BONDS, HIATUS ..... March 24, 2023 For Treasuries, I chose TIPS. At SCHP. Schwab. Rock bottom ER. 12-month yield is 7.2%, but what is the average duration in the fund? Ah, that's the key.
There's a goodly chunk of 1-3 years in there, followed closely by a slightly smaller chunk at 3-5 years. So, no one there is betting the farm on the long stuff, though there is a tranche, much smaller, at 10-20 years. And in between a not small portion with 5-7 year maturities. Guess they wanted to cover the waterfront. OK by me. Spread it out, some. Flexibility, yes? AAA-rated, of course.
But I can't find a portfolio turnover statistic. This is very new money for us--- just got in a week or two ago.
Moderna Plans to Quadruple Covid Vaccine Price
Sci-fi movies predicted this kind of biopharma practice years ago...it's all about the $$$. (and health, if you can afford it.)
Moderna Plans to Quadruple Covid Vaccine Price Good for stock investors’ profits, bad for the American people. A significant part of the cost will be born by Medicare and Medicaid, i.e., taxpayers. It could also cost lives of the uninsured here as well as in developing nations buying our vaccines:
https://thenation.com/article/economy/big-pharma-greed-knows-no-bounds/tnamp/
Just last week, the drug giant Moderna was scrambling to explain away concerns about its plans to quadruple the price for its Covid-19 vaccine, from $26 per dose to $110–130 per dose. “I would think,” claimed Moderna CEO Stephane Bancel, “this type of pricing is consistent with the value.”
It costs Moderna as little as $2.85 to produce a dose of the vaccine. So we’re talking about a price that would be roughly $127 above the production cost for each shot that goes into someone’s arm. Even by the standard measures of pharmaceutical-company excess, this is, as Senators Elizabeth Warren (D-Mass.) and Peter Welch (D-Vt.) suggest, an example of “unseemly profiteering.”
Does Moderna need the money? No. Over the past two years, the company has made more than $18 billion in profits from its vaccine. The company is literally awash in money—so much so that its CEO is now worth more than $6 billion, up from $4.3 billion in 2021. “This is what corporate greed looks like,” says former secretary of labor Robert Reich.
But shouldn’t Moderna be able to profit from a vaccine it created? Actually, as the office of Senator Bernie Sanders notes, the Moderna vaccine was “developed in partnership with scientists from the National Institutes of Health (NIH), a U.S. government agency that is funded by U.S. taxpayers. The federal government directly provided $1.7 billion to Moderna’s COVID-19 vaccine research and development, and guaranteed the company billions more in sales.”
Kind words for T. Rowe Price - Abby Joseph Cohen / Barron’s Roundtable Abby Joseph Cohen * is a panelist in “Round II” of Barron’s Annual Roundtable (current Barron’s print edition). Her five recommendations for investment in 2023 include TROW. Some interesting thoughts about the firm as well about active management.
(Cohen): “My last pick is T. Rowe Price [TROW] … We are entering a period when good active management of portfolios is going to make a difference, after an extended time in which the market was largely momentum-driven. People invested in market-capitalization-weighted index-oriented strategies, such as exchange-traded funds, which became self-fulfilling ‘prophesies’, until they didn't. This approach led to a high concentration in the indexes of a small number of stocks which grew overvalued. A handful of good active managers were left by the wayside …..
“The company's mutual funds outperformed their benchmarks 76% of the time in the past 10 years. T. Rowe … pioneered no-load mutual funds. The idea was to provide a high-quality product with low fees. The company's funds still tend to have fees at the lower end of the spectrum. The stock hasn't performed well in the past year, and it has an attractive valuation. It is trading for 13 times trailing 12-month earnings, with a dividend yield of 4.3%. The consensus earnings estimate for next year is $7.74 a share …..
”If you believe that the U.S. economy will expand, T. Rowe will grow with it. The P/E ratio and dividend yield offer a layer of protection. The 52-week range on the stock is $93 to $194. The stock was trading on Jan. 6 at around $112. The concerns are priced in. What isn't priced in is greater interest in active investment.”
(Excerpted from Barron’s - January 23, 2023 / edited for brevity)
* Cohen once worked at T. Rowe Price as an analyst and had a long distinguished career at Goldman Sachs. She currently teaches business at Columbia University, NYC.
HSAFX vs HSGFX It seems like Hussman got the formula right with HSAFX after years of HSGFX losing money in the post-2008 bull market. Unlike HSGFX, HSAFX has managed to produce small gains even during strong rallies, but it still has virtually no assets. I imagine there’s a legitimate trust question here.
Debt Ceiling and US Treasury Investments I don’t see chimps or lizards trading credit default swaps. The idea that capitalism or communism or any “ism” is natural and therefore unalterable or unimprovable like air or gravity is a toxic one. They are human inventions that were made during certain points in human history and they can be altered, improved upon or even unmade today. Historical context matters and economic and government systems that worked 100 years ago for humanity may not be ideal in 2023 or 2123.
What I find amusing about the $31 trillion in debt is who are the largest owners of that debt? The wealthy. Instead of taxing them appropriately for government services we are actually paying them interest to help them become wealthier. It makes sense they complain about the size of the debt as they worry we won’t be able to pay them back during a default or they’ll lose money because the inflation rate will exceed their debt’s interest rate. But we wouldn’t have to borrow so much in the first place if we taxed them appropriately, which, of course, they also don’t want and complain about.
The ideal situation for the wealthy is for the U.S. to cut government services while still paying them the interest on the debt that was originally issued to pay for those services. The borrowers of the debt—the American people—get less or, preferably, nothing in the form of services, while the creditors/investors still get paid. Keep their taxes low but the interest on their investments as secure as possible.
I should add that the above scenario is only ideal for the wealthy in the short-term but not the long. If you cut all government services, the ordinary folk start to get angry after a while about pesky problems like inequality, starvation and declining life expectancy. Then the torches and pitchforks come out. Enlightened rich folk believe in taxation and government services as a self-preservation measure. Dalio at least understands inequality is a problem. We need our bread and circuses.
Debt Ceiling and US Treasury Investments comical, really dangerous
Unfortunately, the "word on the street" in our nation's capital is that McCarthy is simply not...that...smart.
On the plus side, given the unprecedented legislative items passed over the past 2 years, once the debt ceiling item is taken care of by the adults in the room, we should be fairly good to go for the near term. My only concern is if/when a matter of utmost urgency presents itself, I have no idea how our Congress (House of Representatives) would be able to respond.
BONDS, HIATUS ..... March 24, 2023 @FD1000 - I don’t visit other boards. MFO is the best by far.
So if you want to claim credit here for predictions you made months earlier it seems only reasonable that you also post those predictions here at the time you make them.
And the
MFO post you just put up is nearly 3
years old (February 2020).
Debt Ceiling and US Treasury Investments Thanks for your thoughts Lewis.
Each of those concepts you mentioned were new discoveries (not inventions). IOW's new to man but not new to Earth's physics and capabilities under our sun since day one. But 'nothing new under the sun' refers to human nature (fear and greed and selfishness) which will never change and has us in the boat we are in today. $245,000 in debt per remaining US taxpayer. The last inflationary cycle in the 70's had Federal debt at <$1B and today's possible higher interest rate cycle (and along with it the upcoming problem of interest expense) with today's debt of $31T. I hope we emerge.... but the math is not encouraging. Dalio's work focused on 500 years of the history of capitalism and how debt always is the culprit in falling empires. Thus, history repeats itself. Reserve currency has enormous power.
BONDS, HIATUS ..... March 24, 2023 thx
@Davidrmoran / So he posted the prediction in early November of last year? (Didn’t seem that far back). ORNAX bottomed on October 27, 2022. A very good call on FD’s part if the early November date is correct
? ? Here’s what FD1000 wrote
1/2/2023 - “
I will invest hugely in bond OEFs in 2023, as I have done in the last several years.But, I must see an uptrend to be invested. I think 2023 will be a good year. You can make several % more in managed bond fund, this is where they shine. Think DODIX for higher rated bonds, HY Munis and good Multi (where I find my best ideas). I made 9.7% in 2022, mostly in 3 HY munis trades. See ORNAX (chart). The 3 trades were several days in May + July and several weeks in Nov. All are based on T/A.”Looking at his
January 2 post it appears FD is claiming that he invested in ORNAX 2 months earlier (about when it turned up). Is anyone looking for that early November ‘22 post by FD? I can’t seem to dig it up.
Debt Ceiling and US Treasury Investments @shipwreckedandalone I wonder if the T-Rexes and other dinosaurs, when they spied the Chicxulub asteroid descending towards them during the Cretaceous period, thought, "There is nothing new under the sun." Or if the Neandertals thought that when they saw the homo sapien tribes approaching? Or when a Sumerian King first saw a wheel rolling towards him in Mesopotamia? Or what the royals in Europe thought of American and French democracy? Or what the Newtonian physicists thought when they first heard of Einstein's quantum mechanics? Or what the editors of NewsWeek were thinking in 1995 when they published an article titled "The Internet? Bah!", which reacted against the idea that this silly digital blip was going to infiltrate and replace elements of our everyday lives? This screen we're all staring at right now is something very new under the sun historically speaking and it has radically altered life as we know it. Why is it guys like Dalio think only entrepreneurs can be innovative and change history--hint, too much Ayn Rand--but governments or ordinary humans can't? Yes, history is cyclical, but it also progresses, for better and for worse. Today, for instance, individual rights are better worldwide than they were 1,000
years ago, but our environment is so much worse. Both of those facts require new ways of thinking, about government and commerce especially.
Seafarer Funds’ China Analysis I re-established an EM fund early in 2022. It appears that I was a bit early. Which means it was crushed. PDEZX...which I added a bit to last week. Over the next 2 years I'll either get crushed again, or go up 90%.
i know THAT feeling!
BREIT vs SREIT - What Investors Should Know
Seafarer Funds’ China Analysis I re-established an EM fund early in 2022. It appears that I was a bit early. Which means it was crushed. PDEZX...which I added a bit to last week. Over the next 2 years I'll either get crushed again, or go up 90%.
Roth IRAs funding and conversions You've identified a key reason why people can come out ahead by doing conversions.
I showed the arithmetic in my Jan 14 post. Basically by pre-paying taxes (via conversion), you're moving tax money from outside into your Roth. So you never again pay taxes on that money's growth. More money sheltered means more money after taxes in the end.
2010 was actually the second time the government allowed the taxes on conversions to be spread over multiple
years. You were allowed to declare half of the 2010 conversion amount as part of your
2011 (not 2010) income, and the other half as part of your 2012 income.
https://www.kiplinger.com/article/retirement/t046-c001-s001-faqs-on-the-new-roth-conversion-rules.html2010 Pub 590 (see p. 2 - What's new for 2010)
The first time the government allowed people to spread taxes on conversions over multiple
years was in 1998. Then you were allowed to split the amount converted equally among four
years: 1998-2001.
1998 Pub 590 (see p. 39).
Seafarer Funds’ China Analysis @LewisBraham,
Several Morningstar articles had mentioned the use of quantitative research for DODEX.
"Dodge & Cox isn’t normally associated with quantitative work, but quant analysis can serve fundamental strategies just as well as tactical trading strategies. Robert Turley, who holds a doctorate in business economics, has had a big impact on the firm’s quantitative and risk management work. He’s one of six named managers on Dodge & Cox Emerging Markets Stock (DODEX). This fund has made quantitative research more central to the process than it is at other funds."Link"Unlike the firm’s other offerings, however, this one relies on a quantitative model—developed by committee member Robert Turley—to find attractive stocks. The firm’s vaunted analyst team doesn’t dive deeply into the model’s recommendations; it simply checks if those stocks meet the team’s expectations for valuation, management, and business prospects."Link Dodge & Cox communications emphasize the use of fundamental research for DODEX.
I did not find quantitative research explicitly mentioned.
"Dodge & Cox relies on fundamental research to select investments for the Fund’s portfolio, supplemented by financial screening models that help identify companies from within the Fund’s investment universe for further consideration by research analysts."Summary Prospectus"The Fund is constructed based on Dodge & Cox’s strict valuation discipline and fundamental approach to stock selection, with a portfolio built on the expertise of our global industry analysts. In the years we have spent investing in emerging market companies for other Dodge & Cox mutual funds, we have built tools to enhance our analysts’ ability to identify risks and opportunities in emerging markets." Link
Roth IRAs funding and conversions Big fan of Roth conversions. Did 3 - all post retirement, Couple nice features: No RMDs + when you need a large amount all at once for a major purchase the $$ is easily accessible w/o having to worry about the tax hit.
As sma3 alludes, the best investments after the Roth is established would appear to be the growthier ones - particularly if you have a very long time horizon. Not a done-deal however. If you felt markets were high in terms of valuations, you might want to keep more conservative investments in the Roth for a while. A dollar’s loss in a Roth actually hurts more than loosing a $ in a taxable Traditional IRA. Another way to look at it: If you gamble with a highly speculative investment inside a Traditional IRA, Uncle Sam is party to any loss. But if you gamble inside a Roth and lose money, it’s 100% your own money.
No rigid rule here. But have tried over many years to position my best and most stable funds inside the Roth (those with low fees, long proven track records, highly reputable firms). Newer funds, smaller balances, and the assets I trade in and out of more have ended up in the Traditional. Also - hardly ever keep cash in the Roth.
Roth IRAs funding and conversions I believe that the final result depends on many factors, such as your tax rate now compared to the tax rate many years later. Yet another consideration is whether you plan to use all of your funds, or pass them to your children upon your death.
Roth IRAs funding and conversions My wife and I have been converting some of our IRAs into Roths, now we are retired and in lower income brackets, until we have to take RMDs in 3 and 7 years respectively.
This now adds a third type of account besides general taxable vs non-taxable, ie one that while non-taxable will hopefully be available to our heirs.
Any thoughts re
1) best type of assets to put into a Roth?
The typical recommendation for a taxable account is non- dividend paying equity funds and growth stocks as capital gains rates are lower than income tax rates. Qualified dividends also get taxed at capital gains rates.
Whereas investments that throw off cash taxed at income tax rates should be in IRSs etc, as all of the withdrawals will be taxed at those rates, regardless.
Bonds even high yield Bonds while tax free in a Roth, would not seem to have the same prospective rates of returns over decades as Equities. I also want to avoid speculative ideas, as significant capital losses eliminates the advantage that taxes have already been paid on the money.
2) Has anyone found useful calculators or spreadsheets to help determine the tax implications of Roth conversions? Surprisingly, I cannot find anything helpful, other than calculations for the RMD itself.
Matthews Asia Total Return Bond and Asia Credit Opportunities Funds to be liquidated Thanks
@Crash &
@carew388Neither MAINX (+3% 1 year) or MICPX (
-1.65%
-1 year) appears to have a terrible one year stretch. Most everything related to EM got clocked last year. Not familiar with Matthews funds - but recall some favorable mentions here over the
years. Possibly “fickle” investors fleeing, or maybe (more likely) just the trend out of mutual funds and into ETFs.
