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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.
  • Wealthtrack - Weekly Investment Show
    March 25th Episode:

    bee bee in Fund Discussions
  • Morningstar Portf. Manager speed
    Re-test:
    Down: 134.2 Mbps
    Up: 45.4 Mbps.
    ...Just for the record. So much better than what I had to deal with at the previous apartment.
    Crash Crash in Other Investing
  • Edward "Ned" Johnson III Passed Away at 91
    He had the best record of Magellan (FMAGX) managers, both in absolute and relative terms, with an annualized return of 30.6% vs. 7.9% for the S&P 500.
    https://greensboro.com/magellans-best-manager-the-envelope-please/article_287cfc10-6b68-5515-a321-c7caacfbf802.html
    OTOH, it seems like a bit of a stretch to say, as CNN does, that "In 1974, he broke the mold by selling mutual funds directly to individual investors instead of through traditional brokers."
    Almost from day one, some mutual funds were sold direct:
    By the 1940s, the wholesale distribution system [selling through brokers] had become the norm, and it continued to be so through the 1960s. Yet this was not the only sales model employed by mutual funds. Two of the largest fund complexes in the 1950s and1960s, — Hamilton Management Corporation and Investors DiversifiedServices,Inc. — employed their own salespeople. These individuals only sold their respective firm’s funds, and they were the only sales representatives who did. A minority of funds distributed their shares directly to the public without a sales force of any kind.
    https://www.ebhsoc.org/journal/index.php/ebhs/article/view/208/191
    Nor was Fidelity at the vanguard (pun intended) of offering no-load funds. Unlike families like Scudder (the original no-load fund), T. Rowe Price, Dodge & Cox, Mairs & Power, Mutual Series and others, it did not offer no-load funds in the sixties. It wasn't until the early 2000s that Fidelity dropped its "low" (2-%3%) loads on its most lucrative funds, like Magellan and Contra (FCNTX).
    https://www.jstor.org/stable/4469596?seq=4
    https://www.orlandosentinel.com/news/os-xpm-1995-06-11-9506080389-story.html
    https://www.thinkadvisor.com/2003/06/24/fidelity-drops-sales-charge-on-magellan-fund/
    If one is going to give Ned Johnson credit for selling direct, then he also gets credit for charging loads that went entirely to Fidelity. He was brilliant at growing not just the company but its profits.
    A brief note on the Wikipedia entry - It says that Ned Johnson managed Fidelity from 1963 to 1977, seemingly to have forgotten Dick Habermann (1972-1977).
    http://personal.fidelity.com/myfidelity/InsideFidelity/NewsCenter/quickFacts/Magellan.html
    msf in Other Investing
  • M* -- Bond Investors Facing Worst Losses in Years
    Federal funds rates do not reflect the real interest rates changes his year. Treasury yields have gone up much more in the shorter maturities than longer.
    Last three month changes
    6 mo treasury up 0.78%
    1 year 1.2%
    2 year 1.4%
    5 year 1.1%
    30 year 0.6%
    15 year mortgage rates have risen even more:1.5% and 30 year rates about 1.6%.
    DODIX has a duration of 4.7 per M* so you would expect it to drop 4.7% for every 1 % increase, or 5.2% based on treasuries or up to 7% based on mortgages.
    It is down 5.5% YTD per M*
    These changes are also in line with short duration funds like VUSFX ( duration of 0.98) which is down 1%.
    If you use bond funds for income, you are now going to get more, although it will be a while before it makes up for the drop in NAV.
    If you use bond mutual funds for portfolio balancing and diversification, it may be a difficult time, because if interest rates continue to rise, NAVs will continue to fall, and this may occur just at the same time stocks fall too, if the war gets worse or there is a recession. This is not how "bonds as ballast" is supposed to work.
    An alternative is to look at individual bonds, where ( without a default) you are guaranteed the YTW return and to get your capital back. High rated 5 to 7 year corporates are yielding 2.5 to 3%. If inflation continues to increase, you will still loose money as the coupon rate will not increase, but you will get your principal back (of course it looses some purchasing power).
    There are also fixed term ETFs where all the bonds mature about the same time and the ETF terminates at the end of a specific year. You can set up a ladder with equal amounts in each year and roll this years redemption into an ETF on the top of the ladder. This is simpler than individual bonds, provides diversification and has a low expense ratio (0.18% for BSCM the 2022 Invesco product)
    ishares and Invesco both have lots of these available for corporate munis emerging market and high yield.
    https://www.kiplinger.com/investing/bonds/601759/build-a-bond-ladder

    I heard of these ETFs but not quite sure how they work. The article says at the end of the term you get back your money plus capital gains. Does this mean you are guaranteed not to lose any principal if you hold on until the end of the ETF's term, same as if you bought an individual bond? Would this hold true if you bought in the middle of the term?
    wxman123 in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    Federal funds rates do not reflect the real interest rates changes his year. Treasury yields have gone up much more in the shorter maturities than longer.
    Last three month changes
    6 mo treasury up 0.78%
    1 year 1.2%
    2 year 1.4%
    5 year 1.1%
    30 year 0.6%
    15 year mortgage rates have risen even more:1.5% and 30 year rates about 1.6%.
    DODIX has a duration of 4.7 per M* so you would expect it to drop 4.7% for every 1 % increase, or 5.2% based on treasuries or up to 7% based on mortgages.
    It is down 5.5% YTD per M*
    These changes are also in line with short duration funds like VUSFX ( duration of 0.98) which is down 1%.
    If you use bond funds for income, you are now going to get more, although it will be a while before it makes up for the drop in NAV.
    If you use bond mutual funds for portfolio balancing and diversification, it may be a difficult time, because if interest rates continue to rise, NAVs will continue to fall, and this may occur just at the same time stocks fall too, if the war gets worse or there is a recession. This is not how "bonds as ballast" is supposed to work.
    An alternative is to look at individual bonds, where ( without a default) you are guaranteed the YTW return and to get your capital back. High rated 5 to 7 year corporates are yielding 2.5 to 3%. If inflation continues to increase, you will still loose money as the coupon rate will not increase, but you will get your principal back (of course it looses some purchasing power).
    There are also fixed term ETFs where all the bonds mature about the same time and the ETF terminates at the end of a specific year. You can set up a ladder with equal amounts in each year and roll this years redemption into an ETF on the top of the ladder. This is simpler than individual bonds, provides diversification and has a low expense ratio (0.18% for BSCM the 2022 Invesco product)
    ishares and Invesco both have lots of these available for corporate munis emerging market and high yield.
    https://www.kiplinger.com/investing/bonds/601759/build-a-bond-ladder
    sma3 in Fund Discussions
  • Morningstar Portf. Manager speed
    @Crash- I'm just saying that your internet speed is at least ten times faster than ours, but I really don't know what the available range of speeds is, or what's considered fast or slow.
    We don't have any large screen or high definition video equipment, so we contract for the cheapest service tier provided by AT&T Uverse. All we really wanted when we signed up was reasonably fast internet browsing and email. We didn't anticipate watching streaming video at the time, but since Amazon Prime Video was available with a fair amount of "free" content we later started streaming from Amazon and PBS. Our speed (bandwidth) is enough to simultaneously watch two separate streaming video feeds, but the largest screens are only standard resolution 27", so it doesn't take all that much bandwidth to drive those.
    If we wanted to use the very large high-definition screens we would likely have to pay for greater bandwidth/speed.
    Additional info: I just took a quick look at this site, which says:
    We’ve gathered official figures from many of the most popular streaming services currently available to the public. Obviously, we do not feature every service on this list, but what we’ve seen seems to suggest a standardized range of data usage.
    Netflix: Netflix provides specific estimates for each of its streaming settings. Standard definition uses up to 0.3 GB per hour. High definition (720p) uses up to 1 GB per hour. Full HD (1080p) uses up to 3 GB per hour. UHD (4K) uses up to 7 GB per hour.
    DirectTV Stream: DirectTV recommends a minimum of 8 Mbps to deliver an “optimal viewing experience.”
    Amazon Prime Video: Prime Video recommends a minimum download speed of 1 Mbps for SD content and 5 Mbps for HD content. Prime Video says it will serve the highest quality streaming experience possible based on the bandwidth speed available.
    YouTube: YouTube recommends 1.1 Mbps for SD, 2.5 Mbps for HD 720p, 5 Mbps for Full HD 1080p, and 20 Mbps for 4K.
    Disney+: On Disney Plus, Standard definition streams use approximately 0.7 GB per hour. Full HD streams use approximately 2 GB of data per hour. UHD (4K) streams will use approximately 7.7 GB of data per hour.
    Peacock: Peacock recommends at least 2.5 Mbps of bandwidth for HD streaming.
    Hulu: Hulu looks for 3 Mbps for Hulu’s Streaming Library, 8 Mbps for live streams, 16 Mbps for 4K content.
    HBO Max: HBO Max recommends a minimum download speed of 5 Mbps to stream HD video. For the best 4K streaming experience, it calls for a download speed of 50 Mbps or higher.
    Note that we do not use smartphones, so so not have any data plan for those.
    Old_Joe Old_Joe in Other Investing
  • Silver
    Howdy folks,
    The point I was making about the artificial pricing resulting in greater premiums is highlighted by the fact the US Mint cannot buy silver blanks because the mark up is too high by law.
    https://www.numismaticnews.net/coin-market/acquiring-silver-u-s-mints-hands-are-tied?fbclid=IwAR07-nX4rth8AWhprP352XVDgR7cLcoXuY880H2UA-gZBnvdzxyhyU5zPgE
    and so it goes,
    peace,
    rono
    rono rono in Other Investing
  • M* -- Bond Investors Facing Worst Losses in Years
    A part of me struggling to understand the handwringing for buy-and-hold investors.
    If you have a say 50/50 allocation between stocks and bonds, why would you not just rebalance? Take-advantage of the cheapness?
    I get it with trend-following or trading strategies, which I like, but don't long-term investors need to accept that some years will be worse than others, no matter what the asset class?
    I saw DODIX mentioned.
    Let's say by end of year, it's -9%. About its worst MAXDD. Don't two +9's get remembered, as in 2019 and 2020?
    Here are calendar year returns going back to 1990:
    Year Count: 32
    Worst Year: -2.9
    Best Year: 20.2
    Average Year: 6.4
    Sigma Year: 5.5
    YTD (thru 3/24): -5.6
    2021: -0.9
    2020: 9.4
    2019: 9.7
    2018: -0.3
    2017: 4.4
    2016: 5.6
    2015: -0.6
    2014: 5.5
    2013: 0.6
    2012: 7.9
    2011: 4.8
    2010: 7.2
    2009: 16.1
    2008: -0.3
    2007: 4.7
    2006: 5.3
    2005: 2
    2004: 3.6
    2003: 6
    2002: 10.7
    2001: 10.3
    2000: 10.7
    1999: -0.8
    1998: 8.1
    1997: 10
    1996: 3.6
    1995: 20.2
    1994: -2.9
    1993: 11.4
    1992: 7.8
    1991: 18.1
    1990: 7.4
    Granted, all during secular bond bull. But there were certainly some periods in there of rising rates, if not with concurrent inflation.
    Also, if there is sufficient liquidity, and there seems to be, why is selling a bond or TBill early bad? Can't you just pick-up another with the reduced principal but higher interest for the remainder of the planned term? Don't you end up in same place, less trading fee/bid spread?
    Now if liquidity is crashing, I get it (e.g., IOFIX in March 2020, I do remember and will never forget). Is that what the concern is for investors ... that there will not be enough liquidity with everybody running for the door in bond fund land, perhaps including the Fed?
    Charles Charles in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    Citigroup just upped its forecast to include multiple hikes totaling 150 basis points in 2022, plus a few more individual hikes in 2023. Seems like the Fed is going to get a grip on inflation, even if it kills us.
    I'm somewhat happy just sitting on cash, thinking that it's a short term situation. I've added a bit to a few individual stock positions believing they may be a good spot to hide out... BMY, O, VZ, but am cautious.
    Frankly, I'm afraid of the next week or so in regards to Putin's next move in Ukraine. This reminds me of early 2020 when Covid was starting to reek havoc in Europe, and yet our stock market just ignored it and kept going higher. Until it didn't. I've asked myself several times since then why I didn't pay closer attention to what was going on, and the associated risks to our markets.
    PRESSmUP PRESSmUP in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    You make a good point @hank that bond funds have fallen harder and sooner than the FED's 0.25% increase would indicate. I guess that is because like the equity markets, the bond market is also forward looking. I think many pundits believe the goal is to get to 3% by year end. Not sure where they believe the sweet spot is, but I wouldn't be surprised if they "ideally" target 4-6% over a few years if it correlates to full employment and inflation back to a normal 2-4%.
    Forward looking, within a year of reaching the sweet spot goal may be good times in bond-land again. Of course throw in another financial disaster and we're back at square one.
    MikeM MikeM in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    My … take on bond funds is, they will continue to go down in total return as long as the FED is raising rates.
    As of today the “Fed” has raised interest rates exactly once since 2018, and that one increase was in the amount of 0.25%. The Federal funds (overnight) lending rate has “soared” to a whopping 0.50% from the previous 0.25% rate. Peanuts. So what’s really happened? The Fed “Open Mouth Committee”, including Chairman Powell and numerous other Fed bank presidents, has been clamoring in front of cameras to say how they “may” need to lift that overnight rate higher in coming meetings this year. To a large extent you’ve witnessed a market induced knee-jerk reaction to these public “musings.” And the markets are now pricing in something like 7 additional quarter-point rate hikes this year.
    The bond market is way out ahead of the Federal Reserve Board at this time. What they eventually do will depend on the data (inflation, jobs numbers, housing starts, etc.) What the FOMC might like to do and what it eventually does are two different things.
    hank in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    Crash said: “Very recently, i read a post, here or elsewhere, expressing that it makes sense to buy-back some beaten-down bond funds that you are convinced are otherwise solid, good investments. Then, in effect, the dividends are worth more than "face value." I can't find a good argument against that tactic. :)”
    Might have been mine. I recently moved some excess cash from my household budget that won’t be needed for 6 months to a year out into PRIHX where it can “cohabitate” along with existing longer term money. The fund is categorized “intermediate term” but is so conservatively managed it behaves more like a short term high yield fund. Being down more than 5% YTD I felt it was worth the risk. I can’t predict the future. But I can tell you that should short / intermediate term rates reverse direction and begin trending downward, the fund will respond very favorably and outrun cash.
    Nothing ventured, nothing gained.
    hank in Fund Discussions
  • Poor Warren Buffet is Getting the Last Laugh
    https://www.marketwatch.com/story/how-washed-upold-man-warren-buffett-is-getting-the-last-laugh-11648055804
    “ It’s almost two years since the Berkshire Hathaway chairman, then 89, was publicly mocked by 40-something self-proclaimed stock market “captain” and “winner,” Barstool Sports founder David Portnoy. ”
    “ There’s a simple lesson for all investors in this, and it’s about the value of compound interest once we are in the third stage of life. One of the reasons Buffett has been making by far the most money of his career in the past couple of years is because by this stage his accumulated stake is so large. So a 35% gain today will make him far more money in actual dollar terms than a 50% or even 100% gain would have done in the past. Such are the benefits of saving early and often.” <— Compounding lesson
    — Much has been written about the Occidental purchase… he still holds more warrants that would boost his ownership to almost 24%.
    — Interesting that Buffett buys as Icahn sells: https://www.cnbc.com/2022/03/22/carl-icahn-on-how-his-investment-style-differs-from-warren-buffett.html
    Greedy when others are fearful or just smart valuation?
    JonGaltIII in Other Investing
  • VWINX
    Fido (115 funds) and Vanguard funds (116 funds) at Schwab platform - this seems new and I missed any public announcement(s) if there was any. In the Screener, after you click on Fund Company, give it some time to load the funds; otherwise, it will give 0 results. All funds appear as No-Load/Transaction Fee. May be this happened when Schwab moved to dual-fee structure - lower fees for those who pay-to-play and higher fees for those who don't.
    https://www.schwab.com/research/mutual-funds/tools/screener
    yogibearbull yogibearbull in Fund Discussions
  • VWINX
    @msf
    I was referring to VTMFX, but it has the same info as VMINX; supposedly $74.95 fee to purchase.
    But when I put in a dummy trade, without completing it, the transaction fee is listed as $0.00.
    I could have started a chat with Schwab but got tied up on other things. I will report back if I can get an answer
    sma3 in Fund Discussions
  • VWINX
    Where are you looking? What I see is:
    Transaction Fee $74.95    Short-term Redemption Fee No
    https://www.schwab.com/research/mutual-funds/quotes/fees/vwinx
    msf in Fund Discussions
  • Silver
    Thanks Rono. I am leaning towards a 50/50 SLV and PSLV purchase at some point in the future. Any Au purchases would be bullion buy and hold insurance policy.
    Silver is difficult to value because no earnings or dividend. Silver is rare in that there are very few vehicles you can purchase (commission free) with little chance of going to zero w/o a K-1. There is enough volatility to allow for profit if an investor purchases at the right price and has patience.
    shipwreckedandalone in Other Investing
  • Silver
    Howdy folks,
    @shipwreckedandalone
    Interesting discussion as I have been a silver fan since the Hunt Brothers tried to corner the market in the late 70s early 80s.
    I've always been an advocate of everyone having a small percentage of physical gold and silver bullion as an investment - let's say 5-7%. More than this is speculation and while that's fine, it's different.
    You mention the g/s ratio and it's about 77 to 1 which is extremely favorable for silver relative to gold. I also like silver because the leverage is much greater than with gold.
    Different ways to play: bullion or the miners. Different markets and while they track each other over time, they can deviate a lot in the short term. With silver, the pure play bullion ETFs are taxable at the higher rate. Nasty. Make SURE you keep them in a deferred account. Of these, I prefer the Sprott offerings like CEF and PSLV. Then there are the miners. This is where the vast majority of the mutual funds invest - in the mining stocks for gold, silver, etc. Then there are the ETF miners and there are bunches. In silver, you have SILJ, SIL, and SLVP. I like the first because I like the junior silver miners. They're fun and a bit like a roller coaster ride at time. These are penny stocks and the leverage here can get insane.
    http://www.kitcosilver.com/equities.html
    As for physical bullion, you have to watch the premium, or vigorish. It's getting very nasty as I type. This is because demand for physical silver is very strong right now and the paper price is suppressed. This results in higher premiums. Here's my local dealer and their price quotes for various types of bullion, from plain vanilla to ASE. You want to buy top shelf bullion because it's more fungible.
    http://libertycoinservice.com/wp-content/uploads/quotes/daily_quotes.pdf
    good luck,
    peace,
    rono
    rono rono in Other Investing
  • VWINX
    @PRESSmUP
    That is good news. You are correct that even as late as last fall Schwab said not available.
    It looks like there is no purchase fee but $75 short term redemption fee. I have emailed Schwab to confirm.
    But given above info, not sure I will not just buy IWB and ITM.
    sma3 in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    No where to hide. Timely look at bond market conditions....
    ``It's unclear what the neutral rate is,” Vataru says. ``It's a slightly untethered market.”
    image
    Worst Losses in Years
    davfor davfor in Fund Discussions