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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.
  • Jamie Dimon says we might get to 6%
    Check out the Pointe System on THE OTHER AMERICA.COM. From an article from Time and the New York Times in 1960. In some places long before one could apply for a mortgage the would be buyer had to achieve a certain score to be acceptable to buy. According to this article a score of 50 would be the minimum. I quote here,,,,, “persons of Polish descent had to score 55, Greeks 65, Italians 75 and Jewish People 85. There were no ratings for Negroes or Orientals. “Yeah,,,, the Fabulous Fifties were just great for everyone!
  • Thoughts on JEPI?
    While longer-term record (2020- ) is better, JEPI has been struggling since 2022 (like most other things) with a cumulative TR -3.85% and price-return -14.78%. I don't want to start another debate on yield vs TR, BUT for JEPI, HIGH distributions have been with DECLINING NAV. But I also see ROC as zero.
    Call-writing is an income generation strategy, not a capital preservation strategy.
    https://stockcharts.com/h-perf/ui?s=JEPI&compare=_JEPI&id=p09055307830
  • Jamie Dimon says we might get to 6%
    I personally know for an absolute fact that redlining was vigorously practiced in San Francisco by real-estate brokers. In the late fifties/early sixties a close friend worked for a real estate broker, and she bragged about how they prevented "incursions" by certain minorities into "white neighborhoods".
    Out present home in SF was built in 1918, and when we bought the home in the 1970s I read the information provided by the title insurance company. That information included photocopies of the original property documentation for the property "tract", which included restrictions on (among other things) using the property for a laundry, stables, or ownership by anyone not of the Caucasian race.
  • Thoughts on JEPI?
    Thanks for these comments! The almost 12% current yield looks appealing, but for how long? Excellent article Mark, thanks. My parents do own some treasuries and hopefully they'll buy more. A risk free 5% looks great.
    Thanks!
  • Dodge and Cox Annual Reports posted
    What’s interesting, I think, is that EM got off to a good start this year with DODEX briefly up north of 10%. That early impetus was from mainly a retreat from China’s harsh anti-covid lockdowns plus some easing by their central bank. However, the fund has fallen back to around +2-3% YTD after a near 2% drop Friday. The early good news was offset by the balloon controversy and other growing tensions between the U.S. & China.
    EM has been over-hyped since I was in my 40s (long ago). Our Templeton Funds advisor shifted our workplace 403-Bs from a very fine TEMWX back then into a newer EM fund, TEGOX, (in the early 90s). Did receive our permission first. However that fund never produced and eventually closed.
    Not meant as advice - but I’d be loath to second guess D&C. Sometimes the best opportunities come along when things look grimmest.
  • BONDS, HIATUS ..... March 24, 2023
    @hank
    Being There. A fine example of many things human. If I were a Prof. of Poly. Sci., Psychology or related class; the 2h, 10 min. movie would be required with a 500 word overview from the student. No ChatGTP. In class write only.
    Peter Sellers, Shirley MacLaine and supporting cast were excellent in the 1979 movie.
  • Your tax dollars at work - US Treasury/Savings Bonds
    When a paper savings bond is not received, one fills out Treasury Dept Form 3062-4.
    https://www.treasurydirect.gov/forms/sav3062-4.pdf
    For Series EE and Series I bonds, we no longer issue substitute bonds in paper form. We issue those substitute bonds in electronic form, in our online system.
    Really? Just 10 months after the USPS lost a $50 savings bond (part of a 2022 tax refund), the Treasury Department issued me a substitute paper savings bond.
    Now I have to invest 1¼% (63¢ stamp) to mail it back. Maybe by 2024 I'll finally have it in my Treasury Direct account.
  • Thoughts on JEPI?
    One downside to JEPI - "JEPI may be tax-inefficient, as distributions from the fund may be taxed as income, and dividends from underlying stock holdings are not considered qualified because of the offsetting options positions."
    I thought this was a pretty good discussion of JEPI with regard to which investors it might it be appropriate for, which type of account (taxable, IRA etc.) and what to expect going forward. From Dividend Sensei on Seeking Alpha:
    JEPI: This 12% Yielding ETF Is Perfect For 2 Kinds Of Investors
  • Jamie Dimon says we might get to 6%
    No one needs to give you permission to ignore the distinction(s) I have made. Surely, you don't intend to take the side of criminals over the victims of crime? And I'm still against redlining. larryB
    *******
    crash. Your post rues the day redlining went away.
    Completely false. And as gently as I can, I want to add: PLEASE don't tell me what I think. :)
    @crash - You have an opportunity here to clarify what you wrote.
    As @larryB observed, your post (regardless of whether it accurately represents what you think) seems be saying that once "those people" were no longer confined to redlined neighborhoods (redlining eliminated), crime spread out from those neighborhoods to everywhere. Post hoc ergo propter hoc?
    To bring this (somewhat) back to investing, home ownership is often cited (at least by the real estate industry :-)) as an important way for people to build wealth. Redlining made it impossible for many people to build wealth that could be transferred to future generations. Saying that people should be able to live wherever they can afford to speaks only to ongoing practices of steering, of discriminatory mortgage lending, appraisal discrimination, etc. It doesn't take into account the impact of past redlining on the ability of today's families to afford housing.
    homeownership has been a central way of building wealth ... certainly all throughout the post-war period; the wake of World War II when the suburbs opened up. Although ... it was not an avenue that was open to many people of color, particularly African Americans. And so while homeownership has long been an important source of wealth creation for whites, that hasn't been the case for Black Americans.
    https://www.npr.org/2023/01/04/1146960942/how-buying-a-home-became-a-key-way-to-build-wealth-in-america
    See also:
    https://www.bankrate.com/mortgages/what-is-redlining/
    https://www.habitat.org/our-work/impact/research-series-how-does-homeownership-contribute-to-wealth-building
    https://projects.fivethirtyeight.com/redlining/
    You asked what have we fixed? Well, we've gotten some concessions from Fred and Donald for steering and sales discrimination, we've gone after banks (notably but not exclusively Wells Fargo) for lending practices. It doesn't fix the world, but it's a start.
    https://finurah.com/2022/04/15/nyc-wont-open-any-more-accounts-with-wells-fargo-banking-giant-has-too-many-racial-disparities-says-big-apple/
  • Thoughts on JEPI?
    Seeking Alpha has several explanations of the options strategies they use. It is pretty complicated compared to funds that use simpler covered call option strategies, like JHQAX or GATEX for example. I just started digging into JEPI and do not yet understand what factors control the yield here. Covered Calls are much easier to understand.
    JEPIX is JP Morgan's mutual fund with the same strategy as JEPI , open for a much longer time
    During the Covid Crash ( March 2020 ) JEPIX lost 25% , similar to SP500. JHQAX dropped 14% and GATEX was down only 11 to 12%, but of course neither JHQAX or GATEX yields 11%. It is unclear how long JEPI yield will continue.
    What about treasuries? Can't beat a risk free 5%!
  • BONDS, HIATUS ..... March 24, 2023
    I bought junk early in '22 at just the WRONG time. Still -10% down in TUHYX.)
    Yes. I’m in a similar situation with another HY fund. But I’m prepared to wait until ”Hell freezes over” before selling any of it. In the meantime we have this from Chauncey Gardner to guide us:
    “In a garden, things grow . . . but first, they must wither; trees have to lose their leaves in order to put forth new leaves, and to grow thicker and stronger and taller. Some trees die, but fresh saplings replace them. Gardens need a lot of care. But if you love your garden, you don’t mind working in it, and waiting. Then in the proper season you will surely see it flourish.”
    Excerpt from Being There by Jerzy Kosiński
  • Blackstone Child Labor in Slaughterhouses and Low-Road Capitalism 2
    BTW Blackstone's CEO and 20% Owner, Steven Schwarzman, took home $1.27 BILLION last year, although the stock dropped 40%.
    "Behind every great fortune there lies a great crime"
    He also was the third largest individual donor to GOP "election deniers" in 2020, and earlier equated Obama's plan to eliminate carried interest to the Nazi invasion of Poland
    I wonder if Yale and Oxford and the NY Public Library will now return the millions he has given them?
  • Thoughts on JEPI?
    My 75 y/o parents are considering putting some cash into JEPI as they want some additional income and like the yield (11.49%). They have a growth section in their portfolio (a lot of FCNTX and DODGX both of which they've held for over 35 years) and are considering JEPI for the income side of their portfolio and are willing to sacrifice capital appreciation for the extra income. JEPI has some investments that I simply don't understand and I don't think my parents do either. What are your thoughts on JEPI?
    Thanks in advance for any and all replies!
  • Dodge and Cox Annual Reports posted
    RE China
    I try to avoid funds that have an unknown exposure to China, so I use "Ex-China" funds if possible.
    If I want to invest in China, I use KBA, Krane Shares China A shares as a pure speculation.
    I have serious qualms about China's human rights record and the increasing threat to world stability, but I think the major investment risks ( other than a shooting war) are
    1) I do not think you can believe their numbers and accounting, as the Government has and will continue to manipulate them and
    2) The government has intervened in aggressively in companies management when it wanted to. Jack Ma disappeared for a while remember?
    While owning A shares probably eliminates the risk that the Government will "decertify ADRs", they could just also decide to prevent money transfers to the US, so even if KBA sold their positions, the cash would be stuck there.
    I think Vietnam and other East Asia countries are much better bets long term.
  • Dodge and Cox Annual Reports posted
    @hank, I am looking at NOTIONAL amounts that are the total positions controlled and gains/losses experienced are (almost) on those. For options, the option-delta also comes into play. Amounts invested or current values are smaller as these are leveraged derivatives.
    So, I see:
    $613.73 million (notional) in short futures.
    $846.23 million (notional) in call options
    Some of these positions may offset others.
    Unclear about currencies as only buys and sells are shown, not net positions.
    The fund AUM is $13.51 billion, so 1% is $135.1 million.
    If I was looking for something like this for my personal brokerage account, I would think of it as gross 10%+ exposure to futures and options. This is just an observation, not intended to cause alarm.
  • Blackstone Child Labor in Slaughterhouses and Low-Road Capitalism 2
    Great article in NYT today about child labor in the U.S. It’s actually pervasive:
    https://nytimes.com/2023/02/25/us/unaccompanied-migrant-child-workers-exploitation.html
    These workers are part of a new economy of exploitation: Migrant children, who have been coming into the United States without their parents in record numbers, are ending up in some of the most punishing jobs in the country, a New York Times investigation found. This shadow work force extends across industries in every state, flouting child labor laws that have been in place for nearly a century. Twelve-year-old roofers in Florida and Tennessee. Underage slaughterhouse workers in Delaware, Mississippi and North Carolina. Children sawing planks of wood on overnight shifts in South Dakota..,.
    …In town after town, children scrub dishes late at night. They run milking machines in Vermont and deliver meals in New York City. They harvest coffee and build lava rock walls around vacation homes in Hawaii. Girls as young as 13 wash hotel sheets in Virginia….
    ….Migrant child labor benefits both under-the-table operations and global corporations, The Times found. In Los Angeles, children stitch “Made in America” tags into J. Crew shirts. They bake dinner rolls sold at Walmart and Target, process milk used in Ben & Jerry’s ice cream and help debone chicken sold at Whole Foods. As recently as the fall, middle-schoolers made Fruit of the Loom socks in Alabama. In Michigan, children make auto parts used by Ford and General Motors.
    The number of unaccompanied minors entering the United States climbed to a high of 130,000 last year — three times what it was five years earlier — and this summer is expected to bring another wave….
    …One of the nation’s largest contract manufacturers, Hearthside [Food Solutions] makes and packages food for companies like Frito-Lay, General Mills and Quaker Oats. “It would be hard to find a cookie or cracker aisle in any leading grocer that does not contain multiple products from Hearthside production facilities,” a Grand Rapids-area plant manager told a trade magazine in 2019.
    General Mills, whose brands include Cheerios, Lucky Charms and Nature Valley, said it recognized “the seriousness of this situation” and was reviewing The Times’s findings. PepsiCo, which owns Frito-Lay and Quaker Oats, declined to comment.
    Three people who until last year worked at one of the biggest employment agencies in Grand Rapids, Forge Industrial Staffing, said Hearthside supervisors were sometimes made aware that they were getting young-looking workers whose identities had been flagged as false.
    “Hearthside didn’t care,” said Nubia Malacara, a former Forge employee who said she had also worked at Hearthside as a minor….
    …While many migrant children are sent to the United States by their parents, others are persuaded to come by adults who plan to profit from their labor.
    Nery Cutzal was 13 when he met his sponsor over Facebook Messenger. Once Nery arrived in Florida, he discovered that he owed more than $4,000 and had to find his own place to live. His sponsor sent him threatening text messages and kept a running list of new debts: $140 for filling out H.H.S. paperwork; $240 for clothes from Walmart; $45 for a taco dinner.
    “Don’t mess with me,” the sponsor wrote. “You don’t mean anything to me.”
    Nery began working until 3 a.m. most nights at a trendy Mexican restaurant near Palm Beach to make the payments. “He said I would be able to go to school and he would take care of me, but it was all lies,” Nery said.
    His father, Leonel Cutzal, said the family had become destitute after a series of bad harvests and had no choice but to send their oldest son north from Guatemala….
    …Teachers at the school estimated that 200 of their immigrant students were working full time while trying to keep up with their classes. The greatest share of Mr. Angstman’s students worked at one of the four Hearthside plants in the city.
    The company, which has 39 factories in the United States, has been cited by the Occupational Safety and Health Administration for 34 violations since 2019, including for unsafe conveyor belts at the plant where Carolina found her job. At least 11 workers suffered amputations in that time. In 2015, a machine caught the hairnet of an Ohio worker and ripped off part of her scalp.
    The history of accidents “shows a corporate culture that lacks urgency to keep workers safe,” an OSHA official wrote after the most recent violation for an amputation.
    Underage workers in Grand Rapids said that spicy dust from immense batches of Flamin’ Hot Cheetos made their lungs sting, and that moving heavy pallets of cereal all night made their backs ache. They worried about their hands getting caught in conveyor belts, which federal law classifies as so hazardous that no child Carolina’s age is permitted to work with them….
    …But these jobs — which are grueling and poorly paid, and thus chronically short-staffed — are exactly where many migrant children are ending up. Adolescents are twice as likely as adults to be seriously injured at work, yet recently arrived preteens and teenagers are running industrial dough mixers, driving massive earthmovers and burning their hands on hot tar as they lay down roofing shingles, The Times found.
    Unaccompanied minors have had their legs torn off in factories and their spines shattered on construction sites, but most of these injuries go uncounted. The Labor Department tracks the deaths of foreign-born child workers but no longer makes them public. Reviewing state and federal safety records and public reports, The Times found a dozen cases of young migrant workers killed since 2017, the last year the Labor Department reported any.
    The deaths include a 14-year-old food delivery worker who was hit by a car while on his bike at a Brooklyn intersection; a 16-year-old who was crushed under a 35-ton tractor-scraper outside Atlanta; and a 15-year-old who fell 50 feet from a roof in Alabama where he was laying down shingles.
    Note like the Packers company owned by Blackstone above, Hearthside is owned by a private equity fund shop, this one called Charlesbank Capital Partners.
  • Dodge and Cox Annual Reports posted
    DODBX Annual Report: Pg 13 has details on short positions. The notional amounts seem high considering the fund AUM of $13.51 billion. Related explanations/descriptions are on pg 18.
  • White House Announces New Sanctions on Russia
    Looks like the Krone only dropped about 1% (vs. US$) over the course of Feb 24th.
    https://www.xe.com/currencycharts/?from=USD&to=NOK&view=1W
    [Note: must click away from, then back to, the 1W button for proper x-axis labeling]
  • BONDS, HIATUS ..... March 24, 2023
    Yes, the rally from January is completely unwound by now. I bought junk early in '22 at just the WRONG time. Still -10% down in TUHYX. At some point, maybe the combination of dividends and share price might get me back to "even-steven." I don't EXPECT so. In the meantime, those buzzards can continue to pay me every month at a rate which exceeds IG and CDs, and in my next life, when rates come DOWN, then THAT next iteration of myself can enjoy a profit with it all. (Just under 15% of total portfolio.)
    Together with PRCPX and HYDB, junk is 21.45% of portfolio right now. (Although HYDB is a tiny fraction.) For a particular purpose my wife has in mind over the long haul, we are using SCHP. (TIPs.)