U.S. Investors Flee to Money Market Funds Amid Ukraine Crisis Thanks for the thoughts
@DerfI was mostly concerned with the bond fund outflows. Actually, they slowed a bit in the last reporting week compared to early in the year. One can only speculate; but ISTM all the talk by Fed officials about hiking the overnight lending rate at the next meeting has had a lot to do with the flight out of bond funds. Less demand = higher rates (short end) = falling prices / NAVs = potentially more investor flight. DODIX fell .88% yesterday - a loss one might expect over a period of several months and very rare for a single day for that fund.
In contrast, longer dated bonds, like the U.S.
10-year Treasury, have not experienced the same degree of rate increase, leading to a flattening of the yield curve. Just this week the
10-year Treasury fell briefly below
1.70% - actually about where it stood a year earlier.
Is it market timing? I don’t know. But when money gushes into money market funds yielding next to nothing - regardless of the source - I think it’s at least intriguing - perhaps a sign of investor fear as to what the
“next shoe to drop” might be - whether at the Federal Reserve, in the equity markets or over the war in Ukraine.
Old Thread -
Fed Open Mouth Committee / The pronouncements became so frequent from so many different representatives / spokespersons that I gave up adding them. But they were mostly projecting a .25 or .50% hike in March. Some predicted 5 or more interest rate hikes beyond that this year. More recently, Chairman Powell has signified that there will be a .25% rate hike later this month.
AAII Sentiment Survey, 3/2/22 For the week ending on 3/2/22, bearish remained the top sentiment (4
1.4%; high) & neutral remained the bottom sentiment (28.2%; below average); bullish remained the middle sentiment (30.4%; below average). So, the overall sentiment improved from the very bearish reading last week. The Survey period of Thursday - Wednesday included the start of the war between Russia & Ukraine; the human tragedy & toll, & economic costs (global) will grow longer the lopsided battle continues. Other investor worries included high inflation, monetary tightening by the Fed (triple-actions; the Fed Chair Powell's testimony before the Congressional committees on Wednesday & Thursday this week) & supply-chain disruptions that may become worse.
https://ybbpersonalfinance.proboards.com/post/528/thread
CEF funds CEFs are the oldest form of funds around. But they are complex. So, followed mutual funds/OEFs, ETFs, interval-funds, etc. CEFs develop premiums/discounts and many are leveraged (so better know what you are doing). A newer development is CEFs with term-structures (PDO, TBLD, PAXS, etc), so there has been more than usual news on CEFs. Here is a good intro to them,
https://www.icifactbook.org/21_fb_ch5.html
Giroux selling energy / value stocks. “We have really fundamentally changed…” WSJ Fund managers have target range of sell prices so to ensure they capture majority of upswing. It is likely that he still have some energy allocation. In the meantime, Apple and Amazon were off for their peaks in January and he bought them at their lows. He must believes Apple and Amazon will be much higher 12 months from now whereas the conflict will be over and oil will return to typical range. In that sense he is very opportunistic in order to gain exposure to those tech stocks at reasonable prices. Buffet often said that when you can buy solid business at good price, it actually lowers the risk on that investment.
Buffet’s Shareholder Letter The two best jobs that I had in my life were four years with the Coast Guard and twenty-something years supporting San Francisco's public safety radio systems.
Were you still working at 9
1 like Buffett, OJ?
And, nice to see
Queen Elizabeth II at 95 is back on the job.
I’d agree with the sentiment that public service work (of assorted types) is highly rewarding - even if the pay less than in the private sector. Having read / participated on the board a long time, I do think
managing money would have been both enjoyable and profitable. However, I’d have lost people a fortune in the early years.
PS- Thanks
@bee for posting. There was a bit of coverage in the WSJ, but the Russian War has kind of diminished / overshadowed the normal attention Buffet’s letters receive.
Giroux selling energy / value stocks. “We have really fundamentally changed…” WSJ Looks like he was
early selling energy. Wonder when that was? It’s just now getting “exciting”. Tack on another 2.5% rise today beyond what the chart displays.
Personally, I wouldn’t be loading up on Amazon and the mega-caps now. But that’s why he’s paid big bucks to manage PRWCX and has won all kinds of awards, plus coverage in
Barron’s and the
WSJ and is also widely acclaimed on this forum. I do wonder to what extent his hand is forced, as the size of PRWCX would really impact the price of smaller companies when bought or sold in any appreciable amount.
Chart XLE
To dip or not ? GWB made an error on trusting the former KGB agent who pined for the good old days. Russia is close enough to supply oil and gas to Europe. Transporting these fuels is the bottleneck of the business, either through pipelines or tanker ships. Mark mentioned that Russia and China signed a 10 years deal to supply gas on pipelines yet-to-build through Siberia. Distance and climate themselves pose considerable challenges. The Alaska pipeline was build with great expense in the 70’s and this proposed deal is much more difficult that take many years. Similar deal was made with India where the pipelines will be build over the Himalayan mountains. Neither projects can be completed several years from now. In the meantime where can Russia sell their oil and gas that they desperately need the cash flow? The gas pipeline to Germany built under the North Sea is much more feasible.
Buffet’s Shareholder Letter I taught my first investing class 70 years ago. Since then, I have enjoyed working almost every year with students of all ages, finally “retiring” from that pursuit in 2018.
Along the way, my toughest audience was my grandson’s fifth-grade class. The 11-year-olds were squirming in their seats and giving me blank stares until I mentioned Coca-Cola and its famous secret formula. Instantly, every hand went up, and I learned that “secrets” are catnip to kids.
Teaching, like writing, has helped me develop and clarify my own thoughts. Charlie calls this phenomenon the orangutan effect: If you sit down with an orangutan and carefully explain to it one of your cherished ideas, you may leave behind a puzzled primate, but will yourself exit thinking more clearly.
Talking to university students is far superior. I have urged that they seek employment in (1) the field and (2) with the kind of people they would select, if they had no need for money. Economic realities, I acknowledge, may interfere with that kind of search. Even so, I urge the students never to give up the quest, for when they find that sort of job, they will no longer be “working.”
Charlie and I, ourselves, followed that liberating course after a few early stumbles. We both started as part- timers at my grandfather’s grocery store, Charlie in 1940 and I in 1942. We were each assigned boring tasks and paid little, definitely not what we had in mind. Charlie later took up law, and I tried selling securities. Job satisfaction continued to elude us.
https://berkshirehathaway.com/letters/2021ltr.pdf
529 1099-Q On your 1099-Q, you are the recipient with your social security # and the FBO (for benefit of) of the grandkid name. The IRS also gets a copy of that 1099-Q. When you file that on your 1040, state that you are paying your grandkid qualified education expense including tuition, room and board, books & supplies, and computer. Itemize each expense category on spreadsheet would be a good idea. Like yogibb said, keep all the receipts to the parents and college just in case.
529 1099-Q There are 529 rules on who get the 1099-Q.
In any event, keep records on tracing of the money. So, in this case, your check to parents and parent's check for college tuition.
Anyone care to explain what’s going on with the 10-year treasury bond?
Worst day for bonds I’ve seen in a while
Anyone care to explain what’s going on with the 10-year treasury bond? In stress time like now many investors turn to US dollar and treasury.
Emerging market bonds, EMB and LEMB (local currency) are down 1.5% while 10 Y treasury price is up. Today treasury yield are falling…
529 1099-Q I have NYS 529 accounts for my grand kids. Their parents paid their college tuitions in 2021, and I reimbursed the parent's bank account. Now I received 1099-Q's (reported to IRS) because I didn't have the checks made out to the beneficiaries (grand kids). If the feds come knocking at my door, how do I prove that the 529 withdrawal was a qualified education expense? It looks like I would have gotten the 1099-Q even if the checks went directly to the colleges. How do the rest of you handle 529 transactions?
Anyone care to explain what’s going on with the 10-year treasury bond? It’s at
1.72% 1.70% currently, which is lower than it was a year ago Now, how do you reconcile that rate with (
1) 7%+ inflation and (2) Fed members’ statements to the effect they’ll be hiking the overnight lending rate by .25 to .50% at their next meeting later this month? On the second score, I do understand that those Fed projections were made before things in the Ukraine heated up. But I’m befuddled by the contrast between the documented year-over-year rate of inflation and the meager pittance investors seem willing to accept from a bond over the next
10 years.
ISTM inflation would “eat you alive” over
10 years should you own that bond - even if we lower the inflation expectation to 3-5% yearly, which is closer to what most observers are forecasting. Yes, it could be a
gamble, with folks expecting to unload their bonds in the near future after some capital appreciation. But that
1.70 rate just doesn’t make sense to me any way you cut it.
To “pun it” - If saving to buy a new pickup truck (now selling for $70,000 +) you’d surely be “spinning your wheels” while holding that
1.70% bond. :)
Chart:
https://www.cnbc.com/quotes/US10YPS - Had to edit post. Bond fell below
1.70% while I was writing.
To dip or not ? Fear has driven crude oil to exceed $101.85/barrel today. Other exporters will take advantages to supply Europe. US imports majority of oil from Canada and much less dependent of Middle East as in the past.
My small stake in alternate energy had stalled and declining. Still believe it willl gain traction as windmills and solar panels are widely adopted in the northwest.
To dip or not ? Prices are still above what I just paid a few days ago
@hank. I can wait.
Edit to add: Aw shucks, I knew (or at least felt like) I should have added to my TGT position but it's already a large % of my portfolio. Honestly I can never (rarely) get these right so I'm probably better off not taking a chance. Today (3/
1) I'm wondering if I should dispose of my energy position or is Giroux too early. I do favor the alt-energy space for the long term.
Well, I swore off energy plays a year or more ago having found them a hard row to hoe in the past. Obviously, I missed out on the bonanza - although my allocation funds do hold energy. Remember back when (
1) the world wasn’t going to need as much oil in the future and (2)
fracking had made for nearly unlimited supplies and was profitable at $50 bbl - less than half today’s price?
Giroux selling energy / value stocks. “We have really fundamentally changed…” WSJ Here’s the part I found most interesting -
“He predicts major indexes can still notch gains for the year, recovering their steep losses.” You’d think that for such a bold prediction the WSJ would have quoted directly rather than summarizing or paraphrasing Giroux’s words.
I believe it was Yogi (the
1st) who said making predictions - especially about the future - is difficult. Giroux turned
guru?Thanks
@LewisBraham for the plethora of charts showing relative values & performances of value stocks vs growth over many years. Still trying to digest.
PS - Looks like another blood-bath in the markets shaping up today - unless you like seeing oil jump higher by
10% or so in a day’s time. Wonder if that interview was conducted prior to the invasion of Ukraine? Likely.
Disappointed Vanguard Brokerage Many brokerages describe their
1099 mailings as being divided into three groups. Here's Raymond James' description of which statements get mailed when:
GROUP 1: DATED FEBRUARY 15
Forms mailed for accounts with holdings where issuers have finalized income reallocation or accounts holding less-complex securities, such as equities.
GROUP 2: DATED FEBRUARY 28
Forms mailed for accounts with holdings where issuers have finalized income reallocation since Group 1 was mailed. This typically includes mutual funds and unit investment trusts (UITs). Additionally, the first amended Composite Statements are mailed.
GROUP 3: MAILED BY MARCH 15
Forms mailed for remaining original Composite Statements including real estate mortgage investment conduit (REMIC) that report on Form 1099-OID. Additionally, the second round of amended forms are mailed.
https://www.raymondjames.com/-/media/rj/dotcom/files/client-resources/tax-reporting/2020_composite_form_1099_guide.pdfTDAmeritrade provides an explanation of why these forms may be delayed.
https://tickertape.tdameritrade.com/personal-finance/brokerage-account-1099-deadline-15591
Disappointed Vanguard Brokerage Not familiar with groups 1, 2, 3. What does that refer to?
