How are you positioned going into 23'? Felix Zulauf: going forward, we are looking at a structural, not cyclical, weakening of the European economy. Including UK, Ukraine. "Extremely weak" in 1H '23.
U.S.A.: "mild" recession coming up, in the middle 2 quarters of '23.
Generally, the next DECADE will be a "rollercoaster."
Geopolitically, a divided world. In Europe, the boycott of Russia is counterproductive. (But ethically?)
The world is de-globalizing. Supply chain issues will not go away. We do not have the influence we once did, in the USA. We will be less prosperous 10 years from now, generally speaking. So make the best of your investment decisions.
China cannot afford to store their reserves any longer in US Treasuries. They know that, so do we all. (Geopolitical considerations.)
(He is, of course, speaking amorally, without regard to ethical considerations. His presentation is about making money. There are no value-judgments in what he's saying, clearly. Zulauf: The USA in particular is stupid for freezing assets and boycotting Russia and restricting the flow of chips and maybe other stuff to China.)
Dollar: rally in 1st Quarter, '23. But longer-term, declining. As will the influence of the USA, worldwide.
When the post-recession rally comes, it will be pronounced in growth stocks. When they get to a high-point off that rally, then switch into energy stocks. That's his trade.
Right now he is neutral on stocks and will go net-short "very soon."
**********
....... i don't trade in and out at all. Buy & Hold is dead, so I'm not there anymore, either. Portfolios WILL need to be babysat and supervised much more, into the future. But I don't do shorts. I don't trade in and out, every couple of months. I will have to let this interview percolate and figure out just how much of what he said is useful to someone like ME. But it was time well-spent.
How are you positioned going into 23'? I intend to go into '23 pretty much the same way I went into '22. That is I'll be muddling along drifting where the current takes me. I hold a good slug of dividend paying blue chips that haven't skipped a beat for over 10-25
years. I have a goodly sum of CEF bond funds and BDC's which although they've come down in price, are still over-earning and paying their monthly 9-12% distributions. But lastly, and maybe most importantly I purchased for the first time ever a S&P 500 fund back in Feb-Mar that is only down like less than 3% to date. I will continue to add to that should Mr. Market crash and burn again while meanwhile stockpiling those before mentioned distributions until the fog lifts. If all the experts with all their resources can't seem to agree on where we are going what clue does anyone, including me, think I have.
One final thought,
@hank favorite columnist Randall Forsyth shared an interview with Felix Zulauf recently in Barron's
Market Vet Predicts the Next Decade Will Be Awful for the 60/40 Portfolio. How to Invest. I don't know if his track record is any better than 50-50 but a lot of what he said made sense.
How are you positioned going into 23'? "”economy slows down but also muddles along” - That’s as good a guess as any."
I sat in SUV at Walmart for 45 minutes after dropping gal pal off to exchange 70" TV. Lesson learned, don't take open boxes.
This happened Sat. 3:45 ish. LOTs of shoppers , parking lot about 75% or more full.
Point taken , Christmas pushing economy at this time. After New Years salute, I'm thinking economy to slow way down ! Trucker says it's getting harder to find loads.
As of this time I'm looking at some sales come Monday , with CD's & T Bills being bought.
Going further out on maturities 12,18,24 months.
FWIW, Derf
How are you positioned going into 23'? Curious as to how folks are positioning their portfolios going into the New Year.
I remain cautious as always, top down as follows:
Tbill/Note/CD laddered out to 1 month thru 5 years (~80-85% of portfolio)
AMEX money market online savings
PMEFX
PVCMX
FORTX (Abraham Fortress Fund, Abraham Salem runs the fund...rain maker...now avail at Schwab)
SVARX (thinking that high yield bonds might do very well by end of year 23'?)
PCAFX (Prospector Capital Appreciation, experienced fund mgr's)
Thoughts: I believe inflation will be sticky, balance sheet tightening continues, Ukraine/Russia war continues, housing market muddles along, does not collapse, economy slows down but also muddles along, of course all that being said I have no idea and sure hope things get better! I'll leave my political thoughts off this post as prolly better that way, just to keep the focus on investing.
Best,
Baseball Fan
Just uncovered: AXAHY. AXA insurance. Paris HQ 5 year chartStrictly from a technical view over 5
years, this product appears to be near fully priced at this time. A RSI of 30 and below is a technical level that may be considered near or at 'oversold'; while a RSI of 70 and greater may be considered as at or near 'overbought'. AXA is at 65.16 RSI, which may be considered near the top of its technical price range at this time; that there may not be much more upward movement remaining.
Of course, other market circumstances or special circumstances for this company must be taken into consideration; that may nullify technical criteria.
The $42 Billion Question: Why Aren’t Americans Ditching Big Banks? I was happy with Washington Mutual (WaMu) for a number of years.
They had many branches close to my home, their personnel were friendly, and customer service was great.
Under Kerry Killinger in the 90s, WaMu expanded from 84 branches in 1991 to 248 in 1995.
The following decade Washington Mutual became the country's largest savings-and-loan bank
and also the largest mortgage originator. Subprime loans accounted for some of this rapid growth.
When the subprime lending crisis culminated, the Office of Thrift Management seized the bank on 09/25/2008.
Washington Mutual was sold to JPMorgan Chase hours later. This was the largest bank failure in U.S. history.
I was not pleased with JPMorgan Chase.
They were much more "corporate" than WaMu.
Their lobbies felt sterile and their associates were impersonal.
I switched to a local credit union in 2010 and haven't looked back.
Most of my banking is conducted online with other financial institutions
but it's nice to have an option with a nearby physical presence.
When a medallion signature guarantee was needed to transfer my Roth IRA a few years ago,
the credit union provided a convenient avenue to obtain this guarantee.
The $42 Billion Question: Why Aren’t Americans Ditching Big Banks? I've been banking online for 15+ years. I still have an account with one of the Big 4 and keep just above the minimum balance to avoid monthly fees. Best of both worlds though for all practical purposes I can close out my physical bank account.
Over 15 years the differential between online bank rates and the measly rate I get from my Big 4 bank has been pretty significant.
The $42 Billion Question: Why Aren’t Americans Ditching Big Banks? Math (or lack thereof) + lethargy issue.
In today's world where a fully FDIC protected bank account + ACH transfer can be opened and done within minutes on the phone it boggles the mind. Buying CD's/Treasuries within brokerage account is even more easier.
Savings + CD rate arbitrage over 20+ years starts adding up, it isn't chump change.
The $42 Billion Question: Why Aren’t Americans Ditching Big Banks? Americans are missing out on billions of dollars in interest by keeping their savings at the biggest U.S. banks.Following are edited excerpts from
an article in yesterday's Wall Street Journal. While we here at MFO discuss the merits of CDs which pay 4.85%, huge numbers of fellow Americans are earning next to nothing on their bank deposits.
The Federal Reserve has raised interest rates to their highest level since early 2008. Yet the biggest commercial banks are still paying peanuts to savers. In theory, savers could have earned $42 billion more in interest in the third quarter if they moved their money out of the five largest U.S. banks by deposits to the five highest-yield savings accounts—none of which are offered by the big banks—according to a Wall Street Journal analysis of S&P Global Market Intelligence data.
The five banks—Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., U.S. Bancorp and Wells Fargo & Co.—paid an average of 0.4% interest on consumer deposits in savings and money-market accounts during the quarter, according to S&P Global. The five highest-yielding savings accounts paid an average of 2.14% during the same period, according to data from Bankrate.com. These five banks collectively hold about half of all the money kept at U.S. commercial banks in savings and money-market accounts tracked by the Federal Deposit Insurance Corp. That share has held steady despite the availability of higher rates elsewhere.
The $42 billion gap in the third quarter was the largest amount since record-keeping began, but will likely be dwarfed in the fourth quarter because top high-yield savings accounts have raised their interest rates to more than 3.5%.
Since the start of 2019, Americans have lost out on at least $291 billion in interest by keeping their savings in the five biggest banks. That total balloons to $603 billion when going back to 2014, when the FDIC started tracking consumer deposits in money-market and other savings accounts.
And U.S. savers have likely missed out on much more than $600 billion because the average rate the five biggest banks have paid over the past eight years, 0.24%, includes higher-yielding money-market accounts and some business accounts. Traditional savings accounts paid an average rate of 0.02% at the five largest banks during that period.
Why haven’t savers moved more of their money? Some customers aren’t aware of how much money they could make by switching, and others just don’t care. Alicia Gillum has been with Bank of America for 26 years and says she has no interest in searching for a new bank, even though her savings of more than $100,000 is earning almost no interest. Her loyalty has earned her Platinum Honors Tier status, which affords her a 0.04% interest rate on her savings instead of the 0.01% rate the bank pays to customers of its basic savings accounts.
Americans flush with stimulus payments and enhanced unemployment checks flooded U.S. banks with deposits earlier in the pandemic. The biggest banks got an outsize share of those deposits. About $425 billion flowed into money-market and savings accounts at U.S. commercial banks between the first quarter of 2020 and the third quarter of 2022, according to the FDIC. More than 95% of that went to the five largest banks.
But things could be changing. The average rate on money-market and savings accounts at the five largest banks nearly tripled in the third quarter from where it was in the second. And people are starting to move their money around in other ways to take advantage of higher rates, pouring a record amount into higher-yielding savings vehicles such as Series I savings bonds and Treasury bills this year.
Wow!
"Platinum Honors Tier status" at BofA... Now that's
really something!
Td acquired by schwab I moved 99% of my account out in October '20 after the deal closed, b/c I wanted my TDA FA to 'get credit' for my account as he'd been really good to me over the years. I also didn't want to deal with the drama/chaos of brokerage intergrations -- I've been through enough of them already.
Since then, I've kept it active with a tiny stock position and $1000 cash just so I have access to prior statements and moreso, to keep my access to ThinkDesktop, which is fan-frakking-tastic compared to Schwab's dinky browser-based 'active' trader platform.
When they tell me it's 'my turn' to be migrated, I'll transfer the rest over to Schwab and close the account, b/c I only need 1 Schwab account.
Vanguard Quits Net-Zero Alliance @sma3 "Texas at least, can claim their economic interests are at stake, although with the huge wind and solar arrays there, they will probably do pretty well with renewable energy. "
Are you implying Texas has huge solar & wind projects at this time or they could develop them ? I've traveled to & through Houston on my way to coastal Bend area for six
years & have as yet to see a wind turbine or solar farm.
Perchance I'm not in the right area as TX is quite large
I did note one car being charged via plug in.
CD Rate update My guess is that it is a pause. I think pauses are not unusual just before the Feds make a decision about interest rate hikes, but I fully anticipate the Feds to continue with interest rates, even though they are likely going to be smaller and less frequent. However, I am not anticipating longer term rates of 5 years, to be as high as shorter term rates of less than 2 years. I think there is too much optimisim that this rate hike period will only last another year, and at that time, I suspect shorter term rates will likely settle into a period where they are not rising so fast every few months.
TDA and Schwab Any word on when ThinkDesktop will be moved over?? Stunning this integration has taken over 2.5 years and it seems like they're not even halfway done yet. (And Schwab's 'active trader' is horrid compared to ThinkDesktop.)
Glad I switched over myself back in 2020. I've been thru enough brokerage consolidations that I didn't need any more drama!
Kopernik Global All-Cap Fund re-opening to new investors Interesting.
The fund absolutely cratered in its first two years, 2014 and 2015. Terrible absolute returns - down about 40% - and terrible relative ones. Great since then but reopening, I'm guessing, because it saw massive outflows in the last couple months despite okay returns, about 4% in the past three months which isn't great but wouldn't normally cause investor flight.
I might ask them.
David
Here’s where investors made a ‘risk-free’ 6.6% return in the past four U.S. recessions @MikeM- Yes, I agree with you regarding a short-term CD, say a year or less. If called, no big deal. When I'm looking at Schwab, I filter for terms of 5
years and non-callable, just to narrow the list down a little. You still have to be careful that the price is 100, though.
Here’s where investors made a ‘risk-free’ 6.6% return in the past four U.S. recessions If called, you loss the months of interest that you could have earn at full maturity. Any duration above 2 years would expose you to being called early. Generally I avoid JP Morgan.
Small-Cap Stocks Are Really Cheap We had some discussed in another tread on small cap funds. Mainly it focused on actively a managed OEFs.
Each recession is different. In 2008’s drawdown, all funds went down considerably. In 2000-2002 tech bubble, there were some funds that survived. Value funds in particular smaller caps outshined the growth counterparts by a sizable margins. Back then Fidelity low priced stock fund, FLPSX, a mid-cap value fund did well for two
years, then it lost 6% in 2002. Considering other funds were down in excess of 50% in that 3
years period, FLPSX did well. Fast forward 20 year, FLPSX is quite different with larger names, large oversea exposure, large asset base, and managed by a team of managers. Joel Tillinghast is retiring in 2023.
https://finance.yahoo.com/quote/FLPSX/performance?p=FLPSXHow will small caps perform next year? No one really know for sure and that ought to depend on how severe the recession will be.
Here’s where investors made a ‘risk-free’ 6.6% return in the past four U.S. recessions The 6.6% data was from the past; need to go back to the original time periods.
With the inverted yield curve as of Nov 2022, the short end of T bills don’t appreciate much. So you are looking at the yields. 6-12 months is the sweet spot yielding 4.7% yesterday. CDs are a tad higher at 4.8% non-callable at Fidelity. Next year they may yield higher, but highly unlikely to yield 6.6%.
I have to think twice before getting back to bond funds next years.
