Hello All --
With garden variety CDs offering 3.5-4% or more in FDIC insured interest (and I-Bonds offering north of 6.5%); is there any argument for buying into a Short-Term High-Yield Fund (RPHYX, TRBUX)?
D.S.

@sma3, could not agree with you more! You have articulated what I have failed to state in the past. I would say that many of these states are depending/banking on a left leaning federal bailout...what happens if that is not so? Who knows but maybe a good topic of where to move to avoid these types of potential situations or is that too extreme?
@LewisBraham...you bring up Carly HP...reminds me of Bernie ranting about the billionaire's...pointing to the outliers to make your point...although would agree that it is almost inconceivable that we don't have national health coverate in this day and age...and like my very left leaning neighbor states, "does anyone really need to be a billionaire?" Truth. But, where does that stop, how about a millionaire? Who decides?
Back to the origianal question...if things start to look real wonky with the debt limit, I would pour my monies into something like HSAFX who might actually gain monies from the prior and after 3 months? Also would consider pair trade something like 55% HSGFX/45% VELIX...dunno, your mileage might vary?
Good points you all make, good luck and good health to everyone!
Baseball Fan

@sma3 And I could provide any number of charts like this one below explaining why there are government pension short falls and large amounts of debt because we are borrowing from the wealthy and thereby increasing our federal and state debt instead of taxing them to pay for government services. This one below is just for income tax, but you can see similar downward trends for estate taxes, corporate taxes and capital gains taxes. There was even one year, 2010, when there was no estate tax at all because of legislation passed previously in the Bush era. I believe the Yankees George Steinbrenner died that year and his heirs were pretty lucky--financially that is.
The size of the debt and who owns it also goes a long way in explaining why we will not default on Treasury bonds. Despite their grumbling about government workers, wealthy investors want us to keep borrowing from them instead of taxing them to pay for workers pensions and healthcare. And how is healthcare an "enormous perk?" Other nations provide it for all of their citizens whether they work for the government or not:

@LewisBraham
for future reference
https://www.usdebtclock.org/# ( has a separate clock for each state)
Also lists Medicare and Social security deficit, but I am unsure where those numbers come from.
While this is a bit off topic, the debt burden for state employee unfunded pensions and health care obligations are enormous and could make the debt ceiling fight look like a minor squabble, because it will pit "haves" vs "have-nots" and states cannot print their way out of it. Some "red states" are seriously affected.
https://www.pewtrusts.org/en/research-and-analysis/articles/2022/07/07/states-unfunded-pension-liabilities-persist-as-major-long-term-challenge
"After New Jersey (20.2% of personal income), unfunded pension obligations were highest in Illinois (19.4%), Hawaii (18.0%), Alaska (16.3%), and New Mexico (15.7%)."
Kentucky is 15.2 % South Carolina is 11%, Mississippi 14% . ( this does not include health care costs)
I completely agree that even successful CEOs ( and for that matter even non-profit hospital CEOs) pay etc is morally outrageous at thousands of times the average worker's salary.
However, I find it offensive when a state government ( CT is the state I know the most about) establishes a protected class of workers ( ie Unionized public sector employees) and endows them with wildly enormous benefits and perks ( out of proportion to their contribution to society) that are unavailable to private sector employees, and then requires private sector employees to pay for these benefits. Afraid to increase taxes to pay for it, the legislature then runs up enormous debt for future generations ( in CT's case about $70,000 per citizen in a state with a declining population).
Both political parties are equally guilty.
The same thing is true of the benefits that Legislators give themselves.

@Staycalm
Useful philosophical musings, but I have rarely seen concern for fairness in any policy making. There are many examples on both the right and the left. Lefties point to the tax structure etc but my favorite still has is the outrageous health insurance benefits (in CT work for the state for ten years, then quit and you still get lifetime health insurance!), retirement funds ( top 3 year average including overtime determines defined benefit) and high salaries a lot of state Government union workers continue to get, just for signing up ( and keeping) a job.
More to your point and what would happen in a default: I expect the reaction worldwide to an actual default would be so extreme that there would be little thought given to prioritizing in the days ahead who got paid with what was left.
After the Dow etc. drops 10000 to 15000 points overnight, ( and Gold goes to $5000 ) the debt ceiling will quickly be passed. Any legislator who votes against it will likely be run out of town.
@fred495
To take maximum advantage of the possibility, I would buy Treasuries and Gold, but be prepared to trade into stocks quickly. Other commodities necessary for survival will probably also skyrocket, although since most are priced in Dollars, hard to tell.
I don't think accumulating a month's worth of expenses in dollar bills is a bad idea either, or stocking up on canned goods and booze. I will certainly fill up my gas tank. ATMs and credit cards will probably not work very well.

These cat-and-mouse games in DC are dangerous in that mistakes can happen, or something unpredictable happens.
2 examples:
In September 2008, when the Treasury and the Fed decided to let Lehman go, EVERYONE went to sleep thinking that EVERYTHING foreseen had been taken care of and those were controllable. But NOBODY saw that the next day a run on the Reserve Primary money-market fund would start because it was holding lots of Lehman paper, and cascading market event started. The US had to promise to the Europeans later not to let stuff like Lehman ever again.
In August 2011, EVERYONE (Congress, WH, markets) thought that crisis was over because the debt-ceiling was passed in the last hours of August 1 (the House) and August 2 (the Senate) and stuff was signed off by the President. But then came the S&P downgrade of the US out of the blue on August 5, and the crisis spilled all over.
Stuff like this can happen when things are taken to the brink thinking that things will work out every time.

BTW, gold volatility GVZ has collapsed as physical gold and gold-miners have moved up quietly. Remember, when gold is near highs or lows, its volatility will jump sharply. It has been in the news that many global central banks have been accumulating gold for diversifying their reserves.
https://stockcharts.com/h-sc/ui?s=$GVZ&p=D&yr=1&mn=0&dy=0&id=p69180341751

Some are looking for crash-level VIX of 45-80 before the bear market ends. IMO, VIX remains elevated; it was elevated throughout 2022.
VIX of 21.13 means daily SP500 volatility of +/- 1.11% most of the time and +/- 2.22% or +/- 3.33% some of the time (in the next 30 days).
For VXN (Nasdaq Comp) of 26.96, that means +/- 1.42% most of the time and +/- 2.82% or 4.26% some of the time.
That is plenty of volatility.
MOVE is more relevant for bonds and that is also elevated.
https://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=1&mn=0&dy=0&id=p88970521030

I seems to me, although I haven’t looked at the 50 year chart that the major advantage this portfolio has is avoiding the two “lost decades”
“The key thing about AANA is that in 50 years it has never had a lost decade. Whether the 1970s or the 2000s, while Wall Street floundered, AANA has earned respectable returns.”
There have been two periods of almost ten years before the SP 500 returned to it’s previous high and stayed there. Not hard to beat that if you had any return at all, especially with roaring inflation in the 70s
I have seen several other “ simple portfolios” proposed. But if we used them, MFO would collapse!

Some comments on this from Randall Forsyth this week:
”In the narrow, parochial terms of the stock market, the precedent of the vicious fight over the debt ceiling in the summer of 2011 coincided with a 10%-plus drop in the S&P 500 index. The fight culminated with Standard & Poor's downgrading Uncle Sam's credit by a notch, from the top rating, AAA, to AA-plus. ‘The downgrade reflects our view that the effectiveness, stability, and predictability of American policy-making and political institutions have weakened at a time of ongoing fiscal and economic challenge,’ the ratings firm said at the time ….
Ironically, the 2011 downgrade spurred a rally in Treasury prices and a drop in yields, in a typical flight-to-quality move by investors. Since then, extraordinary schemes to stave off default have been floated, such as having the Treasury mint a $1 trillion coin, which would be accepted at the Fed, and in turn pay off debt obligations.”
Excerpted from ”Up & Down Wall Street”, Barrons - January 9, 2023
Folks - I don’t have a firm opinion on this situation yet. Let’s see how things evolve. Have lived through these episodes before. Govt has always found a way to continue functioning. As a lot of the posturing relates to a wider political agenda I prefer to steer clear myself or address those OT. The OP was pretty specific in asking about investment related consequences.

Thanks for charts YBB and catch22
I have not had the patience to read the entire 55 page House resolution that apparently has to be passed Monday for the HR to open, but as I understand it, it is the source of the power and obstruction that the radical fringe GOP now controls.
I hope someone better versed in HR policies than I can chime in, but it would appear to me that since only one member can now call for the Speaker’s ouster, if 212 Democrats and 6 moderate Republicans collaborated in the crisis they could
kick out McCarthy
elect a moderate Republican who pledges to pass a budget and the debt ceiling, and other reasonable items including a redo of the rules with power to control the fringe ( who could not retaliate if the coalition held firm)
People say no Republican would dare collaborate, but there are 18 elected from districts Biden won, and there are certainly several with principles as we saw during the impeachment trial, so I do not think it is impossible if things get really dire.
Given the reaction of the GOP to Gaetz ( the walk out when he was speaking and the near physical altercation) I hope they are close and realize this may be the end of them as a party
I have a friend who used to be. a HR staff lawyer who I will reach out to.

Hi @yogibearbull
I was rechecking similar info, including the Wiki write which provides a decent review. We were on vacation in northern Michigan when the markets burped, and no access to online; when I read the news of the markets drop, and have this short period stuck in my brain cells. The GFC of 2008/2009 was still fresh in many investors minds and Europe had not yet had a well functioning plan for recovery.
I fiddled around with a chart of SPY, AGG and IEF for a quick look of a 1 year period.

Default is when bills are not paid when due.
Why it occurs doesn't matter - the lack of ability or will or willingness to pay. Technically, there is also a grace period of a few days or weeks, but in case of debt-ceiling crisis, the max damage may be after the initial trigger.
Also, the time for theatrics is when spending bills are approved, not when payments are due.
History of 2011 should be reviewed. Markets started to fall in July 2011 after months of impasse on debt-ceiling but there was a final drop-dead date in early/mid-August 2011. The House finally passed the bill on 8/1/11, the Senate on 8/2/11, but lot of damage to the markets (stocks, not bonds) had already occurred. Then, after the immediate crisis had passed over, the dimwitted S&P/McGraw-Hill downgraded the US sovereign debt on 8/5/11, creating another crisis. As the history shows, no other rating agency dared to follow the S&P, and McGraw Hill was severely punished (in the markets) by that fiasco - it doesn't exist in its then-form anymore.
https://en.wikipedia.org/wiki/2011_United_States_debt-ceiling_crisis#:~:text=July 29, 2011: The Budget,a vote of 218–210.
Chart for 2 months in 2011, 7/1/11-8/31/11.

16 January, 2023:
New offer: 15 month certificate, 5% YIELD, (not rate.)
I see nothing about direct deposit being required. You would need to qualify for membership.
Minimum $50, maximum is bumped up to $250,000.00.
Subject to the maximum, you can add to it as you go along.
**********
**********
"Easy Start." RATE (not yield) = 4.75%.
On $3k, that's a profit of approx. $142.50.
https://www.navyfederal.org/checking-savings/savings/savings-resources/certificate-rates.html#SV05
My bonds are paying me more than that every MONTH. Of course, I'm investing way more than $3k in those. But the Certificate is insured. It may appeal to some folks. Highest rate I've seen out of Navy since i opened my account there.

Maybe 50/50 HSGFX/BRK.B? Dunno

HSGFX +17.3% 1 YR
BRK.B +2.7% 1 YR
Combined: Performance

+10%
Nice going @BaseballFan
Now - Please advise on where to put our money in 2023 :)

Very good work Baseball Fan.
I’ll pick Lee Smith as hardest working guy in 80’s baseball. What’s your pick for hardest working fund manager in 2023?

@Charles or @LynnBolin2021 is it to much to ask what MutliSearch says about AANA for using 7 l ETFs: 14% each in SPDR S&P 500 SPY, iShares Russell 2000 IWM, Vanguard FTSE Developed Markets VEA, , abrdn Physical Gold Shares SGOL, ,iShares S&P GSCI Commodity-Indexed Trust ETF GSG, the iShares 7-10 Year Treasury Bond ETF IEF, and the Vanguard Real Estate ETF VNQ? My MFO lapsed but I am intrigued by what MultiSearch comes up with. She's the best IMHO.

Interesting (arguably nuanced) further elaborations
9mos ago:
https://www.marketwatch.com/story/feeling-seasick-these-simple-low-cost-retirement-portfolios-are-holding-up-well-11652387274
https://kritik.com.my/russia-just-made-a-case-for-owning-gold-and-nobody-noticed/
a month later:
https://www.msn.com/en-us/money/savingandinvesting/do-you-have-the-right-investments-for-your-retirement-savings-this-idiot-proof-portfolio-might-help/ar-AAXeMtJ
LB, I posted the text because responders here had not actually read through the article (of course it's an article) or said it could not be accessed.

@OJ and others who might have the same criticism this is why I asked about the specific composition of the initial portfolio. What was the makeup of alternative portfolios he's comparing AANA to? How does it compare to handing it all over to Warren Buffett and going hiking? If someone is going to say that AANA was a great way to go I'd want to see what they started with and changed over 50 years so that I could dig up my own back tested alternates also if I was OCD enough.

"It consists simply of splitting your investment portfolio into 7 equal amounts, and investing one apiece in U.S. large-company stocks (the S&P 500 SPX, +2.28% ), U.S. small-company stocks (the Russell 2000 RUT, +2.26% ), developed international stocks (the Europe, Australasia and Far East or EAFE index), gold GC00, +0.04%, commodities, U.S. real-estate investment trusts or REITS, and 10 year Treasury bonds TMUBMUSD10Y, 3.562%."

Absolutely not taking any particular "side" here, but the way that I read the substance of the above is that by dividing a portfolio into seven specific groups of dissimilar securities, one can achieve a good return over a long period of time.
What specific vehicle is used (etfs, etc.) to represent each group may change over time- the main thrust of the article is to observe those seven groups, not any specific vehicles.
Added note- not having followed this thread previous to this post, I just took a look at the page generated by the original link... it certainly looks like a financial article, not an advertisement, to me.