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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.
  • BUY.....SELL......PONDER December 2019
    ...I am looking to Asia/China. It's where the future is...
    Hmm, very reminiscent of what I heard 15+ years ago on this board. And my reply then, not in our life time.
  • The 2009 Effect
    My wife and I opened Roth IRAs at the end of 1998, at Fidelity. At that time. we only invested in mutual funds. We figured on a long time frame so I wasn't worried about volatility. I told her "here are the two best Fidelity funds -- Select Electronics and Select Home Finance. Which do you want."
    She said "I want the very best one."
    So we put her $2000 in FSELX. (2K was the max annual Roth IRA contribution back then.) Two years later we put another $4000 in FSELX.
    Now it's worth $30,330. Fidelity calculates the total gain at 405%.
    That's certainly been helped by 60% this year.
    Meanwhile, I put my $2000 in Home Finance, which went in the tank in 2008.
    So that's been dumped.
    But I did buy a bunch of FSELX in my Fidelity 403b a few years ago (now my Rollover IRA).
    It tilts our portfolio to "aggressive", for sure. We balance it with some dividend-paying stocks and S&P 500 funds and ETFs.
    I feel more lucky than smart about it all.
    David
  • The 2009 Effect
    edited after consulting the legacy M* graph interface ---
    good patience --- $10k held since midsummer '79 has grown to $589k, woohoo
    (triple that for FCNTX)
  • Why You Shouldn’t Believe Those G.D.P. Numbers
    It's not just that less money is flowing to the working class. It's also that so much work isn't valued at all. Literally. Unpaid work, whether housework, or home care for the elderly, or charitable labor is not only not rewarded, it is not even counted towards GDP.
    It never has been. Written in 1920:
    if a man hires a house and furniture belonging to somebody else, the services he obtains from them enter into the national dividend, as we are here provisionally defining it, but, if he receives the house and furniture as a gift and continues to occupy it, they do so no longer. Again, if a farmer sells the produce of his farm and buys the food he needs for his family in the market, a considerable amount of produce enters into the national dividend which would cease to enter into it if, instead of buying things in the market, he held back part of his own meat and vegetables and consumed them on the farm. Again, the philanthropic work done by unpaid organiser, Church workers and Sunday school teachers, the scientific work of disinterested experimenters, and the political work of many among the leisured classes, which at present do not enter or, when there is a nominal payment, enter at much less than their real worth, into the national dividend, would enter into it if those people undertook to pay salaries to one another. Thus, for example, the Act providing for the payment of members of Parliament increased the national dividend by services valued at some £250,000. Yet again, the services rendered by women enter into the dividend when they are rendered in exchange for wages, whether in the factory or in the home, but do not enter into it when they are rendered by mothers and wives gratuitously to their own families. Thus, if a man marries his housekeeper or his cook, the national dividend is diminished. These things are paradoxes. It is a paradox also that, when Poor Law or Factory Regulations divert women workers from factory work or paid home-work to unpaid home-work, in attendance on their children, preparation of the family meals, repair of the family clothes, thoughtful expenditure of housekeeping money, and so on, the national dividend, on our definition, suffers a loss against which there is to be set no compensating gain. It is a paradox, lastly, that the frequent desecration of natural beauty through the hunt for coal or gold, or through the more blatant forms of commercial advertisement, must, on our definition, leave the national dividend intact, though, if it had been practicable, as it is in some exceptional circumstances, to make a charge for viewing scenery, it would not have done so
    Arthur Cecil Pigou, The Economics of Welfare (4th ed.) (London: Macmillan, 1932).
    https://oll.libertyfund.org/titles/1410#Pigou_0316_113
  • Why You Shouldn’t Believe Those G.D.P. Numbers
    A NY Times opinion piece by David Leonhardt
    "Americans are dissatisfied, and have been for years, largely because the economy as most people experience it has not been booming. G.D.P. — or gross domestic product, the economy’s total output — keeps on rising, but it no longer tracks the well-being of most Americans. Instead, an outsize share of economic growth flows to the wealthy. And yet G.D.P. is treated as a totemic measure of the country’s prosperity."
    "A team of Commerce Department economists has been working on a new version of G.D.P., one that will show how much of the economy’s bounty is flowing to different income groups. The headline number would still exist, but the new data, known as “distributional accounts,” would make clear who was and wasn’t benefiting. The department expects to publish a prototype statistic next year."
    ARTICLE
  • The 2009 Effect
    What have you held since the late 1970s?
  • Emerging markets land top of managers‘ portfolios with rising rates
    Yeah - a confusing article. It says “Posted by SDD Contributor December 15, 2019” above the article. Than, within the article, it reverts to the original March (first publication) date. Stuff happens. I’d give John a pass on that one.
    Well now ... Higher rates have been prophesied for at least 6 or 7 years now. I suspect the reasons it hasn’t happened are complicated and might even blow over into politics - Heaven forbid.
    Rates fell (unexpectedly) for much of this year, but have reversed fairly sharply (upward) the past 6 weeks or so. The 10-year Treasury’s above 1.8%. Not sure what the 2-year’s at. But I’d guess money market funds will be soon creeping towards 2%.*
    While rates have risen, there’s a lot of speculation the Dollar is going to weaken against other currencies. Trump has said recently he wants it to, and gold seems to be indicating that’s in the works as well. Central banks are loading up on gold. Rumors abound that the Fed is soon going to start purchasing longer dated bonds to try to hold rates down and spur growth (around year’s end.)
    EM? In a wreaking dollar situation EM currencies would be attractive. If my time horizon was a bit longer I’d be holding some. As far as EM equities - that’s anybody’s guess. there’s a lot more parts in motion to consider.
    * FYI - Here’s some current rates as posted on Bloomberg around noon 12/16:
    2 YR Treasury. 1.64%
    5 YR Treasury. 1.72%
    10 YR - 1.89%
    30 YR - 2.31
    Vanguard’s Prime mm fund was yielding around 1.7% as of Friday.
  • The 2009 Effect
    Average 2018 and 2019 together and the growth is not so dramatic as I see it. All in all the longer the time period the better picture of performance. By the way - what is a full market cycle? How does it relate to both buggy whips and home computers? I have had some funds for over 40 years. Will the full market cycle end when I sell them? I think what you are calling a market cycle I am calling a time period.
  • Pass the donuts
    From Fidelity Monitor & Insight
    When realized gains in a fund exceed its realized losses, they must eventually be distributed to the fund’s shareholders — typically at year-end. Should you own such shares in a taxable account (and only in a taxable account), you must pay taxes on some combination of short- and long-term capital gains, and on qualified and non-qualified dividends. These estimated gains will be distributed this coming December.
    To reiterate, fund distributions are a non-event when held in tax-deferred accounts such as an IRA or 401(k).
    Moreover, you can never make money from “buying” a distribution because the fund’s NAV declines by the same amount as the distribution itself.
    in a taxable account
    However, if in the next few weeks you’re looking to buy a fund that’s going ex-dividend, you should probably wait until after the payout.
    Our rule of thumb on the timing is one week for each percentage point of the estimate.
  • Emerging markets land top of managers‘ portfolios with rising rates
    @johnN, are you looking at the dates of these articles you are posting, January 2019. This stuff is irrelevant.
  • Emerging markets land top of managers‘ portfolios with rising rates
    @MikeM ...hi sir maybe in 9 months feds may raise rate again, dows may reach 29k
    when we find out 4q 2018 was indeed a large correct ion/ small recession stock pulled back -15%
    n focus - Economics
    How Q4 ranks among the worst 20 quarters of the past half century
    -gobal stocks have suffered their worst quarter since 2011. We look at how it compared with the 20 worst quarters over the last 48 years and the potential silver lining for investors today._
    https://www.schroders.com/en/insights/economics/how-q4-ranks-among-the-worst-20-quarters-of-the-past-half-century/
  • Retirement: Why REITs Are Good Bond Replacements
    Hi @Hank, in contrast to what you found on over-capacity for self storage REITs, I have a friend at work that she and her husband have been building self storage units as a side business and they can't keep up with demand. They have the units rented even before they are built. They got into the business maybe 10 years ago with another person but have since bought him out. She wishes they could afford to expand but they don't want to take on to much debt. I guess multiple units can cost $100's of thousands to build.
    In any case, what was interesting to hear was that many of their clients are small business owners, construction, trades, sales people who work from their homes but need a place to store material.
  • Retirement: Why REITs Are Good Bond Replacements
    If you open and read this, there is an image of the guy that wrote this blog and he looks like he may have been about 15 years old when REITS crashed in 2007-2009, so I don't think he understands the pain REIT investors felt at that time. I don't know how he can make this summary statement below. If I look at the Vanguard ETF for REITS, VNQ, it lost 70%+ peak to trough during the great recession. Would that be considered a bond alternative with less risk for retirees?
    REITs are a viable alternative to retirees and other income investors who desire greater income without having to take significantly more risk.
    The above and other posts by MikeM are what I have been saying for years. If I want higher income I use funds like Multisector funds such as IOFIX and PIMIX. If you are looking for high income + a good total return, look no further than PCI,PDI and other Pimco CEFs.
    My opinion is that PCI will have a better performance than stocks in the next 5 years and if you are a trader you can avoid the big losses too by using weekly MACD as a good indicator. See PCI (chart) and use it to buy PCI when weekly MACD is positive and sell when it's negative
  • Pass the donuts
    Yes, OEFs are different. And also rather confusing. When purchased through a brokerage they tend to settle one day after trade (not T+2, and not same day). But when purchased directly from a fund company, they seem to settle "immediately" (end of day).
    Then there are the oddball funds that take more than a day to settle at brokerages. And some other funds that may have same day settlement at a brokerage, but only if you sell them early in the day. (I'm currently dumping a MMF at Merrill that settles same day if I place the order before 1:45PM.)
    What seems to be the case is that regardless of when the settlement date is for an OEF, the ex-date is generally the first trading day after the record date.
  • Pass the donuts
    Usually, yeah. As I said earlier I'm late this year.
    No big deal, but PRWCX traded ex-div today.
    Group B: record date Dec 12 (yesterday), ex-div Dec 13.

    Aren’t dates of record one day AFTER ex-date? That’s how it is for exchange traded securities...maybe it’s different for OEFs?
  • Pass the donuts
    No big deal, but PRWCX traded ex-div today.
    Group B: record date Dec 12 (yesterday), ex-div Dec 13.
    Aren’t dates of record one day AFTER ex-date? That’s how it is for exchange traded securities...maybe it’s different for OEFs?
  • Retirement: Why REITs Are Good Bond Replacements
    So is it time to trade self-storage reits for storage-of-self reits?
    @Anna - There is such a company: https://www.nbcnews.com/tech/innovation/company-will-freeze-your-dead-body-200-000-n562551 (a link allows you to get around the ad-block blocking.)
    the practice of preserving a body with antifreeze shortly after death ... - Strikes me as not a novel idea. I’ve known guys who routinely do that ahead of time.
  • Retirement: Why REITs Are Good Bond Replacements
    Great find @Mark,
    As folks in these (REIT) funds know, self-storage is often an important component (normally around 10-20% of holdings). The article you linked notes fierce competition, oversupply and cooling of demand in the self-storage market.
    “In addition to our report on the homebuilding sector, we also published Self-Storage REITs: Storage Wars Wage On. Once a perennial top-performer in the REIT sector, developers and new operators have flocked to the sector in recent years, adding new supply at a furious rate, weakening fundamentals. 2019 was shaping up to be a strong year for the sputtering self-storage REIT sector, but 3Q19 earnings were a setback on the road to recovery. Competition remains fierce in an oversupplied market. Symptomatic of the ongoing storage wars, marketing spending jumped nearly 60% from last year for these REITs, pressuring same-store NOI growth to essentially zero.”
    Got me to wondering if there’s some linkage (albeit a bit stretched) between this and the boomers now being 70+ and possibly ridding themselves of various RV vehicles? Personally, I rid myself of a boat recently after 40+ years of boat ownership and no longer rent a self storage unit for it. I’d imagine other types of RV owners also used these convenient storage options.
    Here’s an article documenting a slowdown in RV sales:
    The RV industry is slowing down after 10 years of growth https://www.curbed.com/2019/6/17/18682121/rv-campers-industry-economy-economic-impact-jobs-2018
    The oldest post WW II boomers are now nearing 75. That generation (to which I and many here belong) has had profound impacts on virtually every economic sector over most of the last century including: education, auto and home sales, RV sales, stock and bond markets, brokerages, health care, insurance. The list goes on ...
  • Pass the donuts

    MikeM: I don't want to 'buy the distribution' and incur a further tax cost .. a lot of people rush to buy OEFs at the end of the year as they rebalance (I don't rebalance) and then get surprised when the fund which they just bought sends them a 1099 with potentially large gains in February. So by waiting until it pays out, I am avoiding increasing my tax costs this year. The ex-day is easy: as estimates on my funds are announced, I mark my calendar and put my buy orders in that day.
    @rforno, something I've heard you or others do before, but why does it matter waiting to buy until after distributions were distributed. Isn't it just a balancing act for the fund? I don't see the positive effect buying before or after distributions, or am I missing something?
  • Retirement: Why REITs Are Good Bond Replacements
    Good Day @MikeM. Yes I think we are saying pretty much the same thing now that you explained your thoughts. The attached article lends a more in-depth discussion.
    Good News Becomes Bad News For REITs
    FWIW I'm not buying more REIT's at this time but I am on the lookout for bargains. Timing and patience as they say.