Hi guys & dolls, Bonds being called away is one of the reasons Old_Skeet went to bond mutual funds only becasuse I simply got tired of bonds being called away from me. Seemed as though I'd buy another one and it would get call away after a couple of years, or so, of buying it. Many times I could not replace the bond with another at or about the same interest rate as the called bond without having to pay a premium. And, with this, I decided to just simply buy bond mutual funds.

@MFO Members: As a holder of Pimco Income Fund I admit the expensive is high, but what concerns me is the size of the fund $103.3 Billion. I beliece it's size has hurt performance over the last couple of years despite Dan Ivascyn's claim that it hasn't.
Regards,
Ted

@Edmond Thanks for the heads up about Yardeni's blog. His latest entry was definitely worth reading. I used to follow him but somehow lost touch with his writings. My email address is now back in his updates que. It does not appear the central banks are ready to give up on their easy money policies. So, from his perspective, it sounds like additional asset price inflation is probably in the cards. Too bad his cryptic ending comment does not spell out more clearly when he thinks that approach probably won't continue to work any more. It seems like we are already in the era of diminishing returns. Perhaps jeremy grantham's ponderings about a gradual reversion towards the mean for asset prices over several years makes as much sense as anything? Its hard to quickly step too far away from risky assets when interest rates are so close to zero and additional liquidity keeps getting pumped into the system.

Spending this afternoon looking at some long-term stock & equity-index charts. Just thought I'd jot down some impressions.. Just thought I'd memorialize some thoughts, for my own benefit as much as anyone else's...
Bonds (AGG) - At $112.xx, bonds appear to be at major L/T resistance, having reached this area in 2013, 2015 & 2017, only to then turn back down... Nothing prohibits a continued move up, but MAN, the YTD move has been a rocket. Nothing grows to the sky.
S&P index: Broke out past resistance in July, north of the mid-2900's. Then promptly fell back. (i.e. so far, could not hold the breakout). July is seasonally a strong equity month (and that is what we saw this year). Aug & Sept (& Oct), often give back a lot of points. Looking 'below the surface' of the index, here is how I interpret l/t charts of some of the larger stocks:
***For the optimists out there, I suppose you could replace the word "topping" with "consolidating prior gains, awaiting the next leg up".
CONSUMER DISCRETIONARY
AMZN 22% of XLY -- L/T topping? ***
HD 10% of HLY - L/T topping? ***
MCD 7.5% of HLY - No resistance, but PE 29. (while S&P categorizes MCD as 'discretionary', I view it as 'the poor man's kitchen' (i.e. a consumer staple).
COMMUNICATIONS
GOOG /-L 24% of XLC – L/T topping? ***
FB 19.5% of XLC - - L/T topping? ***
TECHNOLOGY
MSFT 20% of XLK - No resistance. But extended?
AAPL 16.5% of XLK - L/T topping? ***
FINANCE
BRK.B 12.2% of XLF - L/T topping? ***
JPM 11% of XLF - L/T topping? ***
INDUSTRIAL
BA 7.9% of XLI - L/T topping? ***
HON 5.5 of XLI - only possible s/t topping
UTX 4.7% OF xlI -L/T topping? ***
DJT -- L/T topping. 2019 highs are below 2018 highs.
In most cases, as I write this, the stocks are not at "the top" (i.e. all time highs), but they do appear to be range-bound, somewhere between their high, and what might be deemed "support", technically speaking. As CNBC technician Randall Carlson likes to say "topping is a PROCESS, not a (single-) price".
Disclosure: As time was limited, I didn't view the Utes, or Materials (each ~ 3% of the index), or Energy & Healhtcare -- each of those seems to mostly move to their own tune, rather than general economic conditions.
Meanwhile:
World equities-EX-US (IXUS): These peaked in January 2018, then nosedived through 2018. Then rebounded in 2019 to $60.xx but turned back down. $59-$60 seems to have become the new resistance level.
European markets, removing the FX effects (HEDJ) seems absolutely refusing to breach a line of resistance in $66-67 area. Its tried and failed 7 times in the past 5 years to do so, including in July... How healthy can ANY equity market be, if it supported by interest-rate suppression like what we see there...? The UK (EWU) appears to be at/near support -- presumably the market is being avoided as we approach Brexit. Might be persuaded to dab a toe in here..?
Japan (DXJ, hedged for FX) -- I always find it hard to "read" the Japanese market technically. I can only say that in mid-August 2019, it certainly cannot be said to be in a bullish uptrend..
China (FXI)... Strangely, FXI seems to be "at support" ~ $38.xx. -- Off about 28% from its recent (early 2018) highs.
India (INDA). Another market that I find hard to "read" --- volatility is often intense/sudden, both up and down. That said, with the exception of a "blow-off top" in January 2018, $35-36 seems like rather dogged resistance. I'd be surprised if it broke above it
Gold (IAU) - Could definitely use a rest (i.e. pullback) after recent sudden move up. But, what I see is:a) higher-lows since the late 2016 low, b) successful breach through the intermediate-term line of resistance at $13.xx price area, and from a fundamental standpoint, any significant currency dislocations (e.g. US, China, UK or Europe) OR geo-political conflict (Persian Gulf, or more acutely, Kashmir) could return IAU to the 2012-2013 resistance area (or beyond)...
TAKEAWAYS: Bonds look extremely stretched/overbought. Foreign markets have not overcome their January 2018 highs, despite an enormous "up move" in H1-2019. In many cases, major growth stocks in the S&P, seem to be slightly under lines of price resistance -- suggesting at least a modest move up toward resistance is in the realm of the possible. However, much of the market does appear to be in a trading range, suggesting any move up will not have "legs" and may well be turned back as prices move into their zones of resistance. Risk/reward doesn't strike me as particularly attractive.

@ET91, today environment is challenging for smaller cap funds. TRP is one of the few shops that close their funds in order to maintain their investment process and their expense ratios are reasonable. I invested with their Mid Cap Growth fund for sometime now and having the same manager for over a decade is excellent. The fund finally closed to new investors a number years ago. I understand the closed TRP New Horizon lost its long time manager last year and there is fund outflow today. There are talk that this fund may reopen, but do you want to invest with a new management team? You may want to check if other TRP smaller cap funds are still open.

Machine Learning Engine Says S&P 500 Is 8 Times More Likely To Drop 5% In A Month Than To Rise 10%
https://www.forbes.com/sites/greatspeculations/2019/08/09/60-years-of-raw-data-say-sp-500-is-8-times-more-likely-to-drop-5-in-a-month-than-to-rise-10/#7410a5f27958
Did you know if you’re investing in S&P 500, over the next month it’s roughly 8 times more likely you’ll lose 5% or more, than rack up gains greater than 10%?
Specifically, based on Trefis analysis of many decades of data:
... Anyone think going short for next 30days?

https://www.journalnow.com/business/the-hunt-for-yield/article_5fc7b62b-fae5-5a40-8de4-adcd2d11e5eb.html
The hunt for yield
I’ve got an investment idea for you. How about you loan me money and 10 years from now I will give your money back, less than one-half percent per year. But, no worries, it’s guaranteed. You will lose exactly one-half percent per year: no more, no less.
Anyone has DSL in their portfolio
Thx

Homes that were purchased for $30,000 in the 60’s are now worth over a million.

Zip 91011. My son's grandparents. My first wife moved back in with them, all those years ago, following divorce. They bought at $20,000 in early 1960s and made small expansions through the years. Selling price 2 months ago: $1.9M

As in the past 30 years, demographics will determine the best investments. Millennials outnumber boomers now, and will continue to, even more so in the next decade as the boomers kick the bucket. My picks are: online shopping - Amazon, phones - Apple. Starbucks and Netflix round out my picks.

Ten years? Debt, equity, and private equity in renewable energy, electric vehicles, the subset of utilities that comprehend the times we live in, energy efficiency, batteries, materials needed for an energy economy makeover, possibly grid managers ... you get the drift.

8 Top Stocks From the World's Largest Hedge Fund
https://money.usnews.com/investing/stock-market-news/slideshows/top-stocks-from-the-worlds-largest-hedge-fund?slide=5
Ray Dalio’s Bridgewater Associates is the largest hedge fund in the world with more than $160 billion in assets, and its Pure Alpha fund has averaged an annual gain of about 12% since 1991 and has logged just three down years in that stretch. Thanks to quarterly 13-F filings, any investor can track Dalio’s latest moves.
Here are Bridgewater’s eight largest stock holdings.
1. Biogen (ticker: BIIB). Biogen develops drugs for treatment of cancer and inflammatory diseases, and its multiple sclerosis business holds about an 18% share of the $18 billion global market. Dalio owns 240,378 shares of BIIB stock worth about $56.8 million.
2. Bristol-Myers Squibb Co. (BMY). Dalio started accumulating his stake in Bristol-Myers in the second quarter of 2018 but raised his stake by 78% in the first quarter to 989,293 shares worth about $47.2 million. Investors emulating Dalio should be buying Bristol-Myers on the dip after the stock dropped 22.2% in the past year in part on concerns about opioid litigation. – Wayne Duggan
Biogen (BIIB)
Bristol-Myers Squibb Co. (BMY)
Alliance Data Systems (ADS)
Eastman Chemical Co. (EMN)
United Rentals (URI)
Macy’s (M)
Nucor Corp. (NUE)
Royal Bank of Canada (RY)

@johnN said:

so what is the best plans? buy all these vehicles?

There is a saying a carpenter told me about 15 years ago when he was helping my wife and I build our first retirement home. It goes "Its kind of hard saying without really knowing." A decade is a long time. So, that saying pretty well answers Mark Hulbert's question about the single best investment for that period of time. Having said that, I would pick my largest portfolio holding, RPGAX, to answer the question. It has a broad multi-asset mandate, a fair amount of investment flexibility, and a top notch management team. That seems like a good mix for facing all the unknowns a decade's worth of crystal ball gazing brings to mind. Thinking more short term and small scale with a "Its A Low Interest Rate World" frame of reference, I just took a small, speculative nibble at MNR a few days ago.

OREAX tops FRIFX at: 1, 5 and 10 years (per Lipper). I wasn’t touting the fund, just commenting on the asset class overall. As you might recall, I have no brokerage accounts, Just some money directly with a few houses. Actually, now that Oppenheimer has been taken over by Invesco it appears my investment options have broadened quite a bit.

yes, my bad, I shoulda stuck w FRESX only

@hank You commented...

I’ll say I continue to be amazed by the performance of real estate funds. Maintain a small “nibble” in OREAX - and the danged thing is up 19% YTD (20% after today) - following on the heels of several other good years. I keep expecting it to fall off a cliff - but hasn’t yet.

It looks like OREAX lost about 6% in 2018 when there was increased concern about rising interest rates. That concern has faded this year. Maybe REITS will continue to make sense as long as we remain in a low interest rate world.....

@davfor - Thanks for the dose of reality. I’d overlooked the nasty 2018 swoon in many markets. Also, I tend to use Price’s TRREX interchangeably with Oppenheimer’s OREAX. Nothing to do with which is better - but dictated more by logistics, since I invest directly with both companies. Looks like on March 6 of this year I shifted 100% from TRREX to OREAX (by moving funds around at each house).
Wish I hadn’t deleted my running list of exchanges from about 5-6 years ago. However, I did buy into OREAX (umm ... maybe 2012 or 2013) after it had sustained a nasty licking. Was really in the cellar at the time. Yes - the falling rates have helped REITS. Personally I suspect they’re overvalued - but sticking to my normal allocation is the plan. You never can call the markets exactly right.
Regards

Pardon me if I’m wrong. But isn’t that the reason we buy mutual funds? To hire someone else to do our investing for us? I don’t know if I’d be any good at investing or not. Never bought or sold an individual stock or bond. I do know that some fund managers are better than others and some fund houses run a better shop than some others.
I’ve been in and out of more fund houses in my near 50 years in the markets than I care to think about. Some that failed to satisfy me for one reason or another: Franklin/Templeton, Strong Funds, American Century, Calimos, TIAA-Creff, Hussman, Gateway, James Funds, Janus, Delaware, and most recently Oakmark.
The company I trust most to do it right and to do it with integrity is T. Rowe Price. However, Dodge & Cox is also a favorite.

@hank You commented...

I’ll say I continue to be amazed by the performance of real estate funds. Maintain a small “nibble” in OREAX - and the danged thing is up 19% YTD (20% after today) - following on the heels of several other good years. I keep expecting it to fall off a cliff - but hasn’t yet.

It looks like OREAX lost about 6% in 2018 when there was increased concern about rising interest rates. That concern has faded this year. Maybe REITS will continue to make sense as long as we remain in a low interest rate world.....

OREAX tops FRIFX at: 1, 5 and 10 years (per Lipper). I wasn’t touting the fund, just commenting on the asset class overall. As you might recall, I have no brokerage accounts, Just some money directly with a few houses. Actually, now that Oppenheimer has been taken over by Invesco it appears my investment options have broadened quite a bit.

Sorry - but the 10-year time horizon mentioned renders such comparisons useless. Anything can happen over such a short (and random) time span. Everything runs in cycles, and the cycles can be very long. Since they were basically polling investor “expectations”, however, the article has value from that standpoint.
I’ll say I continue to be amazed by the performance of real estate funds. Maintain a small “nibble” in OREAX - and the danged thing is up 19% YTD (20% after today) - following on the heels of several other good years. I keep expecting it to fall off a cliff - but hasn’t yet.

Hank, to address your question below, here is my perspective: The return of bond funds since the mid-Dec 2018 lows are primarily price-appreciation. Go take a look at the charts of quality bond funds/ETFs. Its like a rocket, and approaching (or at) long-term resistance levels. I don't find it probable that appreciation like we have seen can be extrapolated much further. At least not without some type of correction.
OTOH, as I scan current SEC yields of various quality bond ETFs today, I note AGG's yield is 2.47%, while ICSH's yield (an ultra-low duration bond ETF) is 2.62%. Meanwhile, AGG's duration is 6.0, while ICSH is 0.3.
Based on bond prices here and now (not from 8-9 months ago), cash & near-cash instruments look like a better risk/reward proposition at this time. Obviously, if Treasury yields head to 0%, I will be kicking myself.

Is there a link here?

I’m curious what the reasons for the surge in money market funds might be. The return seems paltry. Over past year, money market mutual funds returned an average 1.97%. VG’s did slightly better at 2.35%. https://investor.vanguard.com/mutual-funds/profile/overview/VMMXX (Need to click on “Price & Performance”.)
Geez - Give me anything but one of these .... A night in Vegas? Online poker? Clean the attic and sell some antiques?
A couple alternatives to money market funds for folks with at least a few years time horizon and able to live with some principal fluctuation: TRBUX- one year 3.51%, DODIX - one year 8.17%

Is there a link here?
I’m curious what the reasons for the surge in money market funds might be. The return seems paltry. Over past year, money market mutual funds returned an average 1.97%. VG’s did slightly better at 2.35%. https://investor.vanguard.com/mutual-funds/profile/overview/VMMXX (Need to click on “Price & Performance”.)
Geez - Give me anything but one of these .... A night in Vegas? Online poker? Clean the attic and sell some antiques?
A couple alternatives to money market funds for folks with at least a few years time horizon and able to live with some principal fluctuation: TRBUX- one year 3.51%, DODIX - one year 8.17%