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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.
  • Is Berkshire more like a Mutual Fund than a stock?
    I’ve thought about this one. But 40%+ in one holding (AAPL)? Kinda shoots holes in the old “diversification” theory. Nothing against their products. There are experienced bears out there who think AAPL is overvalued by a lot / ripe for shorting. Not that I would know.
    From what I’ve seen, you could duplicate half of Buffet’s portfolio by buying just 2 stocks - AAPL and BAC. A “mutual fund” with that much concentration would need be categorized as “non-diversified”. I was thinking that perhaps with Berkshire’s size and stature they’d have better access to company records giving them advance warnings of any problems and time to get out. But that would be a violation of insider trading rules ….
    Not meant to diminish or deny the huge success of Berkshire over the years. Good discussion. Hope those who own it fare well.
    e
  • Help buying individual BOND
    I think interest rates will be lower in 2 to 3 years, so I would buy either 3 to 5 year treasuries or solid corporates that are non-callable
    Does anyone else have different ideas about how far out to go on the yield curve?
    Any body tempted by "make whole Calls" ? As I understand them, if called the issuer has to also pay you the interest owed till maturity. While there is an opportunity cost if rates have fallen significantly, you would do better than with a traditional call.
    Several low yield bonds ( APPL 2025 under 1%) are trading for 85 to 90, ie as almost zero coupons with YTM of 4 to 5%. I would think the issuer would be unlikely to call a bond with that low an interest rate.
    There are others paying higher rates, which would also cost a bundle to call.
  • from Canada: consumers will now be dunned
    Here in California, ARCO has perhaps the lowest cost gasoline. Since the composition of the profit margin for fuel from any gas station is a "black box", it's pointless to wonder what part of the price may be ascribed to anything.
    ...
    ARCO's price differential between cash and credit is also significant. So it's a no-brainer: if there's a convenient ARCO station, go there, use cash.
    Years ago (the last time I lived near ARCO stations), ARCO didn't take credit cards and sold cheaper grade (not Top Tier™) gasoline.
    Apparently not any more. ARCO's moved up in the world. Still cheaper, though.
    https://www.savingadvice.com/articles/2020/10/30/1034665_is-arco-gas-bad-for-your-car.html
    This got me looking, Where I live, the cheaper stations tend to be BP (no ARCOs). It seems that last year BP stopped selling Top Tier gasoline. Though BP claims that its Invigorate® additive exceeds Top Tier requirements.
    Invigorate® FAQ
    On the investment side, BP purchased ARCO in 1999. In 2012 it sold the ARCO brand and a refinery to Tesoro (now part of Marathon Petroleum), while licensing back the name for gas stations in Northern California, Oregon, and Washington State.
    As near as I can tell, OJ's ARCO station is still owned by BP. I don't know what brand gasoline comes out of its pumps.
  • The Liz Truss Travesty Becomes Britain’s Humiliation

                               The U.K.'s Liz Truss hangs on by a thread, as party members call for her ouster
    Following are excerpts from a current report from NPR, severely edited for brevity:
    LONDON — After a bruising first six weeks in office, Britain's still very new Prime Minister Liz Truss is having to bat away repeated questions about her future at No. 10 Downing Street.
    She fired her first finance minister, Kwasi Kwarteng, last Friday. Since then, she has had to watch his replacement, Jeremy Hunt — a former leadership rival she appointed to the second most powerful post in government — publicly tear down a series of proposals that she had insisted were critical to Britain's long-term economic growth prospects.
    They included cuts to the United Kingdom's basic rate of tax, after she had already reversed course on tax cuts for Britain's wealthiest. A planned drop in corporate taxes was junked too, along with plans to keep alcohol prices low and incentivize overseas shoppers to spend money tax-free in Britain.
    Perhaps the most politically painful change of direction concerns an energy price cap that Truss promised last month to keep in place for the next two years. It was designed to protect British households from the high costs of gas and electricity required to heat and power their homes. If gas prices rose again precipitously, as they did earlier this year after Russia's invasion of Ukraine, the British government would be on the hook for what might be billions of pounds in unforeseen price hikes.
    Hunt said this was inadvisable, and reduced the plan's lifespan to just six months. That means by next spring, Britons may be once more at the mercy of global energy markets, at a time when inflation is expected to still be very high, and interest rates set by the Bank of England will mean mortgage costs for many have soared.
    Five Conservative legislators have publicly called for her to resign, with many more criticizing and questioning her position anonymously in British media outlets. British front pages in recent days have appeared united in the narrative that she cannot remain in the role for long.
    "People don't respect her, they don't trust her, and the government is now effectively being run by a chancellor who is going against the very thing the prime minister stood on," Rainbow Murray, a politics professor at Queen Mary University of London, said on NPR's Morning Edition. Murray was referring to the formal name for the finance chief — the chancellor of the Exchequer, which is the U.K.'s Treasury.
    Her failure to show up at the House of Commons on Monday to answer an urgent question about firing Kwarteng drew sharp ridicule: "Instead of leadership we have this utter vacuum," Labour leader Keir Starmer said in Parliament.
    Another Labour legislator accused her of having hidden "under her desk" to avoid parliamentary scrutiny. It will be harder to avoid Wednesday, at the weekly ritual known as Prime Minister's Questions, when Truss will be forced to explain her actions and reactions to political friends and foes alike.
  • Analyst Says Apple to Launch Health Insurance Product in 2024
    @LewisBraham
    Thanks. I did read the article before posting the reply and noted the reference to CCS Insight. It’s not an analyst I’ve seen before in my many years of keeping up with Apple news and rumors so it’s hard to judge the accuracy of their predictions. (Especially since Forbes has become a bit click-baity in recent years.)
    @yogibearbull
    It’s not AAPL who’s been talking about an Apple TV (though they have products in the streaming box and video service space) or an Apple Car, it’s outside pundits and analysts. AAPL is well-known for playing its cards close to its vest and doesn’t announce products until just before they’re ready to ship. Unlike other tech companies, it doesn’t talk about products under development that may or may not come to market.
  • Help buying individual BOND
    Hello, never bought an individual Bond earlier and all my bond investments via mutual funds - are under water this year.
    So trying to buy an individual bond in my fidelity account to supplement 4% SWR later (retired this year and in perfect storm - sequence of returns risk - luckily holding cash for expenses for two years).
    CUSIP - 3133ENT26 FEDERAL FARM CR BKS BOND 5.30000% 10/19/2026
    Looks like 4 year BOND but may be called after 1 year.
    I will get 5.3% - paid semi-annually and on 10/19/2026 - I will get my principal back unless called earlier.
    Am I right in my understanding?
    Any risk, I do plan to hold it till maturity.
    Thanks,
  • Fidelity files for Credit Interval Fund
    Interval-funds are relatively new. Many major firms have them (BlackRock, Blackstone, BNY Mellon, Calamos, GS, Invesco, KKR, Lord Abbett, Pimco, Principal). And this is Fido's first - can you imagine Fido being left behind in something (it almost got left behind in ETFs where it had an early ONEQ and then nothing for years, and finally catching up fast).
    https://stockmarketmba.com/listofintervalfunds.php
  • 2022 year-end capital gains distribution estimates (Vanguard's Final estimated year-end posted)
    Primecap funds at https://www.primecap.com/ have 2022 estimates now
    Rather large, again. Looks like around 9%, for example, in the case of POAGX. Even in the midst of several years' worth of redemptions, plus this year's losses, they may not feel like they're finding great values since they're keeping that fund and all three Vanguard ones closed.
  • from Canada: consumers will now be dunned

    The customers can pay cash by several ways:
    1. A bank check (merchants often need driver license plate number and another piece of ID). Last time I did that was over 20 years ago.
    2. a debit card. Often the gas station charges $0.35 per purchase.
    I think the usual way to pay in cash is to go up to the person at the cash register and hand them green paper. You know : 5, 10, 20 dollar bills. That's how I've paid for gas for decades. I have yet to see a filling station attendant refuse actual cash money.
  • How Coal Companies Sidestep Mine Clean Up Obligations
    Worth reading: https://bloomberg.com/features/2022-west-virginia-coal-mining-alpha/?leadSource=uverify%20wall
    All these old coal mines present a looming and potentially expensive disaster for coal country—and for taxpayers who could be on the hook. Meanwhile, Alpha’s share price has gone up more than 700% since it exited bankruptcy in 2016. The executives who guided the company through bankruptcy, a corporate split, a re-merger and a name change have been handsomely rewarded. Kevin Crutchfield, CEO from 2009 to 2019, earned at least $72 million in those years. President Andy Eidson, set to take over as CEO, has made at least $16 million since he joined Alpha a decade ago.
    Environmental advocates say big coal companies transfer their mines and reclamation obligations to save money, despite the cheery confidence they express in the ability of new owners to clean up their messes. Indeed, Alpha and Lexington both trumpeted their commitment to reclamation when the deal was announced.
    “It’s a fig leaf,” says Erin Savage, a scientist at Appalachian Voices in Boone, North Carolina. “It comes down to the math.” Alpha and other large coal companies must know that reclamation would cost them more than they pay to the company that takes the mines off their hands, Savage says. “Otherwise, why would they do it? They’d just do the reclamation themselves.”
  • Classic stock and bond mix no longer makes sense. Do this instead says BlackRock’s Rick Rieder
    I was very leery of VWINX and other "allocation" funds. Everyone knew the stock market was close to peak PE, but when interest rates were so low last year, the protection bonds offered in the past disappeared, especially as VWINX duration is still 5 to 7 years.
    I don't understand why they didn't move rapidly into short term bonds and cash. The bonds they held were almost guaranteed to lose 5 to 10%
    I can only assume this is a case of being stuck as their mandate did not allow 70% cash
  • from Canada: consumers will now be dunned
    Credit card business is a very profitable business with little downside risk. That is why Visa and Mastercard stocks are commonly held in growth mutual funds.
    Think the transaction fees have gone up from 3% (Visa and Mastercard). Now the credit card companies offer $ reward annually based the amount the customers spent.
    The customers can pay cash by several ways:
    1. A bank check (merchants often need driver license plate number and another piece of ID). Last time I did that was over 20 years ago.
    2. a debit card. Often the gas station charges $0.35 per purchase.
    The downside of debit card is that there is no credit protection for the customers in case of fraudulent charges, and it is tied directly to your checking account. With a credit card you can dispute the charges with credit card companies and they will investigate. If proven in favor of the customers, no payment is required.
    With high gas prices everywhere, one can minimize the debit card risk by paying inside the gas station, say $100, any amount unused will not taken out from the checking account. This would avoid “skimmer” that thieves often install outside by the gas pumps.
  • Wealthtrack - Weekly Investment Show
    @Observant1, thank you for the great summary on Giroux’s interview.
    His timing coming into 2022 is impeccable with his positioning of the portfolio.
    He repeated “recession” several times even though he does not believe it. However, moving 10% of fixed income to 5-yr treasury indicated he is seeking something more than merely the higher yield (4.2% as of 12/14/22). Still he has a healthy % in bank loan and a few investment bonds.
    He reduced the overweighting of utility to fund the cyclical stocks including the semiconductors and other quality growth stocks (3-5 years horizon).
    Discussion on GE stock helped to clarify why he still holding 3% of it.
    Clearly he knows his holdings (40 stocks) well and move in and out based on their valuation.
    Still he don’t like energy stocks.
    For full disclosure, PRWCX is one of our largest holdings. I will get his book for Christmas.
  • Classic stock and bond mix no longer makes sense. Do this instead says BlackRock’s Rick Rieder
    No doubt short term bonds are paying well. But further out on the curve “plain vanilla” bond funds don’t appear to have fared much better than a diversified mix of equities or many mixed allocation funds. PRGMX, which I’d characterize as holding very high quality bonds of intermediate duration (5-7 years), is down 14.6% YTD. Global bond fund DODLX, which I own, keeps around 50% or more in the U.S. and leans towards higher quality bonds (with some sub-investment grade). It is down 14.45% YTD.
    As for allocation funds, a couple 60/40 (bonds/stocks) from TRP sport the following YTD numbers:
    PRSIX -17.6% / TRRIX -17%. Even highly esteemed VWINX is off 15% YTD. If you check equity heavier conservative funds like PRWCX and DODBX you’ll find both have held up somewhat better than those bond and allocation funds I cited.
    Of course managers can use derivatives to make their bond funds perform a lot better or even buck the trend, as I’ve sure some have done. But for the “plain vanilla” category further out on the curve there’s not a lot to recommend them over equities up to this point. None of this will cut your losses or make you feel better. Just a humble attempt to look at a few categories that longer term oriented investors tend to rely on.
    Re Rieder’s suggestion - Note there is an air of market timing in what he says. He’s talking about a temporary shift to fixed income to take advantage of the spike in short term rates. I’d expect Rick to “ring a bell” to announce when the day arrives when we should move out of that defensive position into “growthier” holdings. :)
    Most recent YTD numbers from Bloomberg I’ve glanced: Dow -18% / S&P - 25% / NASDAQ - 35%.
    While it’s dangerous to try to equate this with another period (No two are the same.) - if you were to overlay this bear decline on top of the ‘07-‘09 bear market, I suspect in both magnitude of losses and duration we’re somewhere around the mid-way point.
  • Matthews Emerging Markets ex China Active ETF in registration
    It looks like the Matthews group has been hemorrhaging assets and now manages less (a lot less) money than they did 10 years ago. The company is flailing and throwing all kinds of sh*t at the wall in the hope something will stick. Look at the mass exodus of managers. My opinion, of course, and worth what you just paid for it.
    Matthews Asia funds were once appealing options for investors seeking Asian equity exposure.
    The firm had deep experience with Asian markets and had several talented mutual fund managers.
    Unfortunately, quite a few of these managers exited the company over the past few years.
    There has also been some turnover in the executive ranks.
    Matthews Asia is floundering.
  • Matthews Emerging Markets ex China Active ETF in registration
    It looks like the Matthews group has been hemorrhaging assets and now manages less (a lot less) money than they did 10 years ago. The company is flailing and throwing all kinds of sh*t at the wall in the hope something will stick. Look at the mass exodus of managers. My opinion, of course, and worth what you just paid for it.
  • Classic stock and bond mix no longer makes sense. Do this instead says BlackRock’s Rick Rieder
    Ominous other years in the quadrant in that chart where we are now; the other two began long downturns. 1931 we all pretty much know about; 1969 was the first down year ushering in a decline that didn't break until 1982.
  • foreign dividends: a stinky, poopy discovery
    No, never had issue on foreign tax credit. My foreign tax credit is quite small.
    What will you do differently in your 2022 tax filing in order to avoid this foreign tax credit issue? I have been filing electronically for many years and have no issue.
  • foreign dividends: a stinky, poopy discovery
    The IRS just denied my deduction for foreign taxes that were shown in my brokerage 1099s; I didn't file From 1116. IRS said that those foreign tax credits were just offset by my AMT obligations. I am really far from AMT but did have high tax-exempt interest from private-activity bonds (a change from previous years).
    Does anyone know more about this issue? There are AMT-free muni funds too and I can switch to those. Is that the issue, or something else? The amount denied isn't large enough to hire a lawyer.
    BTW, as I had paid my taxes due via IRS Direct Pay, so this IRS letter was the only indication for me that my 2021 tax return (paper filing!) was finally processed.
    BTW2, I was able to login to my IRS Direct Pay with my old credentials and the new IDme is just optional. I knew its implementation was delayed/suspended but I now got verification.
  • Parnassus Growth Equity Fund in registration
    I wondered how soon after AMG bought them that they'd start rolling out new stuff or tweaking existing products.
    PRILX (which I used to love, but got out of last year) has been more growthy in recent years, so is this really necessary? Unless it's to allow PRILX to be more value-and-income oriented again?