BAC - 24% YTD
APPL - 19% YTD
BRK - 12& YTD
Does diversification work ? Looks like over YTD it does.
Have a good day, Derf

YTD? Look at the last 10 years and see why you needed only APPL.
I'm talking more about wider range funds, not single stocks.

Clements says he has over-rebalanced stocks so that he now has 80% of investments in stocks. The other 20% is in short term bonds - which he considers a cash-like bucket - money he will spend in the next 5 years.

The other issue which he addresses is the price inefficiencies required to build a ladder for less than $500,000
I can't imagine someone with only $100,000 in total retirement savings ( unfortunately there are a lot of Americans in this boat) would find this useful.
Here he is buying two or three bills in some of the rungs. I don't see why you couldn't do every five years for example.

I've seen things like this suggested before. As the writer points out, there are two concerns.
The first is volatility, which he addresses by purchasing a ladder at time t0 that mature in 1 year, 2 years, 3 years, and so on.
The second concern is that one needs to buy bonds with a positive real rate of return. Right now, at least, that seems to be possible. If bonds had only a zero real return then you'd exhaust them after 25 years (4% inflation adjusted x 25 years = 100%).
Likely one would want to do this with only part of one's portfolio, for two related reasons. One is that there's no upside potential. The thing about a safe withdrawal rate is that it is usually a floor, meaning that in most scenarios one comes out better. Not here. The other is that there's always the possibility of living longer than 30 years. (Well, not always; one might be starting at age 80.)
It would be interesting to compare results with an inflation adjusted annuity. That would address the risk of living "too long". The problem here is that this is a product that may no longer exist.
https://obliviousinvestor.com/inflation-adjusted-annuities-no-longer-available-now-what/
(This column points out the same longevity risk with TIPS and of course inflation risk with nominal annuities.)

90% in equity for 80 years old…he/she must has sizable pension and social security and not worry the growth part of their income. Advisors would help.

Much of the stuff I read indicates that current "hope" is for Fed to slow the rate hikes and then "stop" next year. I assume this is why with YOY CPI running 6 to 8% the breakeven tips/5 year treasury rate is only 2.4%. This scenario says buy LT bonds.
If the rate hikes push us into depression, LT bonds are best place to be too.
I tend to think that the "hope" is just whistling past the graveyard, and much of the inflationary pressures (War, Russia control of large commodity markets, political unrest interrupting supply chains, large % workers stuck with long Covid, keeping unemployment low and wages high ) are unresponsive to Fed hikes, without killing the economy. Killing the housing market may not help as much as it did in the past, as many people bought up in the last five years and don't have to move. WFH will allow job switches with relocation, and low unemployment will allow workers bargaining power over relocations.
The 180 degree alternative to this scenario is "Stagflation", ie continued higher inflation with low economic growth. This would presumably be bad for longer term bonds, and almost everything else except MM.
Neither scenario is good for equities, especially high PE overvalued stuff. Solid high free cash flow stocks may do better, but the PE will be ratcheted down if inflation continues high.
It is impossible to tell how long this would last, but the SP500 was underwater for 5 to 7 years in the 70s.
At 70, I am unwilling to make any large bets one way or the other, so have been trying to diversify, keeping a lower than normal % equity, and moving some of my large % MM and short term bonds farther out the rate curve.
As we don't have to buy a house, a car or much else except food and gas in the CPI, our personal inflation rate is probably lower than national averages, and a 4% return on a five year bond is acceptable.
IF you look at valuations, TINA seems dead and we now have BAAA ( Bonds are the better alternative)
https://approd6.advisorperspectives.com/articles/2022/10/13/bonds-are-the-better-alternative
Commodities and alternative funds are worth a good look too.

Hi@Derf et al
A bond plan: Ah, yes. When rates begin to subside. So, I/we have to think we know and can witness as a meaningful shift and one that has legs, that will travel for more than 3 months. A tough task, yes?
The "immaculate" bond plan is: Maintain our cash in FZDXX MM at 3% and then attempt to catch a wave with investment grade bonds; buying at enough of a depressed price to make the money on the price ride upward. A purchase would likely be a dollar cost average, barring some type of special financial event. At this point, the bond purchase would be AGG, bond etf.
I feel the CD plans discussed have full merit and are a good plan, too. If I traveled that path, I would keep 6 month and/or 1 year laddered combo. I am not convinced the FED can keep pushing rates for more than 1 more year without causing too much economic damage, high inflation or not; which for the most part they can not control, due to conditions beyond their control (being political, war and climate). If rates continue to climb, we'll have a continued higher yield with FDZXX MM.
As to the below. I watch several different bond types for movements related to yields. These 2 below have traders involved, for the most part, versus the average retail investor. They have distinct price actions that I've followed for several years. I'll be watching these 2 for clues, too.
And, as important; is that I am able to dedicate time to research and view Bloomberg. Yes, one can learn from tv programs.
The first two TBT and TMF are M* links, if you want to look. They will link to "quote", but you may select any of the other tabs for other data. The third is the relationship, of the two, to interest rate changes.
TBT Ultra Short 20 + YearTreasury
TMF Bull 3X 20+ Year Treasury
TBT vs TMF chart Starting Jan. 2020 to date.
Sleep time here,
Catch

@catch22 @Sven @Old_Joe What are your thoughts on reaching out to a longer maturity rate In the near term ? I'm asking as the last time rates were around 3% for 2 years I bought a CD for two years & within a short time rates were headed down. I have 3 short term cd's coming up before end of year & will reinvest for a longer dated maturity .
One cd in 2023 , so looking at 2 or five year ?
Thanks for your time, Derf

BAC - 24% YTD
APPL - 19% YTD
BRK - 12& YTD
Does diversification work ? Looks like over YTD it does.
Have a good day, Derf

Also remember how BRK acquired shares of BAC
bank-america-become-one-warren

Buffett ended up investing $5 billion in preferred Bank of America stock redeemable at a 5% premium and paying a 5% annual dividend. In addition, Buffett received warrants to buy 700 million shares of Bank of America common stock at a price of $7.14 anytime within the next 10 years.
Right off the bat, Buffett was earning $300 million per year in dividends from his preferred shares. He waited until 2017 to exercise the warrants to buy shares of common stock at the $7.14 price. By the end of 2017, those shares were worth $20 billion, three times the size of his initial investment.
At the time of the Buffett bailout, Bank of America shares were trading at around $7.65. By late 2012, Bank of America was trading back above $10. After a volatile decade of trading, Bank of America hit its post-Great Recession high of $35.72 in December 2019.
BofA In 2020, Beyond: Bank of America shares dropped to $17.95 in March during the coronavirus sell-off, but have since recovered to above $27.
Buffett has made a fortune on his initial investment, but he's still buying the stock. In the third quarter alone, Buffett added 85 million shares to his stake, which is now valued at about $24.3 billion.
Bank of America investors who bought the day of the Buffett investment back in 2011 didn’t get the same sweet deal Buffett got, but they’ve still done pretty well over the years.
In fact, $1,000 worth of Bank of America stock bought on the day of the Buffett investment in 2011 would be worth about $4,081 today, assuming reinvested dividends.

@AndyJ
Nygen's colossal error with WaMu made me believe the entire "shop" was and is suspect.
this ranks with the Sequoia disaster, and I can never understand/forgive the board of directors for allowing this to happen.
While there are many articles ( mainly form M*) about Hero's "genius" I never found that to be believable. Sorta like the Davis father and son's "brilliance" in managing Clipper funds.
Open the hood, look around and run for the hills
Start a small position and wait and see. If in three years, you are significantly underwater and all they do is blame "market conditions" sell
Very different story from Valley Capital that states up front they will not buy unless they see real value. They underperform wildly in some markets, but at least you know why and you don't loose money, only opportunity cost

Scratched an itch today, it was too hard to just watch it and do nothing. I added to two preferred shares I've held for a long time CHSCL ( 7.50%) and CHSCO ( 7.875%).

Excellent holdings. I'm sorry I pulled out of them years ago, but one of them (N, I think) is sitll trading a tad below par, which has tempted me lately.

England needs to hold a general election. How can the country had 5 prime ministers in the last 6 years ? Lewis B is spotted on Britain's resurgent nationalism .
https://newyorker.com/news/our-columnists/after-liz-trusss-resignation-britain-urgently-needs-a-general-election

Hi all on this page, I have already posted this to the Private TBO victims board, but wanted to post it here in the public as well. If anyone has any thoughts or can help us?
Hi All, below is the research that my husband has done on the APPF (Authorized Push Payment Fraud). In the UK they have laws and basically automatically reimburse victims like us in situations like this. The US is behind. But there is hope. Here is his research:
Making the Case the Fraudster's Banks are Guilty of Negligence and Ought to Reimburse the Fraud Losses
The argument in short is the banks should have prevented the fraudster from opening accounts with the banks to stole our money. Moreover, the banks should have carefully monitored the accounts for suspicious activity, preventing the fraudster from stealing our money. Such suspicious activity includes withdrawing our money immediately or very soon after it was deposited, cashing large checks instead of depositing them, transferring our deposited money into crypto currencies, performing in-person bank activities in quasi-disguise (a cap and a medical mask), etc.
The fraud is called Authorized Push Payment Fraud, or APP fraud:
This fraud "happens when fraudsters deceive consumers or individuals at a business to send them a payment under false pretenses to a bank account controlled by the fraudster. As payments made using real-time payment schemes are irrevocable, the victims cannot reverse a payment once they realize they have been conned." (https://www.fico.com/blogs/what-authorised-push-payment-fraud)
The responsibility of the banks to detect fraudster's opening or holding an account(s) with their bank falls under the principle of Know Your Customer, or KYC:
This "refers to due diligence that banks and other financial institutions must perform on their customers before doing business with them. Know your customer policies are usually required by governments and enforced by bank regulators to prevent corruption, identity theft, financial fraud, money laundering and terrorism financing. Most Know Your Customer frameworks are based on four components: 1) customer identification, 2) customer acceptance, 3) transaction monitoring and 4) ongoing risk management. Requirements vary by country, but the collection of basic identity documents, comparison against certain name lists (‘politically exposed persons’ or PEP lists, for example), and analysis of transaction behaviors are most common." (https://fraud.net/d/kyc-know-your-customer/)
Anti-Money Laundering (AML) regulations are also relevant.
"AML is a set of regulations, laws and procedures that detect and prevent criminals from disguising illegal funds as legitimate income. AML policies help banks and financial institutions combat financial crimes. AML regulations require banks to collect customer information, monitor and screen their transactions and report suspicious activity to financial regulatory authorities. Additionally, the AML holding period requires deposits to remain in an account for a specified amount of time (at least five trading days in the U.S.). Banks can use this holding period to help in anti-money laundering and risk management." (https://www.jumio.com/aml-guidance-banking-finance-2021/)
Financial scams and frauds using banks has greatly increased in recent years. Victims of fraud are unaware of this development, but banks are well aware of it and therefore ought to be even more diligent than ever. In other words, banks are more culpable than ever for insufficient Know Your Customer and Anti-Money Laundering practices in a setting where financial fraud has significantly increased and banks know it.
"Authorized Push Payment (APP) fraud losses have now outstripped fraud losses on bank and credit cards for the first time. Impersonation scams more than doubled (up 123%), investment scams rose by 95% and romance scams were up 62%." (https://www.finextra.com/blogposting/20949/could-poor-bank-kyc-part-the-problem-of-fraud) Given this, banks should be especially diligent to prevent their banks from being involved in APP scams.
Articles
https://www.finextra.com/blogposting/20949/could-poor-bank-kyc-part-the-problem-of-fraud
https://www.paymentsjournal.com/is-poor-bank-kyc-enabling-a-spike-in-fraud/
https://www.benthamsgaze.org/2022/04/29/us-proposes-to-protect-bank-customers-from-authorised-push-payment-fraud/
https://www.financierworldwide.com/when-are-banks-liable-for-not-spotting-fraud#.Y00vQb1Ol5Y
https://www.cnbc.com/2022/07/20/federal-watchdog-to-tighten-bank-rules-around-money-transfer-scams-.html
https://www.pymnts.com/bank-regulation/2022/congress-drills-bank-brass-on-authorized-push-payments-fraud/
https://www.reuters.com/business/finance/uk-banks-told-reimburse-customers-tricked-by-scams-2022-09-28/
https://www.addleshawgoddard.com/en/insights/insights-briefings/2022/finance/app-fraud-three-key-legal-developments/

@hank -
Warren Buffett on diversification:
"Warren Buffett has famously said he is against diversification. "Diversification is a protection against ignorance," Buffett once said. "[It] makes very little sense for those who know what they're doing."

And I agree with him. Since 2000 when I started using my system, I never diversified and I used only several funds. For years I used 5 funds. Then I changed to only 2-3 funds and they are not equal. In 2000-2010, the SP500 lost money, in 2010-20, US LC , mainly growth were the best.

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

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.

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 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.

@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.

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,