RiverPark Strategic Income Fund now advised by CrossingBridge Advisors Yogi: "Only m-mkt funds and T-Bills are "cash" alternatives. No other fund, including the ultra-ST bond funds, can formally serve that purpose."
I guess I respectfully look at this a bit differently than stated above. Cash is an asset class that requires some decisions, with risks and rewards. The most obvious form of cash are bills and coins, that you carry in a billfold/wallet, in your pocket, or stash in a some other designated spot (mattress, refrigerator, envelope in a drawer, etc.). It is pretty liquid and accessible, but there are "risks" with this choice--easily stolen, can be destroyed in a fire, hard to find in that hole in your backyard, etc. There can be practical limits to "how much" cash can be stored in those locations as well.
Then there are those "safe" locations in banks/credit unions, etc. in the form of checking accounts, savings accounts, safety deposit boxes, CDs, etc. These have comply with the restrictions of these institutions, not always instantly accessible in any amount, vary as to their ability to generate interest and "grow", and can not exceed certain amounts to be protected under FDIC, NCUA, etc. For the past few years, bank/credit unions paid next to nothing and that "cash" did not significantly increase in value. Recently, we have had some banks failing and some accounts exceeded government protection limits.
If your criteria for where you put your cash, was in your wallet, backyard hole in the ground, envelope in a refrigerator, or in a bank or credit union, there are risks and rewards that had to be understood and accepted with that decision. When you start looking for where else to put that cash, there are different kinds of risks/rewards with those decisions. As an investor for most of my adult life, I was faced with other forms of alternatives for my cash, some much more risky than others, some with much more rewards than others, but many of them heavily recommended by various financial advisors as an important and necessary choice for what I would be experiencing in the future. I had to learn certain skill sets to help identify the risks and rewards of those investments, and steps available for me, if investing/market conditions started changing. For me personally, I held a very large percentage of that cash in equitiies when I was younger, but when I got older I was adjusting those asset options for my cash, to be more income oriented options, such as bond oefs in a falling interest rate environment.
In the past year, I used my skill sets, to reassess where I wanted to put my cash, and when the market became more volatile and risky. I sold my most volatile and risky (largely defined by Standard Deviation criteria promoted by M* definition of risk). I held on to less risky (less volatile and lower SD) investments, such as RPHIX, but I dramatically started reducing the amount in those bond oefs. I found myself holding a large amount of "traditional" cash in banks and brokerage accounts, but earning no interest and exceeding government protection limits. Then interest rates started dramatic increases, and all of a sudden I was finding interest rates for MMs, CDs, Treasuries, etc. very competitive with what I had been previously with funds like RPHIX. I chose to liquidate my holdings in RPHIX, and shifted that "cash" to MMs and many CDs within FDIC protection rules.
I apologize for this lengthy explanation of my concept of "cash", but it makes sense to me, but maybe not for others! Each individual investor can establish their criteria for what they do with their cash, and of course that will vary tremendously.
Happy Investing!!
Japan stocks surge to highest since 1990 as G-7 meeting is underway https://www.cnbc.com/2023/05/19/asia-markets.htmlAround the time I bought DODGX in 1991, I also bought The Japan Fund. I can't remember the ticker. I thought it would be a classic blood-in-the-streets purchase. In those days people convinced themselves that Tokyo real estate was worth more than everything in these United States. And then their market crashed hard.
After many
years, I think it was sold because we needed tires for one of the vehicles. Saved us from taking equity out of the house in Marin county. And it got the kids to daycare, and us to work. So I don't regret the tradeoff.
Anybody Investing in bond funds? Junk I own:
PRCPX. +3.33%. YTD
TUHYX. +4.52%
HYDB. +1.14%
****************
YTD is a long way from 5 years. But there are the dividends in the meantime. If rates stand still or come down, junk will do OK at the very least, along with a stock recovery. I'm always fully invested. The cash I hold is held in the funds I own. I'm aware of 5% CD rates. The mechanics of initiating such accounts is the bugga-boo for me.
...And of course, my own mileage certainly HAS varied---- by a huge amount--- to the downside in TUHYX. At least I'm "in the black" with the other two.
Anybody Investing in bond funds? @stillers, you seem to have quite an anger problem. Bottom line is I never once said a CD ladder wasn't a good idea. I tried to covey that bond funds also may be turning the corner and starting to give decent returns - for anyone who chooses that investment path. Even at your dismay and scorn.
Ah, c'mon man!
If I
really had an anger problem and dealt in scorn, I'd ask you if you think the Bills will EVER win a Super Bowl! Or even ever get there again and, well, lose again!
And I'd be sure to give you 0:13 to reply, make sure all your players have their helmets, and warn you about drifting too far to the right!
My only purpose on this thread was to point up that bond fund investors
generally seek 4%-5% TRs. And that those rates of return are currently available in non-callable CDs, with higher rates having been available at the peak.
Also, many investors don't seem to understand that those incredibly unsexy CDs are there for the taking, if they could only get out of their own way.
So while bond fund investors over the next 5
years will be
putting in time and effort trying to get their 4%-5% TRs, I'll be
putting on a slew of golf courses, knowing that we have a 5+-yr CD ladder in place of those bond funds that is paying in excess of 5%.
No need for anyone to read that again
s-l-o-w-l-y, unless of course you still don't
get it.
BTW, I
NEVER stated that CDs were the
only option. But hey, it's the internet, so feel free to parrot it over-and-over-and-over again and it will become a fact (to some/most).
Matt Levine / Money Stuff: Banks Want a Break From the FDIC A lot of this spring’s US regional banking crisis can be explained this way:
• 1) Banks bought a lot of Treasury bonds and other US government-backed securities when interest rates were low, paying roughly 100 cents on the dollar for them.
• 2) Interest rates went up a lot, driving the prices of those bonds down to, say, 85 cents on the dollar.
• 3) Banks had big losses on those bonds, eating through a lot of their capital.
• 4) People noticed, stocks went down, deposits fled, some banks failed and others have looked shaky.
One solution to this crisis would be that, if the bonds magically went back to being worth 100 cents on the dollar, the banks would mostly be fine again. That seems improbable, though I guess one interesting mechanism would be if the banking crisis caused enough of a recession to drive long-term interest rates back to where they were in 2020. Then the bonds would be fine, though probably the banks would have credit losses.
Another solution to this crisis would be that, if the US government just bought the bonds from the banks at 100 cents on the dollar, the banks would mostly be fine again. Of course then the government would have paid 100 cents for stuff worth 85 cents, which seems bad. But through the magic of held-to-maturity accounting, you can sort of wave your hands and pretend that it’s not bad. If the government paid 100 cents today for a bond worth 85 cents, and then held it until it matured, it would get back 100 cents. (Plus interest, though not very much.) In some accounting sense, the government would not lose any money: It would get a below-market rate of interest on its money for the next few
years, but it would technically get all of its money back.
And in fact this is kind of how the banks thought of these bonds: They were often in the banks’ held-to-maturity portfolios, meaning that they didn’t need to be marked down when they lost value due to changing interest rates. It’s just that, when people notice this stuff and deposits flee, you can’t hold the bonds to maturity, because you have to sell them, at a loss, to pay back depositors. But the government is not funded by short-term deposits, so it really can hold the bonds to maturity.
And in fact this is kind of, a little bit, a solution that the government hit on: In response to the failure of Silicon Valley Bank, the US Federal Reserve announced a new Bank Term Funding Program that would lend the banks 100 cents on the dollar against bonds worth 85 cents on the dollar. This is not the same thing as buying the bonds at 100 cents on the dollar — the banks, rather than the government, are still economically on the hook for the losses — but it is motivated by the same sort of thinking. “Eventually these bonds will pay out 100 cents on the dollar, so it’s fine to lend 100 cents on the dollar against them, even if they are worth 85 cents today.”
But nobody has actually embraced a program of “the government will just buy the bonds back at par to make the banks healthy again,” because it is kind of an extreme transfer of losses from banks to taxpayers, even if you can wave your hands a bit and pretend it isn’t. But here’s this from Andrew Ackerman at the Wall Street Journal:
Banks have spent the past week or so testing what would be a clever gambit: Paying billions of dollars they collectively owe to replenish a federal deposit insurance fund using Treasurys instead of cash.
The idea—floated to regulators and lawmakers by PNC Financial Services Group and supported by others—could allow banks to take securities that are currently worth, say, 90 cents on the dollar, and give them to the Federal Deposit Insurance Corp. at full price. That would effectively shift losses clogging the banks’ balance sheets to the FDIC, according to people familiar with the proposal. ...
Proponents say nothing in the law says FDIC fees have to be paid in cash, so the agency could change its rules. They say the move, if greenlighted by the FDIC, would help the banking system address the way rising rates over the past year have saddled lenders with billions in losses on their portfolios of bonds. Those losses helped sink Silicon Valley Bank in March, sparking turmoil across the banking sector. …
Supporters say the government would hold the securities until maturity, allowing them to recover principal and interest on the debt. The government would suffer no losses, they say.
The FDIC has spent billions of dollars on its bank rescues — which is also a transfer of losses from banks to the government to make the banking system more solvent — but it is getting the money back by charging a special assessment to be paid by about 113 big banks. If the banks pay the assessment with Treasuries that are worth 90 cents on the dollar, but that count for 100 cents on the dollar, then they get a little discount on the assessment and get to move unpleasant assets off their balance sheets.
Why stop there? They should pay their taxes in Treasuries.
Really what they should do is pay executive bonuses in Treasuries: “We’re giving you a $1 million bonus, technically it is only worth $850,000 but if you hold it to maturity it’s a million.”
RiverPark Strategic Income Fund now advised by CrossingBridge Advisors I owned RPHIX for several years, as a "cash alternative" fund, but no longer own it. In a market where fixed income instruments were unattractive, I thought RPHIX was a historically attractive option, but now there are more attractive options available. I have never owned RSIIX, but I maintained it on a watchlist for a long period, and was impressed with its performance trend. I hope both funds continue to do well going forward, but I am not a buyer for now.
Anyone using etfrc.com? Compares ETFs for overlapping holdings I found it because I was looking for a tool to compare the overlapping holdings of funds. And they do have a free tool that allows you to do that:
https://www.etfrc.com/funds/overlap.phpSure would be cool if that overlap feature could be added to observer premium. Anybody know of a free one for mutual funds?
Second question concerns their
ALTAR Score™.
For equities, we calculate the ALTAR Score™ using the formula on the right—itself a derivation of the old Dividend Discount Model—where:
Avg. ROE is the average return on equity of firms in the fund for the five (5) years up to and including the current forecast year
P/BV is the forward price-to-book value based on current market prices
fees is the annual expense ratio of the ETF
The relationship between Return on Equity and Price-to-Book Value multiples is well established in the academic literature. This formula is designed to forecast the likely internal rate of return to business owners. It is important to note that it is not a target price, and there are no timing or momentum components to it.
Here is the graphic they mention . . .
This well out of my wheel house, so I am interested to hear what others think of the ALTAR scoring.
Treasury Direct customer service The 2019 ProPublica piece is out of date.
The IRS announced significant changes Monday [Dec 30, 2019] to its deal with the tax prep software industry. Now companies are barred from hiding their free products from search engines [as reported in the ProPublica piece] such as Google, and a years-old prohibition on the IRS creating its own online filing system has been scrapped.
https://www.govexec.com/oversight/2020/01/irs-reforms-free-file-program-drops-agreement-not-compete-turbotax/162167/Intuit did itself no favors by hiding the free software from users. Instead of living with half a loaf, it could wind up with crumbs. It, and H&R Block, shot themselves in the foot by going further and completely dropping out of the Free File program in 2021 and 2020 respectively.
https://www.propublica.org/article/turbotax-maker-intuit-will-leave-free-tax-filing-partnership-with-irsFrom that piece:
The program was founded as a gambit by the tax prep industry, led by Intuit, after the George W. Bush administration proposed that the IRS create a free online filing option for taxpayers.
Worth noting who made the original proposal, given that
Republicans are already lining up against the plan, fearing it could eventually lead to a system where the IRS fills out people’s returns for them, which they say is a conflict of interest since the agency also enforces tax laws.
https://www.politico.com/news/2023/05/16/irs-free-online-filing-system-00097198Why haven't I seen lots of homeowners up in arms about their municipal government determining how much their property is worth (assessor), then based on that number calculating how much they owe in property taxes, and even collecting the taxes online. And if you don't pay, they'll send the county sheriff to arrest you, the city attorney to prosecute you, and the municipal court to try you.
Certainly those must be blatant conflicts of interest as well. I protest! :-)
