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Ping Junkster;......yikes on the payout, 10 year note at 2.01% at 9:33 am
Catch: Yes - The 10 year is breaking through the 2- handle this morning.
Catch, I thought your recent "Fairy Tale" link was very good. It was pretty elaborate, and I didn't take the time to fully digest the various geopoliticall forces at work. Excuse the expression, but it points to a "Catch 22" for the world's central banks, including the Fed. The implication, I think, is that they are running out of ammunition in their fight to keep things afloat. We can hope for the fairy tale end, but the various indicators recently aren't pointing in that direction. I must say you appear to have been correct on the trend in bonds longer than there's been a MFO. (Used to write a column that focused on bonds as I recall.)
I do think (just my uneducated guess here) that massive fiscal and monetary stimulus could refloat the inflation boat. Question than becomes: 1) at what future price? and 2) would the politicians allow it? On the second question ... I think not. Regards
I e-mailed heezsafe yesterday in fact, albeit had no idea it could be as soon as today. I said if he sent me his address I would send him a check right away. If that doesn't suit him I can send the check to David and he can forward it. As some of you noticed in my original and unedited post I said on a closing basis. This will be a great teaching tool for me till the day I expire about not trading or investing based on what we think but what we see. Like most, at the beginning of the year I thought rates could go only higher. Even afterwards and I made the bet I thought they had already bottomed (around 2.34 or so) and were gradually heading back up and didn't think we would see 2%. You know what (not allowed to mention it here for awhile) is also roaring as it has since I made that bet but it is soooooo overbought now. I just hope today isn't some key reversal day before the close!!! It sure is looking like a key reversal in bondland so far based on where we were early this morning and now. I believe for a true key reversal day yields would have to close up by today's close. If that happened it could well be a key reversal day in equities if they ended up closing higher on the day. I really would like to pay off this wager!!!! Funny thing about these forums when you are dealing with nameless and faceless posters. Now watch heezsafe disappear for whatever reasons and never be heard from again and not try to collect.
You noted: Catch, I thought your recent "Fairy Tale" link was very good. It was pretty elaborate, and I didn't take the time to fully digest the various geopoliticall forces at work. Excuse the expression, but it points to a "Catch 22" for the world's central banks, including the Fed. The implication, I think, is that they are running out of ammunition in their fight to keep things afloat. We can hope for the fairy tale end, but the various indicators recently aren't pointing in that direction. I must say you appear to have been correct on the trend in bonds longer than there's been a MFO. (Used to write a column that focused on bonds as I recall.)
>>>The "Our Funds Boat" was the weekly chat based on our actual portfolio holdings. I would have to reread the writes; but the focus was not directly related towards bonds, but bond holdings were always a large portion of the holdings and areas of the writings did drift in that direction. Combining the equity holdings in some HY bond, multisector bond and direct equity holdings; our equity position since March of 2009 has not been higher than 40%. High yield bond holdings were as high as 40% during this period too; with a mix of investment grade bonds filling the remaining 20%; of which we traded in and out of this area, which included long term treasury and TIPs funds and indexes.
Today, the portfolio is 16% equities; with the majority being PRHSX, FSPHX and GPROX. High yield bonds are at 21% of the total. The remaining 73% of the portfolio is in investment grade bonds, being corp. and U.S. gov't.; and several so-called multisector funds which consists mainly of TIPs, FBNDX, PIMIX, FTBFX, DPFFX, DGCIX, LSBDX and FRIFX (a conservative real estate fund, 50/50 equity and bond holdings). We sold our small cap holdings in February and purchased TIPs related funds. All of this is subject to change, as always. HY bonds were reduced a few months ago; but this area is also suffering with equities. The ratio of price movement, of most active managed HY bond funds versus the SP500 remains about the same as the past 2 or so years. If broad based equities move down 1%, HY bond areas move downward .25-.33%. This relationship is seldom the same each day; but has been a nominal pattern recently. HY bonds began to move downward first; relative to the current equity unwind. From September 9: http://www.mutualfundobserver.com/discuss/discussion/15593/many-market-sectors-are-struggling-a-bit-eh-have-we-a-small-unwind-period-beginning
hank noted: I do think (just my uneducated guess here) that massive fiscal and monetary stimulus could refloat the inflation boat. Question than becomes: 1) at what future price? and 2) would the politicians allow it? On the second question ... I think not.
>>>One area that makes me crazy about perceptions of the quality of the U.S. economy is what I think I understand globally, which includes central bank policies; and how this relates to what I see in Michigan. I will note, that currently Michigan continues to have a large retirement segment that has favorable pension programs; both public and private sector. I continue to find restuarants always busy with customers. So, some folks are spending money in this area; and this includes young, working age couples with children. I know they are spending a large chunk of money when 2 adults and 3 kids sit down for supper. I don't have any real data for other spending areas in Michigan; but also find that vacation periods appear to remain busy, too. So, folks are spending money in Michigan. On the other hand, there are many here, who are only able to live from one pay check, to the next pay check. This is what drives me crazy, relative to investing in what is a very perverted economic circumstance. Our house continues to watch all of the recent market moves and looking for equity areas for purchase. The current market action reminds me of watching the markets from Oct. 31, 2007 through the end of that year. Pretty crazy moves going on then, too.
Lastly, I have performed the annual snowblower "ready test". Yuck ! And, I have to get to some chores outside before the colder air arrives on Saturday.
Good to see you posting. I enjoyed reading your past posting of your thoughts and what you have been doing within your portfolio.
Currently, I am holding my own in this market downdraft. By my thoughts, we have moved beyond a dip and pullback range into a downdraft with which I have been doing a little buying around the edges so to speak but still carrying a good amount of cash because one never know just how deep the leverage runs within the markets. When big money starts to unwind their positions … watch out.
Speaking of that snow blower, if you are not running stand by power generation that might be something to look into before winter arrives up your way. I have had it at my home now for about twelve years, as many others in my neighborhood now have, and have found it well worth the expense as I have to use it at least a couple times a year, or more.
Just the other evening, we had a cold front move through the Carolinas with high winds up to about fifty mph in places. In my neighborhood we lost power for a good bit of the night … but, not me as I run a 17 kw system that runs off of natural gas and pretty much runs everything I need to run and the rest I can do without. In my neighborhood, which is one of the oldest in the city, the power lines are for the most part above ground on poles. They run through the alleyways and the tree limbs often fall upon them even though the power company maintains their right of way. Night before last tree limbs fell on the lines from high winds and out went the power. And, the power company most always waits for daylight to clear the debris and make repairs. Can’t say that I blame them.
I am feeling more and more secure about the 10 year not closing at 2.00% before 3% and thus saving me an expenditure (bet) of $250 And as for as closing at 1%, not in my lifetime. Still I hope I am wrong as I am often wont to be. That was a *climatic* day of epic proportions in yields last Wednesday. My junk munis haven't been hit hard (yet) but nonetheless am 65% in cash as of yesterday's close waiting for a resumption of the uptrend. Another 1/2% decline and I will be all in cash.
Junkster" I'm wondering how many investors can say they're at a 65 % cash level. That's what I like about this forum. Different strokes for different folks ! Derf
Junkster" I'm wondering how many investors can say they're at a 65 % cash level. That's what I like about this forum. Different strokes for different folks ! Derf
Derf, I am not an investor. But yes, different strokes for different folks. I'm even more in cash after today's close and like I said, I may be scampering right back in junk munis if they begin rising again.
Hi Catch. Missed your reply earlier for some reason. So just wanted to say Thanks for the write-up.
To be honest, my equity holdings aren't very high either. Lots of moderate and conservative allocation funds. Not inclined to do an X-Ray at the moment. Probably somewhat higher than you. 30-40% I'd guess.
Yikes. Nighttime temps in the 20s already here in the northern part of the state,
"I'm wondering how many investors can say they're at a 65 % cash level. That's what I like about this forum. Different strokes for different folks !"
Well, like so much else in the financial area, so much depends upon definitions, which vary greatly from one person to the next. For instance: if one deliberately sets aside emergency cash allocations, with no intent to use that cash for investment purposes, should that count as a percentage of the overall "cash level"? Some folks might count it, but we don't, and I personally have no opinion at all as to what's may be "right" or "wrong" with this approach.
In another situation, if pension & SS deposits are automatically deposited to a checking account, and the unspent surplus accumulates there, should that be counted as part of the "investment cash level"? Again, we don't, but I suppose that the guy next door might very well.
My point is simply that we'd have to know a lot more than we'd want to about each others complete economic situation to make that "investment cash level" actually comparable. Different strokes for different folks, for sure!
@Junkster 65% cash? Wow, dem's approaching nosebleed levels. Any higher and you'll move to the front of the line for a Barron's anointment as Cash King of Appalachia, or something (has a nice ring to it, dontcha think?). Yes, they're probably putting the final touches to the Sunday cover as I type, with your caricature. Hot, Hot, Hot!!
If I look at our net worth, exclusive of our non-mortgaged SF home, I find that we are at about 50% cash. But as I pointed out above, if we never intend to deploy a large amount of that cash as an "investment", are we in fact at 50% or at some other number?
If one keeps a significant semi-permanent cash balance in money-market funds at American Funds or American Century, should that be considered "investment" money- simply because of where it happens to be stashed? We consider it to be essentially the same as money that might be in a CD, savings, or checking account.
If one adopts the premise that all "extra" (ie: non-committed) cash is part of "investment cash", then we have a completely different situation.
Another variance in perspective, therefore in terminology: while we do not calculated the value of the SF home as part of our overall NW, we do include the very significant value of the "weekend" place at the Russian River, as it could be sold in an emergency situation. Someone else may very well have a different opinion on that, with good reason.
How on earth can we talk about "65%" of something without a clear and universal definition of what that "something" is?
Junkster" I'm wondering how many investors can say they're at a 65 % cash level. That's what I like about this forum. Different strokes for different folks ! Derf
Derf, I am not an investor. But yes, different strokes for different folks. I'm even more in cash after today's close and like I said, I may be scampering right back in junk munis if they begin rising again.
Junster, Since you trade in and out frequently, how do you deal with the fees Scottrade charges? Some of the funds you trade (ABTYX, NHMRX) are transaction-fee funds at Scottrade, with a $17 fee for each buy and another $17 for each sale, and $17 more for each sale of a fund held less than 90 days (a short-term sale). Then there are Scottrade's dire warnings about short-term fund trading, which they send out after each short-term sale. I use Scottrade, but because of the fees and warnings I hesitate to trade in and out as frequently as I'd like. I'm considering going back to TradeKing, which charges $9.95 per no-load mutual fund transaction, with no short-term trading penalty except when the fund itself charges a short-term redemption fee. I had a TradeKing account for several years, although I've never traded mutual funds through them. I also buy Vanguard funds through Vanguard, which charges no fees, but which won't let you re-enter a Vanguard fund within 60 days of selling it.
Frank, you can ignore the warnings from Scottrade. Seriously, I have had *well* over 1000 in my years there. My branch manager says he can't imagine anyone with more at Scottrade. But Scottrade will never shut you down or limit you. The warnings are automatically generated. Only the fund family themselves can shut you down and that has occurred maybe with three or four times. After a while, you can get a feel for which funds are lenient and which are not. Nuveen, much to my surprise, is among the most lenient. I am a huge fan of Scottrade - the access to a local office, their fees, and more, and would never leave there.
Comments
Catch, I thought your recent "Fairy Tale" link was very good. It was pretty elaborate, and I didn't take the time to fully digest the various geopoliticall forces at work. Excuse the expression, but it points to a "Catch 22" for the world's central banks, including the Fed. The implication, I think, is that they are running out of ammunition in their fight to keep things afloat. We can hope for the fairy tale end, but the various indicators recently aren't pointing in that direction. I must say you appear to have been correct on the trend in bonds longer than there's been a MFO. (Used to write a column that focused on bonds as I recall.)
I do think (just my uneducated guess here) that massive fiscal and monetary stimulus could refloat the inflation boat. Question than becomes: 1) at what future price? and 2) would the politicians allow it? On the second question ... I think not. Regards
Regards,
Ted
Strange Days Have Found Us: The Doors:
Edited 11:15 EST.
Regards-OJ
You noted:
Catch, I thought your recent "Fairy Tale" link was very good. It was pretty elaborate, and I didn't take the time to fully digest the various geopoliticall forces at work. Excuse the expression, but it points to a "Catch 22" for the world's central banks, including the Fed. The implication, I think, is that they are running out of ammunition in their fight to keep things afloat. We can hope for the fairy tale end, but the various indicators recently aren't pointing in that direction. I must say you appear to have been correct on the trend in bonds longer than there's been a MFO. (Used to write a column that focused on bonds as I recall.)
>>>The "Our Funds Boat" was the weekly chat based on our actual portfolio holdings. I would have to reread the writes; but the focus was not directly related towards bonds, but bond holdings were always a large portion of the holdings and areas of the writings did drift in that direction. Combining the equity holdings in some HY bond, multisector bond and direct equity holdings; our equity position since March of 2009 has not been higher than 40%. High yield bond holdings were as high as 40% during this period too; with a mix of investment grade bonds filling the remaining 20%; of which we traded in and out of this area, which included long term treasury and TIPs funds and indexes.
Today, the portfolio is 16% equities; with the majority being PRHSX, FSPHX and GPROX. High yield bonds are at 21% of the total. The remaining 73% of the portfolio is in investment grade bonds, being corp. and U.S. gov't.; and several so-called multisector funds which consists mainly of TIPs, FBNDX, PIMIX, FTBFX, DPFFX, DGCIX, LSBDX and FRIFX (a conservative real estate fund, 50/50 equity and bond holdings). We sold our small cap holdings in February and purchased TIPs related funds. All of this is subject to change, as always. HY bonds were reduced a few months ago; but this area is also suffering with equities. The ratio of price movement, of most active managed HY bond funds versus the SP500 remains about the same as the past 2 or so years. If broad based equities move down 1%, HY bond areas move downward .25-.33%. This relationship is seldom the same each day; but has been a nominal pattern recently. HY bonds began to move downward first; relative to the current equity unwind.
From September 9: http://www.mutualfundobserver.com/discuss/discussion/15593/many-market-sectors-are-struggling-a-bit-eh-have-we-a-small-unwind-period-beginning
hank noted: I do think (just my uneducated guess here) that massive fiscal and monetary stimulus could refloat the inflation boat. Question than becomes: 1) at what future price? and 2) would the politicians allow it? On the second question ... I think not.
>>>One area that makes me crazy about perceptions of the quality of the U.S. economy is what I think I understand globally, which includes central bank policies; and how this relates to what I see in Michigan. I will note, that currently Michigan continues to have a large retirement segment that has favorable pension programs; both public and private sector. I continue to find restuarants always busy with customers. So, some folks are spending money in this area; and this includes young, working age couples with children. I know they are spending a large chunk of money when 2 adults and 3 kids sit down for supper. I don't have any real data for other spending areas in Michigan; but also find that vacation periods appear to remain busy, too. So, folks are spending money in Michigan. On the other hand, there are many here, who are only able to live from one pay check, to the next pay check. This is what drives me crazy, relative to investing in what is a very perverted economic circumstance.
Our house continues to watch all of the recent market moves and looking for equity areas for purchase.
The current market action reminds me of watching the markets from Oct. 31, 2007 through the end of that year. Pretty crazy moves going on then, too.
Lastly, I have performed the annual snowblower "ready test". Yuck !
And, I have to get to some chores outside before the colder air arrives on Saturday.
Take care,
Catch
Good to see you posting. I enjoyed reading your past posting of your thoughts and what you have been doing within your portfolio.
Currently, I am holding my own in this market downdraft. By my thoughts, we have moved beyond a dip and pullback range into a downdraft with which I have been doing a little buying around the edges so to speak but still carrying a good amount of cash because one never know just how deep the leverage runs within the markets. When big money starts to unwind their positions … watch out.
Speaking of that snow blower, if you are not running stand by power generation that might be something to look into before winter arrives up your way. I have had it at my home now for about twelve years, as many others in my neighborhood now have, and have found it well worth the expense as I have to use it at least a couple times a year, or more.
Just the other evening, we had a cold front move through the Carolinas with high winds up to about fifty mph in places. In my neighborhood we lost power for a good bit of the night … but, not me as I run a 17 kw system that runs off of natural gas and pretty much runs everything I need to run and the rest I can do without. In my neighborhood, which is one of the oldest in the city, the power lines are for the most part above ground on poles. They run through the alleyways and the tree limbs often fall upon them even though the power company maintains their right of way. Night before last tree limbs fell on the lines from high winds and out went the power. And, the power company most always waits for daylight to clear the debris and make repairs. Can’t say that I blame them.
Stay warm … and, keep posting.
Old_Skeet
Derf
Hi Catch. Missed your reply earlier for some reason. So just wanted to say Thanks for the write-up.
To be honest, my equity holdings aren't very high either. Lots of moderate and conservative allocation funds. Not inclined to do an X-Ray at the moment. Probably somewhat higher than you. 30-40% I'd guess.
Yikes. Nighttime temps in the 20s already here in the northern part of the state,
Take care. Keep posting.
Well, like so much else in the financial area, so much depends upon definitions, which vary greatly from one person to the next. For instance: if one deliberately sets aside emergency cash allocations, with no intent to use that cash for investment purposes, should that count as a percentage of the overall "cash level"? Some folks might count it, but we don't, and I personally have no opinion at all as to what's may be "right" or "wrong" with this approach.
In another situation, if pension & SS deposits are automatically deposited to a checking account, and the unspent surplus accumulates there, should that be counted as part of the "investment cash level"? Again, we don't, but I suppose that the guy next door might very well.
My point is simply that we'd have to know a lot more than we'd want to about each others complete economic situation to make that "investment cash level" actually comparable. Different strokes for different folks, for sure!
65% cash? Wow, dem's approaching nosebleed levels. Any higher and you'll move to the front of the line for a Barron's anointment as Cash King of Appalachia, or something (has a nice ring to it, dontcha think?). Yes, they're probably putting the final touches to the Sunday cover as I type, with your caricature. Hot, Hot, Hot!!
If I look at our net worth, exclusive of our non-mortgaged SF home, I find that we are at about 50% cash. But as I pointed out above, if we never intend to deploy a large amount of that cash as an "investment", are we in fact at 50% or at some other number?
If one keeps a significant semi-permanent cash balance in money-market funds at American Funds or American Century, should that be considered "investment" money- simply because of where it happens to be stashed? We consider it to be essentially the same as money that might be in a CD, savings, or checking account.
If one adopts the premise that all "extra" (ie: non-committed) cash is part of "investment cash", then we have a completely different situation.
Another variance in perspective, therefore in terminology: while we do not calculated the value of the SF home as part of our overall NW, we do include the very significant value of the "weekend" place at the Russian River, as it could be sold in an emergency situation. Someone else may very well have a different opinion on that, with good reason.
How on earth can we talk about "65%" of something without a clear and universal definition of what that "something" is?