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Tis not 2007/2008, but.....

edited May 2012 in Fund Discussions
Many market sectors still remain stinky. We off-loaded the majority of commodity funds the first week of March and the remainder last week. I continue to find little that is going to kick IG bonds in the teeth at this time; while the equity sector is losing teeth at this time. Although HY bonds have held well, we will monitor these, too.
Will likely sell our most downside exposed equity funds and park the money in cash; which would be TIPs for this house.
I also continue too expect the central banks to maintain the loose money policy; as the last thing any of the CB's want to fight, is deflation; which is still hanging around from continued delevering.

Regards,
Catch

Comments

  • edited May 2012
    Catch, your long running faith in bonds continues to be right. With 10 year below 1.9%, wondered if you expect to eventually see it go below 1%? I run pretty conservative. Had to pull bit out yesterday for an unexpected expense, so catches the eye more than normally would. Hate selling into headwind, though generally markets up substantially for year. Take care. Hank
  • edited May 2012
    Hi hank,
    Geez, if the 10 year travels below 1.5%; there would likely be many other nasty events taking place. I would much prefer to be an equity investor (again) to a much higher percentage.
    While I am sure there are enough here at MFO who may consider our portfolio mix a bit dim-witted; this house's full retire plan is just around the corner. Cash flow from a working wage will cease. We plan to stay away from any SS distributions as long as possible, as the payments find healthy increases when waiting past age 66; and we will be aiming for age 70 to start draws. Based upon my recall, the annual SS payment moves upward about 8% each year between ages 66 and 70, when one waits. Pretty tough to find an 8% annual return on money these days, eh?

    As you are aware, at the very least; we will preserve capital to the best of our ability.

    I continue to be disappointed with some of the folks on the business channels. There are enough of them who are almost outright fools about the economy and finance on too many days. I don't know how they arrived at their station in life with some of the pronouncements that are made to the public air waves.
    Sadly, I observed a conversation among 4 this morning; and all of these folks are nominally level headed and not loud mouths about anything. The discussion was about the 10 year T rate. Statement, more or less: "Your government is only going to pay you 1.8% to hold this note for 10 years." Others; blah, blah, yes............. I know these folks know better and any one of them could have interjected "the fact that as the yield moves down one is able to make money with the upward move of the underlying price; and when one feels rates are going to move upward; one sells. One may take advantage of this current yield fact with any of a number of active managed bond funds or etf's; and to not expect to hold onto such an investment forever."
    So many of these people do a great disservice towards too many things investment related.
    I can imagine that as the network moved to commericial break that anyone of them scratched their own asses and/or picked their noses. Hopefully, not in that order; or at the very least, used the other hand.

    Their are days when any number of folks here at MFO could be on the phone with these folks and offer the old CBS network (60 minutes?) "Point - Counterpoint" to indicate there is indeed other things to consider.

    Many IG bonds are negative yield or just slightly above, indexed to inflation. We don't really give a rip about that at this time. We're not after the yield with these bonds, we gather the price increases. The yield is just a bit of extra money. Hopefully, not unlike any equity investment, we will leave this area in a timely fashion, as needed.

    Pretty sad stuff on too many days with these chatter box heads.

    Take care of you and yours up "that'a way".
    Catch
  • Reply to @catch22: "While I am sure there are enough here at MFO who may consider our portfolio mix a bit dim-witted; this house's full retire plan is just around the corner. Cash flow from and working wage will cease. We plan to stay away from any SS distributions as long as possible, as the payments find healthy increases when waiting past age 66; and we will be aiming for age 70 to start draws. Based upon my recall, the annual SS payment moves upward about 8% each year between ages 66 and 70, when one waits. Pretty tough to find an 8% annual return on money these days, eh?
    As you are aware, at the very least; we will preserve capital to the best of our ability."

    See, the thing is, you may not necessarily be wrong in your approach from a general standpoint and there's also the fact that there's going to be a LOT of people in your generation who are going to be doing the exact same thing - they are looking to preserve capital and will not be throwing the dice with risk again. Many people in your generation will not be taking risk, and many people in younger generations can't afford to (enormous student loans, etc.)

    "I continue to be disappointed will some of the folks on the business channels. "

    Every five seconds they blather about how retail investors aren't coming back. None of them appear to have an idea as to one reason why and can't comprehend that you have many people no longer willing or able to take risks - or at least to the same degree.
  • edited May 2012
    "None of them appear to have an idea as to one reason why and can't comprehend that you have many people no longer willing or able to take risks"

    And isn't that phenomena that's really at the most fundamental level of the "1%/99%" screaming? The seemingly total inability of the privileged classes to even begin to understand what life is really like "lower down"?
  • edited May 2012
    very good commentaries
    Don't know about you folks but I am feeling anxious and edgies day after day. We maybe looking at pictures of early summer 2008 all over again...stocks starting to plateau, slowly decline and crash... The 25%++ corrections/the double dip did not take place yet the past few yrs and we are going up too early/too fast. We don't have much legs to stand on. We have an incumbant president trying to give out as many free meals as possible and another dummy trying to take his place [rommey loves to flipflops].

    I would not be much surprise if obamnomics take over/win election and we would be become Greece in 2013. The best things could be raising taxes and cuttin' all the junkies programs.

    I think many folks here are doing the right thing and starting to hoard/raise cash. I will probably follow you folks soon to 20s-25s% cash. I think several folks are heading toward exists already, they are probably a little early but I think eventually a crash/depression could come soon.

    http://finance.yahoo.com/blogs/daily-ticker/ecri-lakshman-achuthan-no-m-not-wrong-still-145239368.html
  • edited May 2012
    Reply to @Old_Joe: I'd agree with that, and I think the more I have CNBC on in the background and the more I hear, "WHY ISN'T THE RETAIL INVESTOR PARTICIPATING OMG!", the more I agree with that. They don't get why people are upset, they don't get why many retail investors have lost trust and the anchors stare blankly when they are told that some retail investors would honestly rather go to Vegas than put money in the market and trust Vegas more. They also - as you said - don't get the reality many people are facing.

    Either they don't get it, or - and Jim Rogers said it - CNBC is primarily a PR firm for the market. (http://www.zerohedge.com/article/jim-rogers-calls-cnbc-market-pr-agency-whose-sole-purpose-make-stocks-go-higher) CNBC just said people's anger at banks was "unfocused" and disorganized and are whining about the occupy movement and how they don't "get it." "I know people are frustrated, but why take it out on the financial services industry?" lol.

    Meanwhile, CNBC is facing its lowest ratings in many years.

    I think there are exciting companies that I want to be involved in, especially in the developing world. People aren't going to be pulled into risk again, and those hitting retirement age are going to value capital preservation over appreciation and it wouldn't stun me if you see continued movement into fixed income. That's not to say that people shouldn't invest in stocks, but I do think people have to keep expectations in check and the volatility is going to continue to cause people to exit.

    I do think that the emerging consumer has the potential to do better over time, and that's part of the reason why you're seeing moves like you are in some of the Brazil consumer names (AMBev) and Mexico's FEMSA and elsewhere. That'll be a bumpy ride, but the emerging consumer - I think - remains a potentially very good long-term theme (ECON etf is a broad way to play.)
  • Thanks... I'm beginning to remember why we don't have cable and only watch an occasional program on PBS...
  • edited May 2012
    Reply to @Old_Joe: You mean you are not twittering, facebooking, tumblr...ing and Iphone-ing?

    (I don't blame you on cable - it sucks.)
  • edited May 2012
    Reply to @johnN: And I wouldn't be surprised if you get another QE in June. Mort Zuckerman of Boston Properties said on CNBC the other day, ""We have the most stimulative fiscal and monetary policy in the history of this country and here we are three years into the recession and it's not ended. I think we may be heading for an even weaker economy this year than people expect."

    The "recovery" strength or not can be debated, but I'll continue to say it's a case of diminishing (and non-sustainable) returns for the money spent. That doesn't mean that you're not going to have a group of people who will likely say that what has been done just "wasn't big enough" and yet more money needs to be spent. And if that happens, we'll likely get another boost and then have the same conversation (when's the next QE?) again before long.

    We continue to spend money in a manner that does not benefit the core of the country and keep us competitive, and it's instead used on cronies and other malinvestment. Spending money in a way that isn't productive and willy-nilly is going to result in having to continue to do one short-term fix after another.

    Heck, you have CIti analysts recommending things like what they are at the link below and no one really asking why all the trillions have only gotten us a couple of % in GDP. As I said in another thread today, I think there is a point somewhere where the market and the populace starts to find one short-term fix after another unacceptable and push for more difficult choices/solutions.

    http://www.zerohedge.com/news/citis-buiter-plan-z-unleash-helicopter-money

  • edited May 2012
    Howdy,

    Just a few observations for today's close; and apparently any profit takers actually took real cash home in trash bags to bury in the side yard.

    No love at the old Funds Boat.

    Among the whole mish-mash of funds we hold, only APOIX and FRIRX were flat for the day. Everything else was down.

    The "best" loser was -.1% (PTTRX) and the "worse" loser was -.9% (MACSX).
    Perhaps the most troubling fund, and a reflection to last year? is TEGBX, which was down yesterday (-.46%) and (-.77%) today, down more today than the majority of our individual equity funds. Sure would like to know what kind of a mix is being carried by this fund right now.

    Take care,
    Catch
  • Reply to @catch22: I think you can employ start and immediately suspend strategy so that your wife can claim spousal benefits and you can resume getting full+ benefits at age 70. I heard this on a recent wealth track. Investigate it a bit.
  • Hi Investor,
    Thank you for the note. I know that the start, payback the original amount and then start drawing again at a future date was changed by law, I believe, last year.
    We will both be fully qualified for full SS, but will wait to draw as late as possible.

    There may be some other function relative to the spousal connection.

    SS made this change as they were aware that their were those who did not need to start drawing, say at an earlier age of 63; but started at this age, invested in the markets the SS money.....hopefully made some money; and then a year or two later suspensed their SS draw, paid back the original amount they obtained over the period and pocketed the investment profits......:):):) Investing with free money, eh?

    I will check into what you mentioned, especially the start and immediate start.
    Thank you.
    Catch
  • edited May 2012
    Reply to @catch22: No this is new strategy that is still available. Your start and immediately suspend at the same time. There is no payback. Scan recent Wealthtrack episodes for more info.
  • Reply to @catch22: My AGG, RPHYX and ARIVX posted positive returns and soften the blow.
  • edited May 2012
    Reply to @catch22: Old expression: "Dumb like a fox" may apply. While I believe there is a bond bubble, as Buffett remarked recently, "You can get very rich from bubbles". I do enjoy the occasional skirmish over interest rates & market direction - or this manager or that, but consider it all in fun. In the end, maybe walk away with some better understanding. Nobody should get too worked up or resort to name calling. Good luck with your investing. Looks like you've nailed the trend in bonds pretty well in recent years. And, yep - cnbc (& most tv programing) adhere to three principles - ratings, ratings, ratings. Which translate into what they can charge for commercials. Which translate into how profitable company is for investors like us. Viewing in that light ought to make ya at least "skittish" about any advice rendered.
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