The General Employment Strike of 2020-2022 Howdy folks,
It's going on as we watch. How can we play it?
All around us, not only in the US, but overseas as well, we're witnessing (and participating in) a General Strike by workers everywhere. 'Take this job and shove it. I ain't working here no more'.
Workers have more power than they've had in decades and they're using it. Deere and Kellogg are out and on the west coast, the TV and Movie peeps narrowly avoided a strike because management caved in on every issue. At Deere, they were offered 5-6% and the workers are saying, Stuff It. I seriously believe the west coast hospital workers will walk and think of their leverage. And folks, this is only the beginning. Pilots can't strike, but they sure can get sick. Oh, and think how easy it is right now to supplement your strike pay. McDonald's is hiring at $21 per hour. This seems to me that the workers are going to win. Tough to bet against them.
The pandemic has created a perfect storm for workers and employment in general.
1. Not safe to go to work because of the virus.
2. Kids at home.
3. Tired of receiving shit wages for shit work.
4. Additional unemployment benefits [although the bs the republicans spread about exacerbating the problem has proven to be just that - BS. Indeed, the states that cut benefits early not only didn't see any reduction in help wanted signs, but it actually hurt their overall economies more than the states that maintained them due to a reduced aggregate demand.]
5. Lack of some spending - travel, dining out, concerts, movies, etc. - has allowed many households to become cash flush.
6. Perfect opportunity to change careers.
7. Virtual options for financial gain - Ebay, Market Place, OnlyFans, etc. My barber has a friend, who is buying Amazon 2nds for peanuts and reselling them.
Sokay, how to play?
Watch for the companies that figure it out and take the 'high road' vs. the ones that don't. A very easy tell, is whether there are Help Wanted signs or not. The businesses with pervasive help wanted signs are having a very tough time even staying open. How many restaurants do you know with reduced hours and menus? Which are simply raising wages and benefits and not bitching.
New industries that get it (e.g. pot. I was talking with a budista and he said, they were receiving great pay and benefits and it was the best job he'd had in years).
Short? Anyone that relies on truck drivers. Again, POT. To drive a semi, you have to have a CDL. With a CDL, you are subject to random drug testing and pot has a half life of 30 days. Hell, they're pushing to allow teenagers to drive. Feh, in my state, you've got to be 21 to buy pot.
Just a start of a discussion.
and so it goes,
peace and wear the damn mask,
rono
now, here's an unusual financial calculator need Re IRS penalties etc. vs a gogo bull market.
I have just been informed that an older relative, not out of it but trending, hasn't taken RMDs (large sums, meaning v large accounts) for the last 5y, nor filed returns ... and therefore looks to owe over a half-mil in penalties, taxes, and late fees. Maybe well over.
(This is a 403b, so hey, I wonder if you can sue TIAA for not automatically moving the RMD each year into some nonretirement cash account ... assuming they did not.)
Everything in SP500 ETF, I am told.
Anyway, to slightly soften the grievous sting of this supreme idiocy, I was going to rough-crunch how much extra they made in this almost-doubling bull market over that timespan. Close to a half-mil?
I ask about this only because their heirs will be, rightly, wailing about how many college educations etc. the forfeited moneys could have gone toward. And so on.
(What a dumbass mess, yes.)
PRWCX Cuts Equity Exposure If I'm interpreting portfolio data correctly from the TRP website dated 9/30/21, PRWCX equity allocation has increased to 75.68%.
Sector Allocation
As a percentage of Total Net Assets
As of 9/30/2021
INFORMATION TECHNOLOGY
14.33%
HEALTH CARE
13.58%
CONSUMER DISCRETIONARY
10.58%
FINANCIALS
10.28%
UTILITIES
7.19%
INDUSTRIALS & BUSINESS SERVICES
7.04%
COMMUNICATION SERVICES
5.97%
OPTION
4.48%
CONSUMER STAPLES
1.92%
ENERGY
0.18%
REAL ESTATE
0.13%
Top 10 Holdings
MonthlyQuarterly
Represents 38.51% of Total Net Assets
As of
9/30/2021
Microsoft
7.02%
Amazon.com
5.51%
GE
4.48%
PNC Financial Services Group
4.03%
Yum! Brands
3.16%
Thermo Fisher Scientific
3.11%
Alphabet Class C
3.08%
UnitedHealth Group
2.98%
Marsh & McLennan
2.70%
Humana
2.43%
TRP Ultrashort Bond ETF Market Purchase Disallowed at Fido Apparently, Fido considers the new TRP ETF TBUX to be illiquid based on volume. Fidelity will only allow limit orders to buy TBUX due to low volume. Why can't TRP create a market for this etf by getting financial advisers to buy it for their clients ?
Jason Zweig - New SEC Rule Designed to Protect Small Investors May Have Opposite Effect “Never take liquidity for granted. The ability to convert securities into cash promptly, at a price close to the last trade, isn’t a permanent property of markets; it’s a privilege that can disappear almost instantly at the worst possible time. Like water itself, market liquidity can evaporate in an instant. Many traders learned that in January when Robinhood and other brokerages restricted trading in such hot stocks as GameStop Corp. GME 0.33% and AMC Entertainment Holdings Inc. AMC -2.49% Liquidity also dried up instantly during the “flash crash” of May 6, 2010. In the financial crisis of 2008-09, even ultrasafe money-market funds temporarily suspended giving shareholders their money back on demand. …..
“A rule from the Securities and Exchange Commission went into effect at the end of September, generally preventing brokers from providing public price quotations on securities issued by companies that don’t release current financial information. Ladenburg, acquired by privately held Advisor Group Inc. in early 2020, no longer provides financial statements to the general public …
“ ‘If [small investors] were not paying attention to that rule change, they’d better be happy with what they own, because they may be stuck with it for a very long time,” says Robert Forster, a former hedge-fund portfolio manager who sometimes trades over the counter. “You owned a publicly traded security; now you’re a private-equity holder. Congratulations! You own it forever.’ “
Article appeared in today’sWall Street Journal and it appears you may link to entire article Here

FSRRX That piece is arguing that at best, VWINX will fall less than other traditional funds, e.g. since it leans toward value¹. That's in contrast to funds that are designed to benefit from inflation. Which is why I felt that it doesn't make much sense to directly compare performance of these two types of funds.
¹This is not unusual for traditional 40/60 funds. Only 4 out of 120 (30%-50% allocation) funds have portfolios that are in growth style boxes (per M* screener).
The writer speaks in sweeping generalities without substantiation:
- the fact that the Fed Funds rate will stay at or near zero for at least the next few years [as of Sept 2020].
Facts don't change, but predictions do as events change or more data is known. In June, "The central bank forecast[] it would raise interest rates twice by the end of 2023 after previously estimating there would be no interest rate hike until 2024."
Most recently (Sept), "Just over 70 per cent of [leading academic economists surveyed by FT] believe the Fed will raise rates by at least a quarter of a percentage point in 2022, with almost 20 per cent expecting the move to come in the first six months of the year. That is far earlier than the 2023 lift-off from today’s near-zero levels that Fed officials pencilled in back in June."
- Higher inflation likely leads to higher interest rates and a steeper yield curve?
Wellesley traditionally holds a longer duration portfolio than is typical for its peers. That would hurt Wellesley if you believe this generalization linking interest rates and yield curves and that it will hold the next time.
However, when we look at the last sharp spike in interest rates (1978-1981) we see a very different picture. Rate going up across all maturities (which would hurt all high grade bonds), but with the yield curve inverting - the opposite of steepening. (Inverted yield curves often presage recessions, which in turn can be triggered by high inflation and lower spending.)
(Source page)
Speaking of the late 70s and inverted yield curves, banks (notably S&Ls) took a beating, as they lent out long term money at lower rates while borrowing short term money (via deposit accounts) at higher rates. SA notes that VWINX concentrates on financials, but doesn't break it down further. (According to its latest
semiannual report, about half of the fund's financial sector holdings are in banks: JPM, BAC, MS, TFC.) Personally, I have faith in Wellington Management to navigate
this risk.
M* has an actual analysis of real performance data for VWINX to see how the fund responds to rising interest rates.
https://www.morningstar.com/articles/1041732/stress-testing-some-vanguard-and-t-rowe-allocation-fundsWhat M* found was that Aug-Dec 2016, "as the price of long-dated bonds fell, Vanguard Wellesley Income lagged its average category peer by 1.2 percentage points." VWINX lost money over that period while on average its peers eeked out gains.
OTOH, "over the more recent January-October 2018 interest-rate climb ... [VWINX] modestly outpaced the average of that group by 0.5 percentage points. Even with its longer duration, the strategy’s lower exposure to weaker-performing non-U.S. equities gave it a bump.
Hmm, a lesser exposure to foreign equities. SA didn't pick up on this. Could help again if rates climb globally, but hurt if rates rise disproportionately in the US. Regardless, we're again talking about relative performance against peers, not measuring against inflation oriented funds.
I certainly wouldn't sell VWINX. Though that's different from saying that this fund is designed to weather extended bouts of inflation well.
Selling or buying the dip ?! Its been a weird month where Energy boomed and everything else was sorta sagging.
1 MONTH RELATIVE PERFORMANCE
-6.3 % Healthcare
-5.3 Real Estate
-5.3 Utilities
- 5 Basic Materials
-4.2 Communication Services
-4.2 Technology
-3.7 Consumer Defensive
-2.5 Consumer Cyclical
-1.5 Industrials
+13.9 Energy
+ 1.6 Financial
Will President Biden’s economic stimulus cause inflation? Economists are unsure @LewisBrahamYour last entry reminds me of Ray Dalio's presentation on "How the Economic Machine Works". I recall one quote form his presentation that goes something like:
"One man's debt (liability) is another man's income (asset)"Debt creates what he describes as the long and short term debt cycles. Individuals need to service (repay) there debt (Principal & interest) to the borrower (usually the bank). An arrangement exists whereby the government injects liquidity into the system at a very low interest rate (overnight bank rate). The bank in turns loans this liquidity (money) to individuals and corporations so that they can receive and offer goods and services.
The money loaned to individuals and corporations needs to be repaid to the bank (both principal and interest). The money borrowed by the bank is only repaid to the government to the extent that it is borrowed and the banks only outlay is the overnight rate of interest. The government repo's (soaks up) any liquidity (borrowed money) that was not used by the bank to extend credit to credit worthy borrowers.
If credit worthy borrowers add value (labor, innovation, good & services, demand for financial assets) they are able to both pay back the bank and grow the economy. It all works.
When borrowers default, the systems grinds to a halt.
I'm sure you understand all of this, but too many (myself included) Ray Dalio does a great job explaining it all (see video below).
Getting back to inflation. It seems a strong economy should both inflate (have elements good inflation) and deflate (have elements good deflation) simultaneously (would be nice).
IMHO, Biden's bill should be looked at through that lens.
When is Inflation good?
how-can-inflation-be-good-economywhy-is-inflation-goodWhen is Deflation good?
can-deflation-be-goodRay Dalio's Presentation:

The 90/10 Rule - Pre and Post Retirement Thinking In preparation for retirement, most people spend 90% of their planning time on the financial issues and 10% on the non-financial issues. After retirement, the ratio reverses, and most retirees spend the vast majority of their time focusing on the non-financial issues of life
Seems like a article worth sharing. Lots of links to other topics for both young (Pre-retirees) and Old (In-retirees).
introducing-the-90-10-rule-of-retirement