Local finances in trouble, but fund investors can still profit
https://www.nytimes.com/2020/07/10/business/local-finances-troubled-investors-profit.html
/Just counting the effects of the federal tax exemption, if you are within 24% federal tax bracket, the current 1.4% return from the Vanguard medium-tax-exempt fund is equivalent to a 1.84% return in a taxable bond fund (assuming, of course, that no of both is held in a tax sheltered account). For investors in the 35% federal tax bracket, the return is equivalent to a taxable return of 2.2%. The current average yield on basic bond funds (whose income is taxable) is 1.4%.
If this yield advantage is attractive, it should be reiterated that the coming months could be difficult.
Hayes warned that even with the economy reopening, municipal revenues “will only be a percentage of what they were before Covid.” Even if a vaccine arrives, people may not spend as much, rely on public transportation with the same enthusiasm, or drive or fly as much, or flock to stadiums, arenas and convention centers.
In addition, some states and cities that issued high volumes of bonds already had serious budget problems before the crisis: Illinois and New Jersey had many bonds rated BBB, the lowest step in the investment category. before the coronavirus. These and other states may find it more difficult to emerge from this recession./

https://m.youtube.com/watch?v=9BqYfUzbAKs
7/11/2020
Great Investor Bill Miller’s Bullish Case
Enjoy
Thank you BEE!

Zero-value opinion/forecast. IIRC the markets tanked hard after Tweety Amin got elected in 2016, too.

I own a small cap (BOSOX) and a mid cap (WAMFX) from Boston/Walden. I didn't have to spend 100K to get in through my Vanguard IRA. The fees are reasonable. And the yearly turnover is less than 25%.
I also own PARMX, the Parnassus mid cap.
I have looked at large caps. But I don't want one that invests in Amazon. I'm a sucker for value investing. So maybe Parnassus Endevor (PARWX) -- though I don't care for the high turnover.
I'll see where they're at in a couple of years.

Even though US is not yet official in recession,
The official definition, such as it is, is whatever the National Bureau of Economic Research (NBER) says is a recession. And NBER said last month:

in deciding whether to identify a recession, the committee weighs the depth of the contraction, its duration, and whether economic activity declined broadly across the economy (the diffusion of the downturn). The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions. Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.

https://www.nber.org/cycles/june2020.html

Since 1929, the NBER has mapped the U.S. business cycle, which is the up-and-down fluctuation in U.S. economic activity. ...
The NBER measures peak-to-trough declines in economic activity through a number of macroeconomic variables. While the popular definition of a recession is “two consecutive quarters of negative real gross domestic product (GDP) growth,” the NBER does not strictly abide
by this designation.

Douglas C. Smith (Research Analyst, Federal Reserve Bank of St. Louis), What is a Recession
https://files.stlouisfed.org/files/htdocs/pageone-economics/uploads/newsletter/2009/200902.pdf

Equity performance has shifted in last several years as growth out-perform value style. This year the difference is even bigger.
YTD: Vanguard Growth index, 17.2% versus Vanguard Value index, -15.0%.
Prior to the pandemic, FANNG stocks heavily dominate the indices. Even though US is not yet official in recession, few stocks are showing decent earning and many retract their earning forecast. Time like this is similar to the time period prior to the 2000 dot-com bubble. Growth stocks way out-perform value stocks for several years, then came the crash. Value stocks held up better from 2000-2002 until market recovered. Can this repeat again?
FMIJX held high quality stocks but I believe it is slowing environment that steered away from these stocks. Still believe FMI stock picking skills but perhaps bad timing. For now the change to VWILX has been good sofar.

A previous thread got me thinking, anyone investing in ESG funds, ETFs, or in stocks (based primarily on ESG criteria)?
New Labor Department Guidance Takes Aim at ESG Investing
Back in the early 90s, the funds, I was aware of, were Pax World (which I invested in), Calvert Socially Conscious (?), & Parnassus fund. There might have been others, but I forget. Performance over several years in Pax World was so-so and I decided I would invest for return & donate to causes that I felt would make an impact instead.
In 2018, I revisited the socially conscious investing arena & found it had actually morphed into ESG funds.
As noted in a Rekenthaler column link (provided by @msf in the previous link):
The Department of Labor Attempts to Throttle ESG Investing

As I wrote last month, a key difference between ESG and its predecessor, "socially conscious investing," is that socially conscious managers implicitly admitted that their strategies might reduce their returns, while ESG investors do not. Socially conscious investors used negative screens to eliminate stocks that violated their beliefs. In contrast, ESG investors seek positive attributes, which they claim will make their companies better investments.

Though to be honest, I don't recall seeing that in the Pax World literature!
I found the Brown Advisory website to have thoughtful insights & information available & decided to invest in BIAWX at the time.
This is their 2019 Impact Report
Today BIAWX is my largest equity holding.
I would consider Parnassus funds as well. They've been consistent, around a long time, & their website also provides a ton of information in this area.
Parnassus
BIAWX & PRILX have both been competitive:
Portfolio Visualizer
I would have thought that there might be a lot of overlap in their holdings but there wasn't. Microsoft, Amazon, Google, Danaher, & Verisk Analytics make up about 20% for each but are otherwise not.
As the ESG arena flourishes, I am also skeptical in the metrics used to quantify companies & funds.
Take Tesla (TSLA), electric cars, renewable energy, & Elon Musk.
Without evidence, Musk blames ‘false positives’ for surge in coronavirus cases
Any thoughts?

China does a great job stealing our military technology (see j-31). I'm sure they could steal our other technologies just as well.
Moreover, China has the patience to play the long game; something the US or US companies struggle to do.

My take on of all of the above links was the ridiculousness & arbitrariness of the DOL regarding this proposal.
As pointed out in Rekenthaler's piece:

The second implication is that corporate plans will profit by switching from actively run ESG investments to lower-cost indexers. That may be true. But once again, the same logic would seem to apply to all actively managed investments. This book, after all, has been written. We know that active managers of all stripes, both retail and institution, tend to lag index funds. It is strange that the DOL’s counsel extends only to one flavor of active management, rather than the entire field.

As Bloomberg's Matt Levine points out, each of those two sides thinks that it is best positioned to make such decisions. "Under Donald Trump," writes Levine, the U.S. government says "coal is great, more coal please," while BlackRock (being an ESG investor) responds "coal is bad, no more coal please." Levine continues, "The people making environmental, social, and governance issues should be the government, says the government; the asset managers and pension funds had better stick to making money.

Which is ironic coming from a Trump administration touting less regulation. And whose stance on Covid-19 has been & still is everyone fend for themselves.
Contrast this with Europe & ESG investing (as well as Covid-19):

Globally, getting ahead of regulation and viewing ESG as a fiduciary duty were the top factors for adopting ESG scoring 46% while mitigating ESG risks was highlighted by 44% of respondents.

Regulatory shifts driving ESG uptake in Europe

ETF Insight: ESG ETFs score major victory during coronavirus turmoil
ETF issuers not focusing on ESG are set to lose out in a big way

It's hard to see how much value active management could add to treasury funds. There's essentially zero credit risk. The only dimension to play with would seem to be duration.
The short end of the yield curve is usually the steepest, so perhaps there really is some play in the 1-5 year range. I'd have to look more closely at what VFISX owned day by day (and how long it is allowed to go with maturities) to explain the performance. But it doesn't surprise me.
My comment was really focused on how it "navigated the pandemic pull back". That one, brief, not so shining moment of the market.
With respect to the different performance of Vanguard Short Term Treasury Index Fund share classes, it appears to be a 1 basis point difference (based on NAV) 1,3,5,10 year. It could have to do with dividend timing and/or different ERs since last year.

I guess because of its recent rise, the last few months, though, VFISX outperforms VSBSX nontrivially when looked at over 1-2-3-4-5-6mos and ytd.
(My trivial question would be why VGSH trivially outperforms VSBSX most of the time too.)

While I generally try to take a longer view rather than be unduly influenced by (relatively) recent experiences, I admit upfront to being biased here by the 2008 collapse of the muni bond insurers.
ISTM that insurers can provide a valuable service when they spread their risks and payouts are isolated. But results can be disastrous in the face of a systemic failure.

...[T]he low frequency of municipal bond defaults made the insurance business seem quite safe. Insurers responded by increasing their leverage—using less capital to insure more bonds—and diversifying into the more profitable business of insuring structured finance debt instruments such as collateralized debt obligations (CDOs).
Structured finance proved fatal to most insurers during the financial crisis. Defaults on CDOs backed by subprime mortgages resulted in numerous claims on the insurance companies’ thin layers of capital, which (at least in the case of MBIA) was less than 1 percent of insured par. As a result, all insurers either became insolvent or suffered multiple notch downgrades. At the beginning of 2008, Moody’s rated seven bond insurers Aaa; none carried this rating by the end of 2010.
Since 2012, only three insurers have been active, and none were rated higher than AA/Aa by the major rating agencies.

https://www.mercatus.org/system/files/mercatus-kriz-joffe-municipal-bond-insurance-v1a.pdf
Muni bond insurance appears to be in the throes of adverse selection. The market for coverage of new issues peaked at 57% in 2005 [ibid.], and is now at just 5-6%. Adverse selection occurs when the "healthiest" issuers opt out because they'd rather not subsidize the risk of the "sickest" (lowest rated) issuers.
The insurers seem to be focusing more these days on their muni bond coverage. So while they don't have CDO exposure, a systemic problem in the muni market could sink them this time. Especially given the lower (still investment) grade bonds that they are likely insuring.
For example, MMIN's top holding, Phenix City Alabama Brd Ed Sch Tax Wts 4.0%, due 8/1/2037T (CUSIP 717335CC5) has an underlying rating of A+ according to S&P. (See EMMA for ratings)
I'm not knocking the value of the insurance for isolated defaults. I am wondering about the value if the concern is municipal risk in general.

The reason I linked to the 2015 DOD report rather than the 2019 report is that the former makes reference to more than fortifying its fortresses.

The report finds that climate change is a security risk, Pentagon officials said, because it degrades living conditions, human security and the ability of governments to meet the basic needs of their populations. Communities and states that already are fragile and have limited resources are significantly more vulnerable to disruption and far less likely to respond effectively and be resilient to new challenges, they added.

What's the saying? Treasuries are the last refuge of a scoundrel? Nope, that's not quite right. :-)
Still, Treasuries are the last refuge of lots of people. So they tend to hold up better than higher credit risk securities. And when the whole market, including Treasuries, are realizing interest rate risk, short term holds up better than long term.
So short term Treasury funds including VFISX held up better than other bond funds last March. But VFISX didn't "navigate" especially well. Here's a M* chart comparing the March 1 - May 1 performance of this fund vs. its autopilot (index) peer VSBSX. The latter gave both a smoother ride and better performance.
They have similar durations, currently 2.0-2.1 years. The Vanguard Index tracks the 1-3 year index. Notice that Barclays 1-5 year Treasury index, with a duration of about 2.5 years had a tad more volatility. That was the price for its better performance as the overall interest rate trend continued downward.
Perhaps the difference in performance between VFISX and VSBSX can be explained by the fact that the former is allowed to hold up to 20% in agency bonds, while the latter holds only Treasuries.

https://markets.businessinsider.com/news/stocks/stock-market-sp-500-fall-end-2020-bank-of-america-2020-7-1029383104#
The S&P 500 will fall 8% by the end of 2020, according to Bank of America's equity chief, who says a Joe Biden victory could tank stocks
Shalini Nagarajan
Jul. 10, 2020, 11:48 AM
Brad Barket/Getty
/Bank of America's head of equity research predicts the S&P 500 index will fall to 2,900 by the end of the year, an 8% decline from current levels, MarketWatch said.
"I wouldn't paint myself as a bear, but the risks between here and year-end are completely to the downside," Savita Subramanaian said in a webinar conducted by the bank.
She pointed out that a Joe Biden victory in November could reverse market-friendly policies, and push stocks lower.
For investors favoring stocks that benefit from the coronavirus, she recommended leaning towards consumer staples, industrials, technology, and financials instead./
Whomever will be next POTUS Nov2020, may have issues next year dealing with COVID19 morbidity and mortality. If virus linger on this fall/winter may drag market down /stagnation next 3-24 months
Not sure many investors will highly consider Biden because of high corporate taxation.
His plans for middle income Americans are almost similar to Trump for now, no plans to increase taxation.
Anyone have data for Biden proposed 401k plans / brokerage accounts [? any new fees or taxation plans]

GWMEX. See the (chart) and change the starting date to 5/4

I was impressed with the way VFISX navigated the pandemic pull back (red in chart linked here).
https://screencast.com/t/Lz1v3cZkO

@ wxman123, check out PTIMX. It has bounced back better than say VWAHX or ABHYX.
https://screencast.com/t/CXx5t5AXcsU

@msf, you are right, TSCXX would be levitating at .25% but I I don't believe it. I took a quick look on Yahoo and it shows the 7 day yield at 0.1% like most other MMs. Clerical or updating error maybe(?)

(The DOD has declared climate change a security risk and is required to plan accordingly.)

I thought this changed after the 2016 election.
IIRC there was a lot of smoke about Congressional, or Executive, action to prevent DOD from taking climate considerations into account.
But now that I think about it . . . I think that was about mitigation plans for bases, like Norfolk, at sea level.