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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.
  • The Amazon Customers Don’t See
    ”I have never EVER used Amazon for ANYTHING.”
    @Crash - But I believe you are part owner of the company.
    AMZ is the fourth largest equity holding in Mr. Giroux’s PRWCX of which you have spoken laudably. Represents nearly 4% of behemoth PRWCX’s investments.
    :)
    Based on a reported $50 Bil AUM for Giroux’s fund, that’s a whole lot of Amazon,
  • Munis Vulnerable to Fed Policy Shift (Jack Albin / Cresset Financial)
    In a nutshell, munis held up better than most intermediate duration bonds last week. But the author is cautious.
    “Municipal bonds … held up remarkably well as demand for tax-exempt securities swelled earlier this year. That’s because retail investors have piled into munis, adding nearly $25 billion of net new funds to national municipal mutual funds through April, according to the Investment Company Institute, a trade group of mutual fund companies. Meanwhile, new municipal bond supply has run consistently below average for most of the year. The reinvestment of income from maturities, calls and coupons outstripped municipal bond new issuance by nearly $16 billion in January alone, according to a Wall Street Journal report.”
    (An excerpt from this piece appears in the current issue of Barron’s)
    https://cressetcapital.com/post/munis-vulnerable-to-fed-policy-shift/
  • Red-Hot U.S. Economy Drives Global Inflation, Forcing Foreign Banks to Act - WSJ
    image
    People watched fireworks Tuesday after New York state reached a 70% vaccination rate for adults.
    “A booming U.S. economy that is driving inflation higher around the world and pushing up the U.S. dollar is pressing some central banks to increase interest rates, despite still-high levels of Covid-19 infections and incomplete economic recoveries in their own countries. The world’s central banks are hanging on how the U.S. Federal Reserve will respond to a rise in inflation, wary of being caught in the crosscurrents of an extraordinary U.S. economic expansion. Global stock markets fell on Thursday after Fed officials signaled they expect to raise interest rates by late 2023, sooner than they anticipated in March, as the U.S. economy heats up. A global march toward higher interest rates, with the Fed at the center, risks stifling the economic recovery in some places, especially at a time when emerging-market debt has risen.”
    WSJ June 18, 2021
    https://www.wsj.com/articles/red-hot-u-s-economy-drives-global-inflation-forcing-foreign-banks-to-act-11623933343
  • Break Time, markets rest ???
    Hi @carew388 et al
    June 18 close data.
    Here is the 11 sectors performance of the SP500, SPY or closely related indexes. The numbers are close enough for government work and my weekly work.
    One can view the sectors that dinged this area this week.
    YTD performance prior to this week, had also benefited from the large upward moves in energy and a few other sectors....but where the areas loosing this week.
    I.G., investment grade bonds, and long term bonds helped funds holding these for the week.
    The wild riders in the long term bond areas showed the directions by weeks end:
    --- TBT is a choice for levered bets on rising interest rates. Using a combination of swaps and futures, TBT gives investors -2x exposure to daily moves in T-bonds with more than 20 years left to maturity. ... As a levered product, TBT is not a buy-and-hold ETF, it's a short-term tactical instrument.
    --- TMF provides daily leveraged (3x) exposure to the ICE U.S. Treasury 20+ Year Bond Index, falling yields/rates.
    For the week: TBT = -4.7%, while TMF = +7%
  • Artisan Partners launches post-venture China fund for Tiffany Hsiao
    Sorry folks , but I haven't been able to get around the paywall, but the heading provides a glimmering insight about what Artisan Partners may have in store.
    https://citywireselector.com/news/artisan-partners-launches-post-venture-china-fund-for-tiffany-hsiao/a1520731
  • The Amazon Customers Don’t See
    @Old_Joe For what it's worth considering the source: https://military.com/join-armed-forces/military-vs-civilian-benefits-overview.html
    Actually, here's a better article: https://theatlantic.com/business/archive/2015/12/military-versus-private-sector/422124/
    But my impression has always been that the military is tough on new recruits during training but benefits-wise once you make it through that training period, it provides excellent ones for career military people--free housing, healthcare, tuition through ROTC. I think the comparison to Amazon thus isn't apt. The problem with serving in the military if you're a heterosexual white male is singular--the prospect of dying or being injured in a war. If you're female, not heterosexual or a person of color, you can encounter a host of other problems, although again I wonder for minority groups if the military isn't actually a less-racist institution than many private employers. Though I don't have the data, I've heard the military is actually more egalitarian regarding race than other professions.
  • Let the SS COLA Projections for 2022 Begin
    Agreed. It's likely going to be slightly-to-moderately higher.
    As noted here, the annual COLA bump is announced in October using the following methodology. It's all about the 3rd Qtr YOY CPI-W change.
    https://www.investopedia.com/social-security-2021-cola-of-1-3-announced-5081979
    Excerpt:
    COLA Specifics
    The annual COLA adjustment, which is designed to help benefits keep pace with inflation, is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as calculated by the Bureau of Labor Statistics (BLS). If the CPI-W increases more than 0.1% year-over-year between the third quarter of the previous year and the third quarter of the current year, Social Security will raise benefits by the same amount. The exact calculation is complicated and may result in a new benefit amount that is slightly different from the amount you get by multiplying the new COLA by your current ben
    Scoring at home, much of the increase is already baked in, the clock is about to run out and the inflation trend is higher/higher than expected, thus I'd be very surprised if the 2022 COLA is much less than the current projection, and as I said, likely higher than this projection.
    That opinion and ten bucks will get you a Starbucks.
  • The Amazon Customers Don’t See

    I do happen to know that when it comes to health care, Ireland's system provides diabetics anything and everything they need, for free to the individual. Of course, taxpayers ultimately "foot the bill." No surprise there. And I don't have the figure memorized, but there is an income limit in order to be eligible for the medical health care card. But even if someone is not eligible, I have to believe costs are much lower than they are in the States. That would make the social safety net more effective from the get-go.
    https://www.rte.ie/brainstorm/2019/0415/1042763-how-irelands-spending-on-welfare-compares-to-the-rest-of-europe/
    Imagine reading a fund's annual report that read: Sure we made less money last year than nearly all of our peers, but look at the killing we made with Tesla. So our returns were better from the get-go. .
    In addition to the Eurostat figures given in the article, you can use the link I gave above for OECD statistics. The numbers are similar.
    https://data.oecd.org/chart/6pfS
    The number for the means-testing threshold is important because that affects perception. If it is low, it stigmatizes people receiving the benefit. Perhaps you recall the brouhaha over "poor doors" - literally separate doors for residents of affordable housing units in condos.
    OTOH, if the threshold is high, so perhaps 5-10% of people are excluded from the benefit or have to pay more, people tend to view that as merely requiring those who can afford it to pay their fair share. IRMAA is an example of that. Somewhere around 7% pay a higher Medicare premium based on income.
    With respect to diabetes, that's handled with a long term illness (LTI) card separate from the medical health care card. There's no means testing for the LTI card. But there are additional conditions. Though you hold Irish citizenship, you would probably not qualify for the card. "To qualify, you must be 'ordinarily resident’ in the Republic of Ireland. This means that you are living here and intend to live here for at least one year. "
    https://www2.hse.ie/services/long-term-illness-scheme/long-term-illness.html
    Of course like most countries, medical coverage in Ireland is not truly universal. The first page that came up when I searched for "safety net Ireland" was this one:
    Safetynet Primary Care is a medical charity that delivers quality care to those marginalized in society without access to healthcare, including homeless people, drug users and migrants.
    https://www.primarycaresafetynet.ie/
    None of this is intended to disparage the safety net benefits that Ireland does provide. The article points out that absent some programs, the fraction of the population at risk of falling into poverty would jump from 15.7% to 43.8%. So the programs are clearly doing a lot of good.
    But they could be better - they could be more universal; the amount spent on them could be brought more in line with the country's EU peers. Or even with the US.
  • The Amazon Customers Don’t See
    " Capitalism does not care about people, only profit. Capitalism, well-oiled, maximizes profit."
    Just two words, and they aren't "Milton Friedman". Hobby Lobby. A company is free to act on its religious beliefs. Didn't you know that companies have beliefs? They're people too.
    So if a company feels that paying workers a decent wage and treating them with dignity and respect is required by its religious beliefs, it's free to do so. Or if it wants to tithe 10% of its profits to the Church instead of giving the money to its shareholders, who's to say it can't?
    I was gobsmacked in reading Australia given as an example of a "Democratic Socialist Capitalist" country. And again when it was implied that its safety net benefits were any more secure than those of the US.
    For much of its history, Australia has been, shall we say, parsimonious.
    [T]he first colonial pension schemes ... reproduced the distinction between the deserving and undeserving poor. Payments were means-tested and subject to a character test. People had to prove they had led ‘a sober and respectable life’. ...
    [W]hen the Commonwealth scheme came into effect in July 1909, all non-white residents, even those already naturalised before the racist Naturalisation Act 1903, were formally made ineligible for benefits reserved for white settlers. ...
    From 1907, following the Harvester Judgement, employers were bound to pay a male worker a ‘fair and reasonable wage’, sufficient to sustain himself, his wife and their children in ‘a condition of frugal comfort’. The basic male wage became the centrepiece of what has been described as the ‘wage earners’ welfare state’..., but thereafter—in spite of challenging times like the 1930s Great Depression—attempts to extend social protection to those outside the labour market failed.
    [Through two world wars and beyond] [t]he basic male wage remained the foundation of social security policy and the Unemployment Benefits resembled a dole more than an earned social entitlement.
    The Whitlam government (1972–1975) sought to reform the system along social democratic principles. Social security would no longer be merely a safety net, but a precondition for economic justice. Economic justice demanded that social security should be provided according to need, in recognition of the innate value of every citizen, not an assessment of character. ...
    The Poverty Inquiry chaired by Professor Ronald Henderson [in this period] highlighted many systemic problems in the design of social security and put forward a concrete proposal for a basic income scheme , but poor timing meant its recommendations were never realised.
    The last forty years of social security reform mark a steady retreat from the principle of universalism and a return to older notions of ’deservingness’.
    This has coincided with the dismantling of the regulatory frameworks and institutions put in place to curtail both economic volatility and deep inequality. At the same time as deregulation has markedly increased household exposure to risk ..., the social safety net has become less effective.
    Some paragraphs rearranged for continuity.
    http://library.bsl.org.au/jspui/bitstream/1/12232/1/Thornton_etal_Safety_net_to_poverty_trap_2020.pdf
    Many economists subscribe to the theory of path dependence, aka "history matters". It's not sufficient to look at where things are, but how they got there, especially when it comes to stability of social nets. And the history of Australia is not a pretty one. I left out the reference to White Australia in the paper I was excerpting.
    Here's a good paper about much of those last forty years. It compares and contrasts the US and Australia with respect to workfare. Very distinct histories, but with similar outcomes.
    https://scholarworks.wmich.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=3315&context=jssw
    Australia and the U.S. are both liberal welfare states. During the past quarter century, they have begun the transition from a welfare to a workfare state, albeit at different rates and through different paths. Social work developed in each country in ways congruent with the local liberal welfare state, and as such, has been destabilized by the transition to the workfare regime
  • The Amazon Customers Don’t See
    +1...... And now, THIS: dated August, 2019. It is pertinent. I mention this because my other citizenship is in Ireland. Generally the reporter claims that Ireland is stingy, not generous, compared to other EU States. Which runs counter to the "myths" he specifies near the end of the piece.
    I do happen to know that when it comes to health care, Ireland's system provides diabetics anything and everything they need, for free to the individual. Of course, taxpayers ultimately "foot the bill." No surprise there. And I don't have the figure memorized, but there is an income limit in order to be eligible for the medical health care card. But even if someone is not eligible, I have to believe costs are much lower than they are in the States. That would make the social safety net more effective from the get-go.
    https://www.rte.ie/brainstorm/2019/0415/1042763-how-irelands-spending-on-welfare-compares-to-the-rest-of-europe/
  • Let the SS COLA Projections for 2022 Begin
    https://www.cnbc.com/2021/06/16/social-security-cola-for-2022-could-be-higher-based-on-consumer-prices.html
    Excerpt:

    Rising consumer costs have helped push the latest estimate for next year’s Social Security cost-of-living adjustment to 5.3%.
  • The Amazon Customers Don’t See
    If I'm reading comments correctly, @crash is positing that by the nature of capitalism employers must maximize profits to the exclusion of all else. @carew388 doesn't seem to be disagreeing with this premise. Rather he is adding the observation that governments provide some measure of support (safety net) for workers.
    That safety net if measured by public social spending as a percentage of GDP is actually lower in Australia and Canada than in the US, though all are below the OECD average.
    https://data.oecd.org/chart/6pfS
    The chart below is a little old (it only goes up to 2012), but it highlights just how low Australia ranks historically. Again, social spending as pct of GDP.
    image
    A full picture involves much more than safety nets. The graph comes from this 2014 paper on Australia that provides both historical context and a much more expansive picture including minimum wages, social inclusion, and so on.
    https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4246053/
    Returning to the initial premise - that under capitalism companies must maximize profit to the exclusion of all else, thus leaving workers to fend for themselves. This characterizes the way companies operate in liberal market economies (LMEs). These include the US, UK, Canada and Australia.
    Then there are coordinated market economies (CMEs)
    exemplified by the economies of Germany and Japan. ... CMEs tend to be characterized by relatively long-term relations between economic actors that are also relatively cooperative. ... CMEs tend to have high levels of job security, a good record on training and development, institutionalized forms of worker participation, based on works councils, and relatively cooperative relations between trade unions and employers' associations.
    https://www.oxfordreference.com/view/10.1093/oi/authority.20110803095637561
    LMEs and CMEs are just different varieties of capitalism.
    https://en.wikipedia.org/wiki/Varieties_of_Capitalism
    https://scholar.harvard.edu/files/hall/files/vofcintro.pdf
    None of this is to say that Amazon couldn't do much better, but it does suggest that there are limits to what any company can do within the particular form of capitalism in operates. And there are no "pure" economies, just matters of degree and emphasis.
  • The Amazon Customers Don’t See
    I would love to take a Blue Origin space trip but it's roughly $17, 990,000 out of my price range based on the winning auction bid of $18M.
    Don’t sweat it @Mark. The company up in first-class isn’t usually that great anyway. Suggest you save your $$ and wait until they offer “tourist class” or “coach” seating.
    ISTM ….. The entire trip is only about 15 minutes. Imagine the “buyer’s remorse” you’d feel the next morning having spent your whole wad on a 15 minute ride?
  • Break Time, markets rest ???
    I’ve thought for awhile that commodities have gotten ahead of themselves. I’m guessing the Robinhood crowd has latched on to NYMEX futures, which have seemed to defy gravity recently.
    Most commodities - notably copper and lumber - have turned sharply lower in recent days. WSJ reports that China is unloading stockpiles of aluminum, copper and other metals in an attempt to drive down commodity prices which threaten their economy.
    Gold’s getting clocked today, off about $30, and silver doing worse off about 5%. The gold bugs are relentless. I kind of feel for them as it’s almost a religion with them. In the long run I think they’ll be right. But their portfolios must be suffering - unless they’re better market timers than I suppose.
    The Fed was “out of character” yesterday in hinting at rising rates and their seeming recognition of greater inflation now than welcome. I suspect it’s more bluster than anything. But bonds retreated a bit on the news. (And the dollar strengthened dramatically). My very short-term TIPS fund (TLDTX) lost .50% yesterday - biggest swing I can remember. I suspect folks may be waking up to the fact that TIPS are wildly overbought.
    Recently added a small amount of FXF as a play on a weakening dollar longer term. Fits well into my real assets sleeve. But getting dinged a bit in wake of the Fed’s latest shot over the bow. Overall, I’ve been lightening up on the natural resource / commodities sectors most of the year - some of those type funds up in excess of 50-60% year-over-year.
    (Above constitutes MHO, and not intended to be investment advice.)
  • The Fed this summer will take another step in developing a digital currency
    A little European thinking about the appropriate relationship between potential central bank digital currencies and the private sector:
    Benoit Coeure, the head of the Bank for International Settlement’s Innovation Hub,....said the most likely setup will be a two-tier model, whereby digital currencies would be issued by central banks but distributed by commercial lenders.
    Cecilia Skingsley, the first deputy governor of Sweden’s Riksbank, said central banks will play a “focused and narrow role” in providing the infrastructure on which the private sector can build, “and that’s where we are going to stay.”
    Central Bankers Talk Down Concerns Over Digital Currency Risks
  • Booth’s Dimensional Converts $29 Billion of Mutual Funds to ETFs
    I understand that neither DFA nor Adventis ETFs are index based funds. Some elements of factor based are used, and thus they are considered actively managed. Just want to learn more information on their strategies.
    Loaded terminology, "index based".
    Vanguard used to be adamant that its tax managed funds were not index funds. For example, in this 2015 paper, Vanguard meticulously represents broad-market index funds and tax-managed funds as separate albeit similar groups of funds.
    Yet it was pure marketing. Vanguard created VEA as a share class of then Tax-Managed International VTMGX. At the time, ETFs were required to be index funds. Still Vanguard insisted that this tax-managed fund when marketed in its OEF form was not an index fund.
    DFA has similarly tried to have its cake and eat it too. It promoted its funds as actively managed index funds. By this it meant that active management was layered on top of its proprietary indexes to do better. For example, it is flexible on when it sells shares of a company removed from an index and when it buys shares of a company newly added to an index.
    As M*'s John Rekenthaler wrote earlier this year: Once considered an index provider, DFA now describes itself as an active manager because of the changes that it makes to its theoretical indexes when converting them into portfolios. To coin a phrase, I will call such a practice "selective indexing."
    He went on to observe: Most of the [outperformance of DFA relative to cap-weighted funds] likely owes to differences in index construction--DFA uses its own proprietary benchmarks, rather than those of outside parties--than to the use of selective indexing.
    https://www.morningstar.com/articles/1017351/what-to-know-indexing-with-a-twist
    All of which gets us back to index-based. DFA funds are not based on cap-weighted indexes. But they are based on DFA indexes. I would call them index-based. Others may hot. In the end, as the Bard wrote, what's in a name?
  • Booth’s Dimensional Converts $29 Billion of Mutual Funds to ETFs
    I should have said: the magnitude of the relative underperformance of value with respect to growth in the past three years is unprecedented. This is clear from DFA's bar chart reproduced above. Also evident from that chart is value's relative but much smaller underperformance in the preceeding seven years.
    For completeness, here's exactly what DFA wrote:
    This three-year run [2017-2020] warrants further inspection—just how uncommon was this value premium magnitude? Literally unprecedented, as illustrated by the rolling three-year value premiums in Exhibit 2. Of the 1,093 rolling observations in US history, the three years ending in June 2020 ranked dead last. This is the very definition of an outlier.

    ᴇxʜɪʙɪᴛ 2

    Back of the Pack

    Rolling 3-year annualized return differences for value versus growth,
    US market, June 1929–June 2020
    image
  • The TIFF Short-Term Fund was liquidated
    https://www.sec.gov/Archives/edgar/data/916622/000110465921081939/tm2119846-1_497.htm
    497 1 tm2119846-1_497.htm 497
    TIFF Investment Program (“TIP”)
    Supplement dated June 16, 2021
    to the TIP Prospectus dated April 30, 2021,
    the TIFF Short-Term Fund Summary Prospectus Dated April 30, 2021
    and the TIP Statement of Additional Information Dated April 30, 2021,
    each as supplemented April 30, 2021
    This supplement provides new and additional information to the TIP prospectus dated April 30, 2021, the TIFF Short-Term Fund Summary Prospectus dated April 30, 2021 (collectively, the “Prospectus”) and the TIP statement of additional information dated April 30, 2021 (the “SAI”), each as supplemented April 30, 2021.
    The TIFF Short-Term Fund (the “Fund”) was liquidated on June 15, 2021 pursuant to a Plan of Liquidation and Dissolution for the Fund approved by TIP’s Board of Trustees. All references to the Fund are hereby removed from the Prospectus and the SAI.
    If you have any questions, please contact Members Services at 1-610-684-8200.
    Please keep this supplement for future reference.
  • Weird Day !
    Not to be too picky, but ISTM anything less than a .25% daily move (up or down) is pretty insignificant. A matter of which way the wind blows. I tried to find some type of chart online displaying a hierarchy of daily investment change. But (perhaps understandably) nobody’s bothered to publish one.
    Maybe …
    Hierarchy of Daily Portfolio Loss
    0% - .09% essentially unchanged
    .10% - 24% slight
    .25% - .49% minor
    .50% - .99% moderate
    1% - 1.49% significant
    1.5% - 1.99% large
    2% - 2.99% very large
    3% - 4.99% serious
    More than 5% - Lord help me