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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Trump Stock Rally Second Only To FDR
    @Maurice
    And by the way FDR oversaw the two worst Depressions in the last 100 years.
    What sort of nonsense are you spewing?
    The Great Depression began in 1929 under Herbert Hoover, a pro-business, low-tax, anti-New Deal/anti-"socialist" Republican. Here is GDP Growth under Hoover from the U.S. Bureau of Economic Analysis:
    1930
    -8.5%
    1931
    -6.4%
    1932
    -12.9%
    Roosevelt was president from March 1933 through April 1945. The first part of the New Deal was passed midway through 1933. Here is GDP growth during Roosevelt's presidency:
    1933
    -1.3%
    1934
    +10.8%
    1935
    +8.9%
    1936
    +12.9%
    1937
    +5.1%
    1938
    -3.3%
    1939
    +8.0
    1940
    +8.8%
    1941
    +17.7
    1942
    +18.9%
    1943
    +17.0%
    1944
    +8.0%
    1945
    -1.0%
    Note that the U.S. didn't enter the war till the end of 1941, and the war itself was another form of government spending, i.e., "socialist" fiscal stimulus to build weapons and hire massive amounts of soldiers.
    Also, note that the one significant GDP downturn during Roosevelt's presidency occurred in 1938 after Roosevelt was pressured by a newly-elected Republican Congress to balance the budget and curb government spending, which he did.
  • SPY vs PONDX total returns, probably not what many would expect to view
    Hey, I received this one as a self-requested Christmas present. Geez, @Ted ; we're a little bit alike, eh?
    "A Field Guide to Lies, Critical Thinking in the Information Age"
    https://www.amazon.com/Field-Guide-Lies-Critical-Information/dp/1524702528
  • SPY vs PONDX total returns, probably not what many would expect to view
    The chart example is/was as intended. One must pay attention to how data is expressed, used and shown. A constant problem today in many circles where one hears verbal and the question remains; show me the data.
    Y'all will receive an award in the mail as soon as you provide your home address to me. :)
    A few adds: Taking the same chart and pulling 2 sections.
    ---This chart section is from the very bottom of the equity market melt to date; although this (the bottom) was not yet known and there remained many folks who were still attempting to remove the stains from their shorts, including Ben Bernanke, Timmy "TurboTax" Geithner and some folks I personally know.
    March, 2009 - Jan. 29, 2018 (Apologies, previous chart did not set early date properly)
    http://stockcharts.com/freecharts/perf.php?SPY,PONDX&n=2238&O=011000
    ---This 3 year section expresses the gyrations still in place from various factors. Europe still found the Central Bank in austerity mode, and Greece was the word, Japan, well, I don't recall what they were doing and in July of 2011 the U.S., it's/our AAA credit was downgraded one notch. Other than a few other things, almost smooth sailing, yes? The very good traders, including individuals have made a boat load of money since Sept. of 2008!
    Dec. 2010 - Dec. 2013
    http://stockcharts.com/freecharts/perf.php?SPY,PONDX&l=942&r=1696&O=011000
    ---A wonderful review and new for some here. Clarke and Dawe, two Aussie's who put everything in perspective in 2.5 minutes regarding the "times" then, July, 2010. A must watch, IMHO.

    Has much changed? What say you ???
    Hey, have a great remainder.
    Catch
  • SPY vs PONDX total returns, probably not what many would expect to view
    @MFO Members: Catch22's returns for SPY and PONDX only prove how to to make any point, or lying with statistics. In 2008 SPY returned -(36.81)% while PONDX -(5.79)%. That 31.62% difference skewed his chart. Take out the year 2008, the numbers would look very different.
    Regards,
    Ted
  • Barry Ritholtz: Why Markets Love Trump's Tax Cuts
    Ritholtz may be right that tax cuts are good for the stock market, but is wrong or intentionally misleading about their impact on the overall economy. It is disingenuous to call corporate tax cuts Keynesian fiscal stimulus in any traditional sense as that wasn't really what Keynes had in mind, but rather government spending on things like infrastructure to create jobs. The idea that these tax cuts will filter down throughout the economy to benefit everyone is the old trickle down lie. At best the evidence for it helping the average person in the economy is weak. Only one kind of tax cut specifically tied to creating new jobs--if you hire X people, you get Y tax cut--seems to work well. Here's an excerpt from Politifact comparing the impact of different kinds of stimulus:
    politifact.com/truth-o-meter/statements/2010/aug/12/rachel-maddow/maddow-claims-spending-more-stimulative-tax-cuts/
    As Greg Mankiw, a Harvard economics professor, explains in a summer 2010 edition of National Affairs magazine, Keynes believed that "extreme and sustained unemployment during a recession" is fundamentally the result of "a decline in overall (or aggregate) demand in the economy." The government can "help restore normalcy" by increasing demand through spending, writes Mankiw. "And because the influx of government spending drives businesses to hire and consumers to spend, its impact is multiplied."
    According to classic Keynesian theory, government spending increases have a higher "multiplier" than tax cuts, because individuals might choose to save the money from tax cuts, rather than spend it.
    Is there data to back up Keynes' -- and, by extension, Rachel Maddow's -- argument?
    Yes, but there's also data that certain types of tax cuts can have a similar impact.
    To start out, we turned to testimony by Mark Zandi before the Senate Finance Committee on April 14, 2010. Zandi is the chief economist for Moody's Economy.com and a former adviser to Republican Sen. John McCain during his 2008 presidential campaign. Page 5 of the testimony contains a table that summarizes Zandi's calculated "bang for the buck" for various fiscal stimulus programs. Spending $1 on unemployment insurance benefits, for example, increases the GDP -- the value of goods and services that the economy produces -- by $1.61 a year later, according to Zandi. (We found some counter-arguments in a previous Truth-O-Meter item checking New Hampshire Sen. Jeanne Shaheen's use of Zandi's data.) A temporary increase in food stamps has the biggest stimulative effect. For each dollar spent, GDP grows by $1.74 one year later. For spending increases as a whole, the "bang for the buck" ranges from $1.13 for the Low-Income Home Energy Assistance Program to $1.74 for food stamps.
    The former economist for the GOP presidential candidate also looked at the stimulative effect of tax cuts. Making the Bush income tax cuts permanent has a multiplier of 0.32, which means that for every dollar the government cuts in taxes, GDP grows by $0.32. Cutting the corporate tax rate also has a multiplier of $0.32. According to the chart, the most stimulative tax cut initiative would be a job tax credit, which has a multiplier of $1.30.
    So based on Zandi's research, Maddow is on solid ground. All but one of the spending programs that Zandi analyzed have a multiplier significantly higher than one. The highest multiplier for tax cuts is $1.30.
    All of that said, Ritholtz is probably right that corporate tax cuts should benefit the stock market. Corporations and wealthy stock holders are precisely who the cuts are designed to help. The fact that the cuts are working in that regard shouldn't come as a surprise. They increase corporate profits after taxes by default. Yet whether the rally from the cuts is overdone at this point is another question entirely. Valuations matter too. And conflating the stock market's performance with the health of the overall economy is a gross distortion of the truth.
  • LFEQ - gimmicky ETF (with the possibility of downside protection)
    Kind of interesting idea, anyway. Van Eck offers this product (LFEQ) which supposedly uses a proprietary model to determine the best allocation split between 2 investments: 1) an S&P 500 ETF and 2) US Treasuries. That's it. Just 2 investments. The ER is .59%.
    Supposedly the model gives daily trades signals on whether to allocate 20%, 40%, 60%, 80% or 100% to equities. Which begs the question....if stocks go into a tailspin, will their model get out of equities in time?
    This ETF has total Net Assets of only $9.8M. If only such products worked as intended/advertised. I find they rarely do.
  • Trump Stock Rally Second Only To FDR
    Let's see: the S&P 500 appreciated about 220% (including dividends) during the Obama term in office. Does that mean he gets all the credit for that? How bored does a journalist have to be to come up with these screwy stories? Who in their right mind invests based upon who sits in the White House?
  • FMC Strategic Value Fund liquidation
    @MFO Members: Way to go, very consistent, 100 percentile YTD-15 Years.
    Regards,
    Ted
  • FMC Strategic Value Fund liquidation
    As previously noted on this board, FMSVX is being liquidated next month.
    I invested some money in this small cap value fund some years ago, probably because I read some positive comments here. It has been run by First Manhattan Co and I don't think it even had a ticker symbol for awhile. I was enchanted by the idea that this New York investment firm was running a small fund for its clients and whomever else wanted to join in.
    Surely they knew what they were doing and things would go well.
    They did for a little while.
    I plead guilty to not paying attention to how it has done lately: but it's only up 1.74% for the last year, - 2.65% for the last three years and +3.16% for the past five years. I would have thought those numbers impossible in the booming market we've seen.
    The fund made a large cap gains distribution in December, is making another one now (payable Feb 6, who knows how much??) and is maintaining a CONSTANT SHARE PRICE of $20.
    I called today to see how the liquidation process works. I could cash in now (at 20), or wait until the mid-February final demise. One factor in the final distribution amount is the cost of carrying out the execution.
    But there's no rational basis to make a decision! How can a fund which holds equities maintain a constant price?
    Unless it's gone to all cash.
    In which case they should tell me.
    It really seems strange to distribute cap gains right before a liquidation.
    Lesson to be learned -- PAY ATTENTION to your holdings.
    I'll not buy anything again which is so far under the radar that information is hard to find.
    At least I think I made a little profit on it.
    David
  • What to watch from health care earnings
    I am not familiar with the writer of this article; but she may add value to your thoughts in the healthcare sector.
    https://www.healthaffairs.org/do/10.1377/hblog20180126.137502/full/
  • Pimco D Shares to convert to A Shares
    I paid a load to buy Oppenheimer’s new fangled commodities fund back in ‘96 or ‘97. It did very well for several years (double digit gains) before crashing and burning. Now it’s long since eliminated from their store of funds. I’m left with some Class A shares there spread out currently among 5 different funds (kind of like a breakfast buffet at a mid-priced hotel chain) - a little bit of everything. I can’t recommend the company or its funds. But I cling to my A shares 20+ years after buying them direct. I’ll say one thing about Oppenheimer: They do have some unique fund offerings in areas many companies don’t care (or dare) to venture into. Just one perspective. FWIW.
    I used to suggest that people don't move money out of load families once they've paid the load. It's a sunk cost; you might as well get something out of it (the ability to do exchanges at NAV). But as I noted above, many families, including Oppenheimer, are making (most of) their front end load funds available NTF through supermarkets.
    Unless their unique offerings are not available NTF elsewhere, you might consider transferring your holdings to a brokerage for convenience. Not that you need to, but with the NTF option, a compelling reason to stay put (access to A shares without a new load) has disappeared.
  • Trump Stock Rally Second Only To FDR
    FYI: In stark contrast to the dire predictions from some pundits and prognosticators, the equity markets have continued to soar since Donald J. Trump moved into the White House.
    In addition to a record-setting period for stocks, the Dow Jones Industrial Average since Mr. Trump officially took office on Inauguration Day has produced the second-best 12-month performance since Franklin D. Roosevelt’s first year in 1933.
    Source: FactSet and CNBC.
    Regards,
    Ted
    http://www.investmentnews.com/gallery/20180123/FREE/123009999/PH
    1. Franklin D. Roosevelt (D)
    2. Donald J. Trump (R)
    3. Harry S. Truman (D)
    4. Barack H. Obama (D)
    5. Lyndon B. Johnson (D)
    6. George H.W. Bush (R)
    7. William J. Clinton (D)
    8. John F. Kennedy (D)
    9. Gerald R. Ford (R)
    10. Dwight D. Eisenhower (R)
    11. George W. Bush (R)
    12. Ronald W. Reagan (R)
    13. Richard M. Nixon (R)
    14. James E. Carter (D)
  • Pimco D Shares to convert to A Shares
    I paid a load to buy Oppenheimer’s new fangled commodities fund back in ‘96 or ‘97. It did very well for several years (double digit gains) before crashing and burning. Now it’s long since eliminated from their store of funds. I’m left with some Class A shares there spread out currently among 5 different funds (kind of like a breakfast buffet at a mid-priced hotel chain) - a little bit of everything. I can’t recommend the company or its funds. But I cling to my A shares 20+ years after buying them direct. I’ll say one thing about Oppenheimer: They do have some unique fund offerings in areas many companies don’t care (or dare) to venture into. Just one perspective. FWIW.
  • $1M-VG, 2017 = Only $25.5K Income & Div.s
    If one separates from service in the year one turns 55 (even if before one's birthday), then one can tap employer-plan (government Thrift Savings Plan) without penalty.
    Pretty much all tax sheltered plans (IRAs, 401(k)s, etc.) can be tapped without penalty so long as one takes "substantially equal periodic payments" until the later of age 59.5 or five years. Section 72(t) payments.
    Here's the TSP description of both options and more (annuitization):
    http://www.wifle.org/newsletters/december2007/accessingTSPwithnopenalty.pdf
  • Pimco D Shares to convert to A Shares
    So the small investors can:
    1) put up the money for I class shares
    2) go through an advisor
    3) buy the loaded A shares (for the new investors, not the converted D share investors ).
    4) buy the etf BOND which is a more tax efficient structure than the mutual fund.
    5) Pony up $3K to buy the A shares NTF, e.g. PONAX:
    https://investor.vanguard.com/mutual-funds/profile/overview/N061?FundIntExt=EXT
    6) Buy A or I shares NTF with no/low min through an HSA, e.g. The HSA Authority (available funds)
    7) Buy an annuity clone (Pimco Variable Insurance Trust) fund, with no min, e.g. through Fidelity Personal Retirement Annuity
  • Illinois Ponders Pension-Fund Moonshot: A $107 Billion Bond Sale
    I don't think you appreciate the nature of FPRTX. This was a fund that was double tax free in all 50 states. At the risk of sounding repetitive, the only way to accomplish this is to invest exclusively in munis issued by territories. This must load up on Puerto Rico - since it must own only territories, and pragmatically most of those bonds are from PR.
    That's very different from a single state fund, that's allowed, in fact expected, to have the vast majority of its bonds tax-exempt in just one state. This doesn't preclude these funds from bulking up on territory bonds, but it doesn't require them to, unlike FPRTX.
    As it turns out, in the past decade, FXCNX never exceeded 20% in territory bonds, generally peaking around 18% between 2010 and 2012. In 2015 it had dropped down to 5% or so. Contrast that with the 2015 holdings of the Oppenheimer Rochester funds in the link I provided (some 30%+, all nine over 18%).
    To put these numbers in perspective, I spot checked other NC long muni funds in 2012 (links are to SEC filings):
    FXCNX (2/2012): 18.3%
    EVNCX (2/2012) 16.2%
    MSNCX (3/2012) 9.6% (if I added right)
    FLNCX (5/2012) 1.25% (my arithmetic, again)
    OPNCX (3/2012) 40.6%
    From the Oppenheimer Annual Report: "Securities of the Commonwealth of Puerto Rico, which are exempt from federal, state and local income taxes, represented 40.6% of the Fund’s net assets as of March 30, 2012, and contributed favorably to the Fund’s total return this reporting period."
    Sure, Franklin is at the high end of the "normal" range for territory holdings, along with Eaton Vance. But Oppenheimer Rochester is in a class of its own - in the risks it takes, and in how it flaunts this (at least in good times). Many people do not seem to recognize the outsized risks this family takes.
  • $1M-VG, 2017 = Only $25.5K Income & Div.s
    May need to look at private corporate bonds 5%-10% of portfolio. for instance Pick large companies like Verizon sprint macys bbb- or higher rate. Typically yield 5.5%ir higher. Vanguard got many Corp bonds
  • $1M-VG, 2017 = Only $25.5K Income & Div.s
    @Thurston_Howell_IV, if you are in your early 50's, aren't you going to have to pay a 10% penalty on top of taxes from the IRA/401K? Or am I misunderstanding where you are taking money from. Also, if you are working within the tax deferred accounts, why are you making dividend and income a priority and not just total return? Doesn't matter where the return comes from when you withdraw from tax deferred.
  • $1M-VG, 2017 = Only $25.5K Income & Div.s
    I'm early-mid 50s, considering an early out offer. At the moment I don't need that much, but that won't last forever and I want to plan on needing more—say, a total income of about $3-3500/mo before taxes—and just save/invest the excess (which my current status seems to support)—$325K of my 401K is parked in the federal gov. MM "TSP G Fund", waiting for the inevitable market crash (well, at least a 30-40% haircut...though given the runup in the last year, maybe more like 50-60%! :)
    Plus, in 4-5 years I will be eligible for a pre-SS pension supplement of about 1200mo/14,400yr, which would last until I'm 62 and SS kicks in (again, which I don't plan on touching until I'm 67-70, unless life shortening/defining chronic/terminal health conditions become an issue).