Hi @_Bobpa
I am not investment guru/expert, but I would imagine betting on more aggressive heavily stock driven portfolio [90/10], or Emerging market/oversea products may get you back to previous peak soon if there is indeed recovery. Many predict maybe few years before we see dows at 30000 levels. Others say recessions on horizon and unemployment rate maybe extremely high in near future and severe economiccontractions.
For us late 40 years old, has many years until retirement, our portfolio still comprise 80/20, mostly index products. We are also couch potatoes thus we do hold Tdf 2045 funds in vanguard and schwab. We did not sell, hoping for market to recover soon
Our largest holders currently :
Brk.b
Vanguard primecap core
Vanguard emergent market etf VWO
EEM
Wellington fund vwelx
Vanguard star vgstx
Fbnd
Bnd
Vti
Voo
Been adding vde qqq and vti last week, even going all way downs
Probably will sell good holding bonds [private-corp bbb ] soon, would need cash to pay uncle Sam 2019 tax next few weeks.
Regards

That is exactly the problem. They use estimates until there are buys or in this case sales that establish a real price. So when the estimates are obviously higher or much higher than the prices they see quoted the last thing a manger wants to do is sell and set a price, but when a wave of redemptions come in they have no choice, the sell the prices drop more redemptions etc etc.
Over the last few years there are fewer and fewer market makers making the markets a lot less liquid. The few that are left probably have no incentive to offer realistic prices but instead low ball them. They also probably know when a huge fund company has to sell at any price

@BenWP- don't beat up on yourself too much- lot's of us have been there too over the years. Win some, lose some...

For what it is worth I think the issue with IOFIX is they were forced to sell thinly traded bonds at any price to meet redemptions after they exhausted their line of credit ( I seem to remember $200 million??)
Since these bonds probably sell "by appointment" and I think by phone anybody they called knew they were in trouble and offered low ball prices seeing if they would bite. They had not choice
Once they sold at those low ball levels, there is a price and more of the portfolio gets "marked to market" and the NAV is automatically that much lower, even if the bonds in the fund are really worth much more.
With corporate bonds that mature, like in ZEOIX, the mangers will tell you just to hang on and bonds that mature will mature at par in a few months or so, raising the NAV by that much. I don't know the duration of IOFIX, but if the mortgages mature in 10 to 15 years it will be a long time before they hit "par". Many homeowners may also have enough equity to refinance but that would be a redemption at par and would just reduce the interest payment. but "raise" the NAV.

"The Federal Reserve is providing the fuel for this morning's reversal, announcing that it will purchase Treasuries and mortgage-backed securities "in amounts needed," along with plans to buy corporate bonds and municipal securities and a lending program to support small-and-medium sized businesses'

>>> Many of these pieces of support is what has been in place in Europe from the ECB.......the "whatever it takes", especially from several years ago; with backstopping corporate bonds, etc.
And the beat goes on.......................

Few years back I recall someone bringing a bill to congress which would make it illegal for members of Congress to trade on insider information. The bill was soundly defeated.

STOCK (Stop Trading on Congressional Knowledge) became law in 2012. It was subsequently modified to make enforcement more difficult, but as of now it is still illegal for members of Congress to trade on insider information.
https://www.npr.org/sections/itsallpolitics/2013/04/16/177496734/how-congress-quietly-overhauled-its-insider-trading-law

I'm old enough to remember when NYC didn't pay the coupons on its bonds. (Of course, all the bond houses were sending out messages that NYC had to pay the bond holders before it paid the cops, fire fighters and garbage collectors. That may have been true legally, but it wasn't true either politically or practically.) This all happened in 1975.
For all you young'uns, what happened was that there was a moratorium on NYC payments, the coupon rate was reduced & it was eventually paid off. If history is your hobby, you can read about it at https://en.wikipedia.org/wiki/History_of_New_York_City_(1946%E2%80%931977)#Fiscal_crisis The hero who arranged all this was Felix Royatan.
So, bottom line, yes things can go wrong with munis.
And we should expect states, etc. to have reduced income from taxes as the virus decreases economic activity.
Finally, if you want to know how vulnerable your bond fund is to changes in interest rates, look for its DURATION. The duration is the average maturity of all the payments a bond will make (including its coupon payments). It's a bit less than the average maturity of the fund or bond. The magic about duration is that a change of X% in interest rates results in a change of (duration) times (X%) in the principal value of the bond - and in the opposite direction. So if interest rates rise by 0.5% and the fund has a duration of 5 years, then the principal value goes down by(5)(.5%) = 2.5%
That change is independent of credit risk - if the issuer of the bond becomes less credit worthy, then there will be a change caused by that too.

Charles,
I don't watch charts daily where I make my decisions. I do see prices daily because every night around 6:30-7 PM I see my total portfolio updates (Both Fidelity and Schwab allow you to aggregate all funds/accounts from several brokers.
Once a week write down my favorite funds for several categories which is around 30 funds. The rest of the time, I'm just watching and since investing is my passion for decades I read, watch, listen daily.
I may hold funds for weeks and months and sometimes years. Since 2000 I have my system of best risk/reward funds. It goes like this, identity best rusk/reward funds, select the top 3-5 funds and keep switching within this list. It's more complicated than that but that's the basics.
Example: I held PIMIX from 2010 to 2018, it did so well I couldn't find anything better.
Then, I retired and have enough, so now I mainly investing in bond funds and several times annually trade stock/ETF/CEF/whatever when I see a great trade.
Example: PCI is one of the best CEFs (managed by the PIMIX team and where Ivascyn has most of his money). I don't like CEFs volatility which can be much higher. Last Wed I traded it for around 30 minutes and made 5%, see (link) and the last post
When markets are unreasonable with a screaming value I may buy for short term to make a quick trade.
When I see that bonds+stocks don't make sense + very high VIX + panic I sell everything.
My main 4 goals are:
1) We need to make just 4.5% annually to cover LT costs+inflation for our portfolio to last for 4-5 decades.
2) I still want to make at least 6% annually with the lowest Standard Deviation (under 3) and without ever losing 3% from any last top and be positive annually. I no longer care to maximize performance but to keep our standard of living
3) Use mainly bonds OEFs with the flexibility to trade more often by using momentum and trends
4) May use sometimes faster trades of other funds(stocks,CEFs, gold and more).

Hi @Derf

@FD1000 said,"As usual, I follow my chart/trends and they come directly from the price which is the end result of the opinions of all traders. "
Something like the Junkster would have said ! Follow the price !

This method "price"; is a fully viable process. This does not preclude one's paying attention to what may or may not be pushing a price up or down; and of course, one's risk assessment.
A simple example from my simple mind. One is thinking of buying a particular vehicle that they have had their eye on......but, to be smart; buy a two year old model and avoid most of the first 2 years depreciation. Then one discovers the secondary/used pricing is even lower than anticipated and what would be normal. What happened? In searching the net you discover that, in spite of large new sales volumes, owners over the two year period have become dissatisfied with the product. So, Mr. Market price; sets the price.
Part of my method to discover pricing. But, I agree with FD1000; and his long time process, which is technical; but helps answer the question of why investment "x" is price performing in a particular fashion. @rono and others here also pay attention to Mr. Market pricing.
c'est tout
Take care,
Catch

It seems to me that with respect to "when to start buying" equities/equity funds the decision should mainly be based on two factors:
• How close are you to retirement?
• Do you believe that the equity markets will eventually recover and continue to operate as they have historically?
If you have five to ten years left to accumulate before retirement, and you believe that the markets will, in time, recover, then what's the problem with buying right now? There's a "1/3 off sale" going on even as we sit here.
If you're a little early, the market will decline even more before stabilizing and beginning another upward cycle. If you prefer to buy a little now, and maybe a bit more each week for a while, you will either get even better prices or maybe pay just a bit more, depending on what the markets do. Nobody knows exactly when we will hit bottom, but we're certainly in a good buying area right now.
Please note that I'm restricting my perspective to the equity market. What the bond market will do is being manipulated by so many outside actors that it's impossible to know what's going to happen. I'll leave the bond commentary to my friend Catch22.

A few countries and companies have successfully issued "century bonds" with 100 year maturities, so sure, this could work. Even Petrobras did a few years back. It's all part of that bond game where a whole lot of investors don't plan to hold most of their bonds to maturity anyway, so it's about hedging, and bets on the curve, or all these other things I don't pretend to understand.

Dear Old_Joe, we are not born investors, my profession is very far from it, but life offers us many opportunities to make silly mistakes. That is why I am following you for many years any trying to learn from you and many others.
MikeW, I fully agree that the financial support may give huge unexpected boost to the market. I am still 60% invested, I do not want to be too smart about things that I do not understand well enough. My main concern is that if the outbreak is not mitigated soon, the emotional response will be very strong, and the standard tools like looking at the 200 day moving average may not help us to understand what is going on. Probably we will know part of the answer soon.

@rforno- oh, yes! bought some 14% tax-free out of Salt Lake City for some power generating plants. Figured that if anyone could get through that period it might be the Mormons. They did, and the income was spectacular.
It was only many years later that I found out that those power plants were the massive coal-fired polluters at Four Corners.
Crap!

@Finder- Sir: I note that you've been around MFO for over six years, but we very seldom hear from you. That's a shame- your observations and comments are well done, and I'm betting that your continued contributions to the discussion would be well received.

@MikeM and @newgirl.
Thinking more about the letter MikeW shared ...
If the sudden drops are caused by forced redemptions, which I fear they are, the situation seems tough.
Forced redemptions mean discounted prices on thinly traded assets, which then sets the pricing matrix for remaining assets in portfolio. So, kind of self-fulfilling.
Suspect that impacts funds with similar RMBS. At least that's the way it should work.
While you can call this just "technical" as opposed to "fundamental" those selling prices now represent market price ... with the portfolio being "marked-to-market."
I could very well see these assets regaining their value quite quickly. In that sense, OK "technical" ... the assets are oversold. Like a lot of other assets seem right now.
Long run, RMBS will be AOK of course.
The struggle will be to survive more redemptions. All these investors (like me) lulled by low volatility and high return for nearly five years ... expectations now blown.
Liquidity is a risk we don't normally see until it's too late.
I don't think OEMs can stop redemptions, but I wish this one could.
If the nation closes next week, hope the markets close too for a while.
Maybe some reprieve.
Anybody else have a better take?
Good to see GP offering to take calls, which is the right thing to do.

NO ! We hold about 28% in healthcare from several years ago and will sit with this.

Alphacentric just released this letter. I'm not sure this relieves my concerns. It doesn't explain the steep drops:
March 20, 2020
Valued Investor,
We appreciate your commitment in the AlphaCentric Income Opportunities Fund IOFIX | IOFCX | IOFAX, especially
during periods of uncertainty and volatility. We believe the Fund is positioned well for this low mortgage rate
environment.
Markets have seen an enormous amount of cash being raised out of fear over COVID-19.
The recent NAV decline in our Fund is largely technically driven. On the flip side, the large draw down in the
corporate world, in both equities and bonds, can mostly be explained through deteriorating fundamentals (ex.
massive drop in airline, hotel, restaurant, retail, travel revenues).
While we are prepared for potential continued technical volatility, longer-term we are as confident as ever in the
fundamentals of our portfolio and believe the current rate environment may accelerate upside returns for our
Fund.
Here are the underlying reasons:
• Legacy mortgages originated back in 2002-2007, are 13-18 years old, why this is important:
o These borrowers made it through the worst housing crisis ever in 2008/2009.
o They have on average 43% equity in their homes today and have spent over a decade building
this equity.
o A good portion of their monthly payment today is on principal.
• YTD mortgage rates have dropped around 17% to historical lows, why this is important:
o Lower rates = increase in refinancing by homeowners and bond calls by service providers.
o Many of the legacy bonds that we paid less than par for are now likely to be paid off at or near
par.
o The increase in refinancing and foreseeable bond calls sets the table for nice price appreciation
over the next 12-18 months, in addition to the monthly income.
o Average price of the homes in the portfolio is around $260k, this segment of the housing market
continues to remain strong with low rates and a shortage of homes.
• Unlike corporate debt, our bonds are backed by hard assets - homes with real equity and in many cases,
the biggest asset a homeowner has.
o 10 out of the last 11 recessions have had minimal impact on housing.
o The Government provided many mortgage assistance programs to keep homeowners in their
house during the last recession and now, more than ever, it is of the utmost importance for
homeowners to stay put in their homes and away from others.
o In many cases, homeowner's two largest expenses, mortgage and energy, just got reduced.
o The Fund has no exposure to CLO's, CMBS, consumer credit, etc...just housing.
This will not continue forever, and as always markets will eventually stabilize. We know that being an investor
today, and during any period isn't exactly a stress-free experience, but we believe value investors should consider
adding to this portfolio.
Please let me know if you have any questions. If you would like to schedule a call with one of the portfolio
managers, we are happy to schedule it.
Thank you,
AlphaCentric Advisors
Garrison Point Capital LLC

I see financials at levels I've not seen in years ... BAC under $20, WFC under $30.
I think these are sales for long-term investors.
I suspect the folks at D&C are well prepared and are working overtime to capitalize. But after this past week, I'm thinking it will get worse before better.

Have we ever had a case where both stocks and bonds are in the toilet at the same time, like this? Even if monthly divs from my bond funds diminish, it's still something to depend on, while we all slide and get nicked and cut along this razor blade Market. How soon will my Fund Managers finally put the cash they're sitting on to use? A time-frame of YEARS to ride out this coming Depression seems likely. I hope it's more like 2 years, not 8, as with The Great Depression. Could this not be a "Greater Depression," given the high-flying valuations, beforehand? Feels like I'm watching the Fall of Icarus.

Yes, 2008 and treasuries were positive.

@Sven- for years I believed that I was the most cynical of the MFO group. Now I'm not so sure. :)

Well. I think there's still a healthy difference between skepticism and cynicism. But when I grew up in Missouri, that "show me" attitude was still taken seriously. Maybe it still is.