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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.
  • Treasury Direct customer service
    Last year I bought three batches of I-Bonds, one in my name and two intended as gifts for my wife and daughter. Apparently I did something wrong, and no gift accounts were created, although my holdings showed three separate holdings. I tried to figure out how to reclassify these as gifts using the TD website but got nowhere. So I finally broke down and called Treasury Direct this morning.
    My experience was very positive. I expected a hold time, and it turned out to be just as long as the recording advised me — 15 minutes. The rep was friendly, helpful and knew exactly what to do. He walked me through each step patiently, and I was able to reclassify two batches of the bonds as gifts and transfer them to my wife and daughter. This all took about 10 minutes.
    The I-Bonds for my daughter were a wedding present, so she can do whatever she pleases with them.
  • Dip Buyers Scorched by Cratering Bank Stocks Head for the Exits - Bloomberg
    Regional bank KRE is in mid-30s again (as in early-May). I think that is good price for it - but after an initial position in early-May, I am not adding to it here. The downside is 2020/pandemic-low in mid-20s. The upside is if there is a comprehensive reform on the FDIC insurance coverage.
    This is like catching a falling knife. So, don't just jump on it.
    Right now, the FDIC has a few proposals on deposit-reforms, and the Treasury (so, the White House) and the Fed are reviewing those. The FDIC is also proposing temporary fees on banks to recover its costs of covering ALL deposits (that it didn't have to do) in the rescues of 3 failed regional banks (SVB, Signature, First Republic). Of course, this cannot continue on ad-hoc banks as more regional banks fail - PACW seems to be in trouble now.
    https://stockcharts.com/h-sc/ui?s=KRE&p=D&yr=1&mn=0&dy=0&id=p27896665771
  • Anybody Investing in bond funds?
    But please leave out the widely understood part about past performance being no guarantee of future results. Got that part.
    Ok, but that's exactly what you based your whole argument on. Past 3-5 year performance.
    I do agree with everyone else though that with CD's at 5%, it's hard to take on more risk to get 6, 7 or 8% as rates plateau or start to come down. But it may be close to that time IMHO. I do believe the next 3-5 years will not look like the past 3-5 years. Extrapolate YTD returns on some of these funds now and it shows returns growing greater than 5% for the year.
    The only bond fund I've held on to over the past couple years is in my withdrawal bucket, RPHYX. I recently added RGHYX and SAMBX to that bucket in small dosage. A couple TIP funds too, but that bucket still consist of more than 50% in 3-12 month treasuries, CDs and MM. I'll add, because it's not talked about much, also a nice consistent player in this bucket has been SPC, Crossing Bridge Pre-Merger SPAC ETF.
  • Anybody Investing in bond funds?
    I dumped my TIPs bond fund but holding the rest of them, about 35% of my total portfolio. Most bond funds now have healthy yields, and I think the worst of the slaughter is probably over. I am holding more cash in money markets and CDs than ever before. I expect bond funds to produce excellent total returns when and if interest rates stabilize and potentially drop.
  • Anybody Investing in bond funds?

    ....
    It is hard to beat 4 to 4.5%
    =====================================
    With taxable and municipal bond funds, indeed it is.
    -------------------
    Here's a link to the 1,921 taxable bond funds that Fido currently offers.
    https://fundresearch.fidelity.com/fund-screener/results/table/overview/averageAnnualReturnsYear5/desc/1?assetClass=TBND&category=BL,CI,CL,CS,EB,FX,GI,GL,GS,HY,IB,IP,MU,NT,PI,RR,TW,UB,WH,XF,XP&order=assetClass,category
    For kicks, sort them by descending 5-yr total returns.
    Note that only 11/1,921, or 0.57% exceeded TRs of 4.50% for the past 5 years.
    -------------------
    Here's a link to the 903 municipal bond funds that Fido currently offers.
    https://fundresearch.fidelity.com/fund-screener/results/table/overview/averageAnnualReturnsYear5/desc/1?assetClass=MBND&category=HM,MC,MF,MI,MJ,ML,MM,MN,MO,MP,MS,MT,MY,SI,SL,SM,SS&order=assetClass,category
    For kicks, sort them by descending 5-yr total returns.
    Note that only 0/903, or 0.00% exceeded TRs of 4.50% for the past 5 years.
    -------------------
    Read it again s-l-o-w-l-y and try to understand it.
    Then s-l-o-w-l-y try to explain why an investor, going forward, should invest in either taxable or municipal bond funds in their portfolio's fixed income sleeve instead of say, 5-yr, 4.50%, non-callable CDs.
    But please leave out the widely understood part about past performance being no guarantee of future results. Got that part.
  • Dip Buyers Scorched by Cratering Bank Stocks Head for the Exits - Bloomberg
    Well! I've learned some lessons through the years. I cannot sell my smallish, mid-sized bank stock at THIS point. (Stick out foot, then pull trigger.) ...I did unload a true beast: PRISX. TRP Financials, though. I redeployed the money, not taking it out. When I get some spare cash again at the head of the month of June, I'll be buying more of BHB. They've even managed to RAISE the dividend a tiny bit. P/E stands at 7.23. And P/B is 0.84. Price-to-cash-flow = 5.96. Trailing div is 5.81%. (That last one is surely connected to the fall in the share price.) The geniuses at Morningstar say I'm holding a stock that sits at 33% less than its true value. Market cap = 343.7588 Mil. Call me stubborn. But this one I can see is a "keeper." This crisis will pass, like the others. And I sense that it's a GOOD thing that this stock is not in the news.
  • In case of DEFAULT
    @msf In addition to the evidence you provide about Dem vs Rep budgeting, there have been a number of studies refuting the 1998 research @Baseball_Fan cites by Feldstein and Wrobel regarding progressive tax policies, income inequality and wealth migration:
    https://cbpp.org/research/state-budget-and-tax/tax-flight-is-a-myth
    https://researchgate.net/publication/4731605_Do_Redistributive_State_Taxes_Reduce_Inequality
    While it is possible for a billionaire to leave a high tax country for a low tax one with relative ease, it is far less likely for the average high-earning wealthy person to do this. Among the reasons is that normally people are usually later in their lives when they are at their peak earnings levels, and have established important career and business ties in their local area that are not so easy to rebuild in a new state. Moreover, moving is a pain, and causes disruption of family and friends.
    The evidence indicates that Feldstein and Wrobel's research was skewed by the fact that progressive tax states already had high levels of income inequality to begin with before such taxes were enacted. It is one of the reasons the taxes were enacted in the first place. The taxes reduce inequality, but there remains often a higher than average level of income inequality in such states. No tax is going to fix the difference between a Silicon Valley millionaire/billionaire and the average person. But it eases the pain.
  • In case of DEFAULT
    The state budget/pension situation is why I gleefully bought into the 403(b) option versus the state pension when I joined the uni system. Not only was the 403b portable and fully-vested immediately, but if I was going to lose (or make) money, I wanted to be the one responsible, not some politically-appointed state investment board who might, for example, think 25% or more in high-priced hedge funds is a good idea.
  • Anybody Investing in bond funds?
    Yes I maintain a little in a global bond fund and also hold a high yield mini fund. They’ve long been part of a well diversified low risk portfolio. Bonds & bond funds got whacked in 2022. Worst year for bonds I can remember in more than 25 years of managing my own investments. That didn’t deter me from keeping the same allocation. Since my total allocation to all fixed income (cash and bonds) is only 20% you might assume there’s not a whole lot in bond funds. Where possible, I favor multi-asset allocation and alternative investment funds to either pure fixed income or stock funds.
    *Note: I also hold a convertible bond fund. That’s considered an “alternative” type investment and so is not included in the above fixed income amount.
  • Anybody Investing in bond funds?
    yes, even h.y. munis give 4.15 now. HYMU...although i don't own it.
    I keep some bond funds, yes. I'm not the sort that reacts and makes moves based on the macro picture------much. SCHP tips and HYDB junk. And prcpx & tuhyx, both junk. I bought into tuhyx at just the wrong time. i held on, and it's very slowly rising for me. attractive dividends.
  • In case of DEFAULT
    State budgets have to follow the rules of economics, because they cannot print money. CT was running neck and neck with IL for the most indebted state
    consequently, taxes went way up, real estate shriveled ( housing prices were flat from 1987 to 2019!) and people left.
    A moderate Democrat has refused the left wing's demand to spend more, and the pension deficit is easing.
    Massachusetts was in similar shape in the past but they have a flat rate income tax, passed a law preventing town budgets from rising more than 2 1/2% without voter consent and they let loose Harvard and MIT Biotech and they are no longer Taxachussets.
    But with the Covid budget surplus, the politicians want to spend again and they haven't learned their lesson
    There are massive amounts of money that can be cut in the Federal budget, if the corporate hogs were kept away from the trough.
    Medicare is a prime example. The US spends twice as much as any other country on health care, with worse results.
    "Of the 10 highest paid among all corporate executives in the US in 2020, 3 were from Oak Street Health, and salary and benefits included, reportedly, $568 million for the chief executive officer (CEO). Executives in large hospital systems commonly have salaries and benefits of several million dollars a year."
    https://jamanetwork.com/journals/jama/fullarticle/2801097
    The budget busting Alzheimer's drugs are just the start.
  • Anybody Investing in bond funds?
    I increased my position in RHPIX but sold everything else last year when they all were down 4 to 5%, thus avoiding worse losses. I did jump into OSTIX again a month or so again. I have had a position in it off and on over the years
    I figure they have a decent chance of avoiding credit blow ups and high yield may be less interest rate sensitive.
    I also bought some long term munis and muni bond funds
    It is hard to beat 4 to 4.5%
  • Anybody Investing in bond funds?
    OP Q: "Anybody investing in bond funds?"
    A: Um, not us.
    Why not? Well, we ask ourselves, what do we expect as likely/probable average annual TRs from dedicated bond funds over the next say, five years? We answer, maybe 4%-5% if we're very lucky.
    With 5-yr, non-callable, 4.5% CDs widely available now, and over 5% widely available back at the peak, why should be bother with dedicated bond funds for the next 3-5 years?
    We are sufficiently over the interest rate hurdle that allows us to "Just Say No" to dedicated bond funds for the next several years.
  • Anybody Investing in bond funds?
    Yes, I have some $ in etf's BOND and IEF. I'm not putting $ in OEFs now; I did like you and had some decent $ in Pimco Income in the early part of the year, but decided I was early and sold at ~ breakeven. I have most of the portfolio in T bills now, with a combined yield at the moment of a hair over 5%. I'm happy with that at least for now.
    I will be back in bond OEFs, but it may not be to any significant degree until well into Q3 or even Q4, depending on the rate situation. Then again, once the debt debacle plays out, that may be a time for IG, and maybe some credit too. But I'll likely keep to etf's for maximum flexibility.
    I'm a retiree sans pension who couldn't handle major losses, so this is just my individual take. YMMV.
  • In case of DEFAULT
    Look at Chicago, getting choked by the pension costs and debt service....just like virtually all democratic run cities in the USA.
    There's no question that Chicago's pensions are way underfunded - its four unions have funding ratios ranging from just 21% to 46%, according to this 2022 WTTW (Chicago PBS) report. That's close to, if not at, the bottom of the pack. A 2019 Pew Research Center Report specifically called out Chicago for it low and rapidly declining funding ratio.
    And that's the point. It's dangerous to draw inferences from a single data point, especially from an outlier. Instead, use broader data. Here's a 2023 report from the conservative think tank (per Crain's) Truth In Accounting. It presents 2021 debt (or surplus) per taxpayer for the 75 largest US cities, including pension liabilities. 25 cities have surpluses, 50 are in debt.
    Ballotpedia reports that in 2020, of the mayors in the 100 largest cities, 64% were Democrats, 29% were Republicans, and 7% were nonpartisan. That's almost exactly in line with the breakdown of the 25 cities reported to have surpluses: 16 Democrats (64%), 8 Republicans (32%), and 1 nonpartisan (4%). Republicans don't seem to have done a better (or worse) job than Democrats in managing city budgets, once one controls for percentage representation.
    this is what some people in a very low percentage of counties who vote for govt handouts want, not the huge majority of counties in the USA
    Take care not to conflate people and counties. Otherwise one might wind up thinking that Illinois is a deep red state.
    image
    Then there's Los Angeles County. Just one of 58 counties in California, yet 25% of the state's people live there. One can have a majority of people in a minority, even a small minority of counties. What counts, or what should count, are the people, not the land.
  • The Case For International Diversification
    Whether or not an investor should own foreign equities is a contentious topic in some circles.
    Some prominent investors (Warren Buffett, Jack Bogle) have stated
    that international diversification is not required.
    "If you could predict the future there would be no reason to diversify but no one has the ability to know what comes next in the markets or global economy."
    "Diversification is hard because you just know there is always going to be something in your portfolio that’s going to underperform. You just don’t know what that asset class or strategy it will be at any given time."
    "Global diversification is about accepting good enough returns to avoid the potential for terrible returns at an inopportune time."
    The author compares returns for the S&P 500 and MSCI World ex-U.S. indexes below.
    We have MSCI data for international stocks going back to 1970.
    Here are the annual returns for the S&P 500 and MSCI World ex-U.S. through April 2023:
    U.S. stocks +10.5%
    International stocks +9.1%
    It’s also true that much of the outperformance has taken place during the latest cycle.
    From 1970-2012, the annual returns were basically dead even:
    U.S. stocks +9.7%
    International stocks +9.6%
    Link
  • Advisers love bonds, cash and value stocks, shun growth and gold - BofA survey
    Just checking in again since the first post on March 8th. Quote "78% prefer Value (IWD) (VONV) vs. 12% who like Growth (IWF)"
    This (chart) since March 8th shows that IWF=growth continues to outperform IWD=value by more than 9% since and GLD did pretty well at 10+%
    YTD: IWF leads by "only" 16.5% (chart).
  • Seeing red across the board this morning.
    @Mark, congratulations.
    In 3 months when he gets his Social Security number, open a grandparent 529 to get a head start on college. Recent changes have eliminated previous roadblocks for this.
  • Seeing red across the board this morning.
    @Mark, Congratulation! It is a beautiful thing to welcome a new generation.
    Now is the time to help your son and daughter to get the 529 plan started. Time is on your side for the college fund to compound for next 18 years before withdrawing. You can apply for his/her social security number now and you are all set… College tuition is much higher now than those periods when we went to college. One of our kid graduated without debt while another one is entering graduate school with sufficient 529 fund to cover her schooling.