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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.

CD Rates Going Forward
@msf — I agree with you that the next 5-10 years could be very different. That’s why I’m maintaining significant holdings in bond and stock funds. However, in my lifetime as an investor, I haven’t seen cash yields this high and I doubt that it will continue for long. As soon as the Fed starts cutting rates, yields will drop. If that doesn’t happen for a while, I will keep buying CDs and Treasuries as issues mature.
My wife and I will start taking required minimum distributions before long, and it’s nice to have cash holdings we can rely on if stocks and/or bonds are down. BTW, I checked my watch lists for bond funds and very few have topped 5% over the past 15 years either— and those funds are all high yield funds that tend to drop in stock market crashes.

Tarwheel August 2023 in Fund Discussions
CD Rates Going Forward
I don’t own or track a single bond fund that has produced an average annual return approaching 5% over the past 5 or 10 years
That time frame includes a couple very bad years for bonds during the FED rate hikes, so of course averages will be lower. If you look forward as the FED slows and completes their interest rate hikes, those statistics will likely change again for the better for income funds. Just my opinion. That change may have already happened. PIMIX has gained 5% in just the 1st half of 2023. Projection and extrapolating data is a risky business, but, what is to keep income funds from continuing that trend moving forward?
Not saying buying treasury or CD ladders now at 5% isn't a safe and prudent investment. It certainly is. Especially for retirees or those close to it. I've been doing it too. I do think, though, that when we look back a year or 2 from now, income funds may be winning the race.

MikeM August 2023 in Fund Discussions
CD Rates Going Forward
This morning, Schwab brokerage MM SWVXX is paying 5.17% and SNAXX is paying 5.32%. CD rates at Schwab seem to be about in this same MM range, with anything over a year being less than the MM rates. I had a CD mature yesterday, which I have decided to park in SWVXX for now.

dtconroe August 2023 in Fund Discussions
CD Rates Going Forward
1-yr T-Bill was at 5.37% yesterday. Auction is on Tuesday, settles on Thursday.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202308

yogibearbull August 2023 in Fund Discussions
CD Rates Going Forward
I don’t own or track a single bond fund that has produced an average annual return approaching 5% over the past 5 or 10 years
Neither do I, but some posters here do track or own BGHIX / BGHAX. This fund has returned at least 5.5% annualized over the past five years.
Regardless, it's pointless to project past fixed income returns into the future. I don't know of any MMF that yielded 4% over the past several years, yet many taxable MMF now yield at least that much. Rates have risen.
Unlike CDs, you can readily sell Treasuries if you need the cash prematurely.
CDs that are purchased directly from an issuer often carry a put option. That is, you can redeem them (sell them back to the issuer) albeit with a penalty (strike price below par).
For example, you can save like a Senator via The United States Senate Federal Credit Union. It offers fixed rate share certificates (the CU equivalent of CDs) yielding more than5% for up to 3 years. Though they come with substantial loss of interest early withdrawal penalties.

msf August 2023 in Fund Discussions
CD Rates Going Forward
For comparison: Hickam FCU, Oahu. 9-month "special" CD rate = 4.75%.

Crash August 2023 in Fund Discussions
CD Rates Going Forward
BTW, Fidelity’s bond listings showed a bunch of new Treasury offerings today. This morning, the expected yield on the one-year Treasury zeros was 5.05% By this afternoon, the expected yield had risen to 5.35%. I’m going to jump on this. Unlike CDs, you can readily sell Treasuries if you need the cash prematurely.

Tarwheel August 2023 in Fund Discussions
CD Rates Going Forward
@Tarwheel. +1. Agree totally. 5% is a winner for this retired guy.

larryB August 2023 in Fund Discussions
CD Rates Going Forward
You can lock in non-callable CDs with rates exceeding 5% up to two years and 4.5% up to five years. I don’t own or track a single bond fund that has produced an average annual return approaching 5% over the past 5 or 10 years. What’s not to like about CDs yielding close to 5% or more? By waiting to see if rates go higher, you could be passing up an opportunity of the decade. If rates go higher, so what? Create a ladder and take advantage of the increase.
We’ve all seen over the past year that bond funds can be very, very risky and produce abysmal returns over long periods of time. Their returns do not necessarily provide ballast during periods when stocks drop. They can let you down when you need them the most.

Tarwheel August 2023 in Fund Discussions
Champlain Strategic Focus Fund in registration
https://www.sec.gov/Archives/edgar/data/890540/000139834423013984/fp0084628-1_485apos.htm

TheShadow August 2023 in Fund Discussions
CD Rates Going Forward
My house is about 50 years old, and I am having to spend more and more each year on ACs, Hot Water heaters, plumbing, and a number of "surprises" outside of my house. I am starting to question whether we need to "sell the house" and buy smaller and newer house that requires less maintenance. My wife wants to stay in the house, and so I do have to manage our investments to keep up with the demands of owning an old home--liquidity has to be taken into account with my taxable account for these surprises. </blockquote
DT: I know what you mean about older homes. We have been in ours about 40 years. We have found out that after that long, things just wear out or need to be updated. We have talked about downsizing, but we do like it out here so we have decided to stay as long as we can.

hondo August 2023 in Fund Discussions
CD Rates Going Forward
How long will it last, and where will it peak? Those are the questions. The consensus seems to be that it will only last for about a year, not more than 2, and that it will peak around 6%, maybe a little less and not more than 6.25%. That's a very strong consensus, and it seems that many take it as a forgone conclusion. That's not to say that it's wrong.
If I really believed in it strongly, I would try to go out as long as I could within the next year at anything over 5.5% -- but really I'm not so sure. I'm afraid inflation might get out of control. If we go out one year now, I think rates will still be this good or better in a year.
btw, there is no reason to buy CDs with an early withdraw penalty. Buy a brokered CD. My broker tells me that he has been able to sell CDs for clients for very minimal losses or even with small gains. (The seller keeps all accrued interest).
I am not seeing that very optimistic CD scenario for longer term CDs, but CD investing involves projections for rates, and I did choose a short term laddering scenario in 2022, with many CDs maturing in 2023 and early 2024. The first 6 months of 2024 will be a major test for me, to make CD investing decisions, possibly choosing longer term CDs if the rates are higher than today.

dtconroe August 2023 in Fund Discussions
AAII Sentiment Survey, 8/2/23
AAII Sentiment Survey, 8/2/23
Bullish remained the top sentiment (49.0%; high) & bearish remained the bottom sentiment (21.3%; low); neutral remained the middle sentiment (29.7%; below average); Bull-Bear Spread was +27.7% (high). Investor concerns: Inflation (still high); economy; the Fed; dollar; crypto regulations; market volatility (VIX, VXN, MOVE); Russia-Ukraine war (75+ weeks, 2/24/22-now); geopolitical. For the Survey week (Th-Wed), stocks were down, bonds down, oil up, gold up, dollar up. Fitch downgraded the US debt to AA+, but it retained AAA for 3 US financials - NY Life, Northwestern Mutual, TIAA. #AAII #Sentiment #Markets
LINK

yogibearbull August 2023 in Other Investing
CD Rates Going Forward
How long will it last, and where will it peak? Those are the questions. The consensus seems to be that it will only last for about a year, not more than 2, and that it will peak around 6%, maybe a little less and not more than 6.25%. That's a very strong consensus, and it seems that many take it as a forgone conclusion. That's not to say that it's wrong.
If I really believed in it strongly, I would try to go out as long as I could within the next year at anything over 5.5% -- but really I'm not so sure. I'm afraid inflation might get out of control. If we go out one year now, I think rates will still be this good or better in a year.
btw, there is no reason to buy CDs with an early withdraw penalty. Buy a brokered CD. My broker tells me that he has been able to sell CDs for clients for very minimal losses or even with small gains. (The seller keeps all accrued interest).

dryflower August 2023 in Fund Discussions
CD Rates Going Forward
@hondo. Same boat here. My wife has no interest in this stuff and I think more and more about a vastly simplified portfolio going forward. As my CD’s and treasuries mature it might be time to build a position in Wellesley or some such thing. At least in the IRA accounts. That and sell the boat
My house is about 50 years old, and I am having to spend more and more each year on ACs, Hot Water heaters, plumbing, and a number of "surprises" outside of my house. I am starting to question whether we need to "sell the house" and buy smaller and newer house that requires less maintenance. My wife wants to stay in the house, and so I do have to manage our investments to keep up with the demands of owning an old home--liquidity has to be taken into account with my taxable account for these surprises.

dtconroe August 2023 in Fund Discussions
CD Rates Going Forward
I’ve been loading up on CDs and treasuries, with ladders extending out five years in my IRAs and three years in taxable savings. I don’t care if interest rates rise further as I’m happy to be earning better than 5% on all these cash investments. I’ve got plenty of CDs, money markets and Treasuries on the short end, in case I need cash. If rates rise further, I’ll simply buy more CDs or Treasuries as individual issues mature. I’m holding more cash than ever in my accounts because we haven’t had interest rates this high in many, many years and I don’t know how long it will last.

Tarwheel August 2023 in Fund Discussions
CD Rates Going Forward
dt: I bought a 12 month 5% CD yesterday. I know that I could have gotten a higher rate with a brokered CD, but wanted to stay with my credit union. As you know, I have always tried to keep it simple for my wife's sake. Now, I have come to the point that I need to keep it real simple for myself. I realize my thinking is slowing. There may be a whole new strategy sometime in the near future.</
>
hondo, sounds good to me. I can get Money Markets over 5% for now, but I can live with 5+% CDs as long as they are available. I am willing to go longer term than 1 year in my IRA account, but in my taxable account I prefer to stay more liquid with shorter term offerings. I think I could go back to investing in bond oefs, but it feels good to be able to talk to my wife about CDs, and she shows interest and actually offers opinions on terms and rates. Right now, I am just happy to have CDs to make some money, and it certainly is a lot less stress and worry for me.

dtconroe August 2023 in Fund Discussions
Munger on "diworsification." (link.)
“Well, how much cash in Munger holding these days, and how is his portfolio doing?”
Berkshire remains heavy on cash. Best recollection is north of 20%. Around 40% of their equity stake is in AAPL (+54% YTD).
Berkshire lost a bit in 2022, but has done very well this year. Better than 10% YTD.
To each his own. If diversification is the refuge of cowards, I’m guilty as charged. It’s harder to muck things up ISTM if widely diversified. No single stupid move is going to screw things up too badly.

hank August 2023 in Other Investing
Fitch Downgrades US from AAA to AA+
I’m befuddled as to where the markets are heading (I mean more so than usual). Took a bit of risk off the table this week. I don’t think the downgrade in credit rating was a big reason for today’s turbulence. Maybe a good excuse to unload some overextended sectors. Everybody & his brother know the S&P, dominated by big tech, is overbought.
Under ”woulda, coulda, shoulda”, a consumer staples (food) stock I gave up on / sold 2 weeks ago jumped nicely today. Bad timing - again. Looks like consumers staples in general did well today. I’m amazed how well BRK.B continues to hold up. If you look at the historical charts, it has experienced at least 1 steep drawdown. (Don’t own.) Some magic Buffet / Munger potion I guess. And PRWCX has held up better this week than I would have expected (but off .59% today).
Intermediate and long term bonds at over 4% worth looking at. Will do well in a recession. But probably losers out very long term. Enjoying everybody’s thoughts.

hank August 2023 in Other Investing
Fitch Downgrades US from AAA to AA+
Try this yourself.
Check your credit score.
Go apply for a bunch of credit (credit cards, student loans, HELOC,etc.)
Max out all of these cards
Apply for more Credit
Max that out
You discuss your credit related debt with your wife… she says, “raise your debt ceiling”
You divorced your wife on grounds of insanity
Your net worth is cut in half
Your 2.5 kids move back in with you
Your Ex-wife never moves out because it's too expensive for her to buy or rent
She starts dating your financial advisor
He now collects more than 1% for his services
You lose your job
You check your credit…oops, you have been downgraded.
Highlights:
It’s important to recognize how your financial behaviors may impact your credit scores
There are several factors that are used to calculate credit scores
There are many different credit scoring models, or ways of calculating credit scores
Makes sense to me why US Credit score just dropped!
https://equifax.com/personal/education/credit/score/how-do-your-actions-affect-your-credit-scores/

bee August 2023 in Other Investing