cents for the same old stuff that has created a good year for lots of funds, some of which charge less. And many of the green funds charge a lot more.
    Been trying for years to get my wife to cut the Amazon cord.
    WABAC WABAC in Fund Discussions
  • "Green Investors Have New Room to Grow"
    James Mackintosh, who has always been adamantly skeptical of ESG/SRI/green investing (though less loudly opposed to anti-woke/red investing, perhaps because it's so marginal), offered a nice analysis today (WSJ, 12/06/23, B1)of the year's ESG crumple and its prospects going forward.
    "Invest according to your political views," he begins, "and you're unlikely to make money." One might point out that ESG investing isn't merely a political gesture (the "G" in ESG, especially, is predictive of corporate performance), but he's never been interested in nuance. And, heck, why bother pointing out that the Equal Weight ESG 500 has higher returns over the past year than the Equal Weight 500 (1.2% vs 0.7%, as of 12/6/2023). Or even that the ESG-screened 500 has outperformed the basic 500 over the same time period (15.7% vs 14.0%). And, by the way, the same is true over the past five years. It's much more fun to highlight the implosion of a few clean energy stocks and declare, "point made!"
    The point that makes me less irked with him is "investors who bought green stocks probably didn't think they were making a leveraged bet on Treasuries, but that is what they ended up with." He argues that rising interest rates impact renewable energy stocks (for which he uses the synonym "green stocks") two ways. First, renewable energy projects are 80% debt-funded, and debt is increasingly expensive and hard to acquire. Second, consumers making personal investments in "green" products - heat pumps, solar, electric cars - also use debt, whether credit cards, HELOCs or second mortgages, to finance them. Higher borrowing costs lead to lower demand for those products.
    High costs shift people's attention from the long-term - the need for renewables and global heating - to the short term - the need to cover the bill.
    He also argues that much, though not all, of the "greenium" has been squeezed out of the market. Valuations on renewables are way down, if not deeply discounted. That makes that more economically rational purchases now than they were two years ago.
    My sole green holding, which I've discussed in each of my annual portfolio disclosures, is Brown Advisory Sustainable Growth. It's up 32.4% YTD and has eked out 16% APR since I first bought it. Which is to say, I'm not sure that Mr. Mackintosh's analysis is quite so clear and profound as might be warranted by inclusion in the world's premier business paper.
    David_Snowball in Fund Discussions
  • Trying to learn more about BCRED
    Thanks @yogibearbull. Sounds like a treacherous area. Rowan’s (house view) argument is that for many investors “liquidity” is being oversold (and is costly). His “sell” is that most of us need perhaps 10% of our invested assets at any one time (ie in the next 3 years). Even to me that sounds like a difficult argument to make (and losing half your money doesn’t sound like a great idea).
    If folks are inclined, perhaps the scope here could be broadened to discuss valuations in both the public & private markets. Despite many nay-sayers at the start of ‘23, the public markets - especially the S&P - have plowed ahead. Always trying to learn more here - to go beyond simply looking at a fund’s 10 year track record and assuming it’s a relatively profitable / safe / predictable investment.
    hank in Fund Discussions
  • Trying to learn more about BCRED
    If you're interested in them, maybe consider one of the ETFs or CEFs that hold BDCs. I'm sure at some point these things will be included in them.
    As for me, i have no interest in those specific names, but am considering BIZD for exposure to the finance sector and play on interest rates over the next few years. (I still have a very hard time buying bank stocks.)
    rforno in Fund Discussions
  • the December issue of MFO
    Pretty much the same experience here. A good friend, also also a retired doctor, started letting down his guard about a year ago. Started going back to the SF Symphony, and eating out with others.
    Now he has Long Covid, with loss of taste.
    My wife and I had season tickets to the SF Symphony for almost thirty years, but haven't been to any entertainment venue since the start of all this. Really miss the Symphony, the SF Jazz Center, and a jazz restaurant that we went to for over 20 years. Almost all of the jazz groups that appeared at that restaurant no longer appear there either. This whole thing is a real bummer.
    Old_Joe Old_Joe in Fund Discussions
  • Best month for bonds in nearly four decades
    A bond trader doesn't care what happened, only how to make money in the future.
    Examples
    PIMIX made 8-10% for several years with low SD.
    IOFIX fell 45% in 03/2020, but after that it exploded 40-50%.
    Cat bonds did not make much in previous years but did well in 2023 with a very low SD.
    HY munis made several times 3+% during 2022-23 and much more in Nov 2023.
    Woohoo.
    FD1000 in Fund Discussions
  • Alaska buys Hawaiian. Wow.
    As a member of the Alaska Airlines million mile club I am opposed to this merger. Hawaiian Airlines has lost money in 14 of the last 15 quarters. When Alaska bought Virgin they were stuck with a bunch of crummy Airbus planes that were non compatible with their Boeing fleet. It took about 3 years to fix. Why not let them fail?
    Mitchelg in Other Investing
  • Alaska buys Hawaiian. Wow.
    CNBC: "Hawaiian’s stock nearly tripled on Monday to $14.22 a share, though still below the proposed purchase price. Alaska’s shares lost 14.2% to end the day at $34.08."
    I'm still not planning to ever invest in any airline. That's a change from years ago, for me. For those so inclined, here's a major dip in ALK shares. Have at it. :)
    Remember the old quote "how do you become a millionaire? Become a billionaire and then buy an airline." :)
    Or in modern parlance, be like Elon Musk and keep making super-jenius acquisitions.
    rforno in Other Investing
  • Alaska buys Hawaiian. Wow.
    CNBC: "Hawaiian’s stock nearly tripled on Monday to $14.22 a share, though still below the proposed purchase price. Alaska’s shares lost 14.2% to end the day at $34.08."
    I'm still not planning to ever invest in any airline. That's a change from years ago, for me. For those so inclined, here's a major dip in ALK shares. Have at it. :)
    Crash Crash in Other Investing
  • Novel explanation of NTF short term trading fee - Fidelity
    @msf,
    Need clarification on two sentences from the posts above:
    "I just spoke with a Fidelity private client rep who said that this is a fee that Fidelity merely passes through to the brokerage."
    Based on the context, I think you meant "fund' where it says "brokerage." I agree with you that Fidelity Rep is BSing. In fact Fidelity Reps also told me that the transaction fees on TF classes are also passed on to the fund companies. All fees collected from us by a fund needs to be disclosed in the prospectus. Does not matter if they are collecting directly from us (e.g., ER) or through an agent (e.g., brokerage). If it is not disclosed by the fund, the brokerage keeps the brokerage commission. I may have mentioned before that in the last couple of years I have found Reps at all brokerages I do business with have given me misinformation one time or the other, some even in writing. I think brokerages expect us to train their Reps! I usually ask them to point to a document or page on their (or a) website if I do not think their answer makes sense. More often than not the Reps insist their wrong answers are correct, even when the official answers clearly show the Reps are wrong. With the long telephone waits and the sub par customer service from Reps, I call the brokerages less and less and try to figure out answers without their assistance.
    (In my last encounter with a TD Rep, I asked him to point me to a SEC webpage or document that states what he was espousing. He gave me an URL to a 400 page document. After confirming with him I have the correct document, I asked him to point to the page where he was getting his answer from. He said page 19 which had nothing to do with the topic of conversation. So, I put him on hold and looked at the document and figured out that it is a proposed (not final) SEC regulation document, with the first 300+ pages being preamble (SEC discussion) to the proposed regulation. I politely told the Rep what he is doing and asked him not to assume his clients are idiots. I asked him to transfer my call to his supervisor and he dropped the call. I have been with TD for over 20 years and they were one of the best for customer service but this was new.)
    "I asked Fidelity to confirm that there was no fee for buying back shares shortly after selling."
    Fidelity does not charge a fees for buying into an NTF fund class. If there is a frequent trading violation, one can be banned from buying back into the fund permanently or temporarily but fees to buy back? I do not have a recent experience with short term trading of NTF funds but you can ask some of the fund traders in this forum to confirm. May be I am not understanding the question you are exploring.
    BaluBalu in Fund Discussions
  • the death of momentum investing: blame Morningstar
    Or, more precisely, a sensible decision made by Morningstar 20 years ago.
    Mark Hulbert's latest WSJ piece, "Momentum investing has struggled for two decades. Here's why." was published today. It reports on some new research that points that (some manifestations of) momentum investing essentially stopped working about two decades ago. Pre 2002, a strategy that loaded up on the preceding year's 10% of highest returning stocks and shorted the 10% of lowest returners, crushed the broad market average. In the year's since, the same strategy lost money annually in the face of rising markets.
    The researchers blame Morningstar. Or, at the very least, attribute the collapse of momentum to a change they made. Prior to 2002, all stock funds were benchmarked against each other; you got to be a five-star SCV fund by outperforming large caps and midcaps and small caps. After 2002, funds were benchmarked against their style peers (you got to be a five star SCV fund by outperforming other SCV funds). The researchers note that money flows to five star funds, so pre-2002 money disproportionately flowed to whatever funds - in the entire universe - were hottest. That fed the momentum already shown by the stocks in those funds.
    After 2002, the effect became greatly diluted since there were five-star funds scattered all over the investing universe with some of them qualifying as no more than "the best of a bad lot."
    John Rekenthaler is, understandably, skeptical because ... you know, Rekenthaler. His argument is that fund flows represent just a fraction of all stock investment flows, so even if Morningstar influenced that subset of investors, a far larger set would have been unaffected. The researchers recognize that fact, but point to the undenied effect over ratings on new fund flows.
    For what interest it holds. David
    David_Snowball in Fund Discussions
  • Best month for bonds in nearly four decades
    The intermediate term, 5-7 years, is the sweet spot. Those who bought long bonds when they were down double digits, they have since been rewarded handsomely. Ironically junk bonds are out-performing treasuries so far. If and when the economy turns downward, this trend will reverse quickly.
    Another surprise is that the dollar-hedged BNDX and global bond funds are way ahead of BND this year.
    Edits. I went back to read @davidsherman’ “No Fat Pitches” as a reality check. Thus I move slow and incrementally.
    Sven in Fund Discussions
  • Parnassus Value Equity
    I can't wait to get rid of it.
    It was originally focused on companies that have a good work place. At that time it was the Endeavor fund. It morphed into a value fund as Dodson plotted his departure.
    PRBLX has also experienced some serious style drift in my opinion.
    Parnassus funds do have the virtue of being among the least expensive in the ESG space. But take a close look at what they are up to now, instead of what they were doing a few years ago. If the shoe fits . . .
    WABAC WABAC in Fund Discussions
  • Most Americans are better off financially now than before the pandemic
    We are enjoying the best cash flow of our lives due to the rates on MM funds and the house being paid for. Thus we can leave the IRA's alone for a few years. My wife is picking up grant-based consulting work. That reduces the need to spend from the MM's. So we can DCA a bit into equities for the long term.
    We're on the right side of what Wilkins McCawber would describe as the key to a happy life.
    WABAC WABAC in Other Investing