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.
My smaller cap funds are trailing considerably behind S&P 500. The banking crisis in March did not help either. Additionally, the possibility of recession by year end (inverted yield curve) and more rate hikes had me to rethink the investment for the latter half of this year.
So far, I have sold all commodity futures and alternatives to fund short term bonds, VGSH and allocation funds, FBLAX. Will buy more T bills as older T bills and CDs mature.
I can't stand the small-cap funds' volatility anymore. I do own a "small/value" single stock in my BHB. Ordering-up more shares tomorrow (3rd) or 5th of July.
Yeah, small-cap funds tend to be more volatile. VTMSX is my only dedicated small-cap fund. I ran Portfolio X-Ray for the period ending June 30 earlier today. VTMSX constitutes 7.7% of my portfolio.
Yeah, small-cap funds tend to be more volatile. VTMSX is my only dedicated small-cap fund. I ran Portfolio X-Ray for the period ending June 30 earlier today. VTMSX constitutes 7.7% of my portfolio.
Old Ted mentioned that he'd not worry about the performance of a holding that constituted less than 5% of his stuff. I'd not give a small-cap fund any more than such minimal room along with my other stuff.
But I wish you well with it. I hope you don't need Vanguard's customer "service."
@Observant1: I’m finding it’s not just the volatility of small caps, especially SCV. Good past performers BRSVX and RWJ have struggled this year, while a couple of newcomers (which I own) are doing fine. Most of you probably don’t buy new funds, even from established managers, but I have been pleased with SMOT and DSMC. The moat discipline works for domestic stocks (i.e., MOAT) and now SMOT, while the global MOTG and international MOTI don’t impress. From Distillate Capital comes DSTL with a distinguished record; DSMC is the new SMID version of that LCV fund. Their overseas version, DSTX, does OK, but trails old favorite international value FMIJX. I don’t know why value metrics that work for domestic stock managers appear not to function as well when applied to international portfolios. Probably opacity, accounting standards, less actionable information, and a reduced commitment to enhancing shareholder value make security analysis more of a challenge for international PMs. I believe the challenges are even greater when selecting small-cap international stocks.
Foreign small-cap universe is very different from that for the US small-caps. As Barron's noted recently, the largest telecom in some country may just be a small-cap by the US standards for LC, MC, SC.
Yeah, small-cap funds tend to be more volatile. VTMSX is my only dedicated small-cap fund. I ran Portfolio X-Ray for the period ending June 30 earlier today. VTMSX constitutes 7.7% of my portfolio.
Old Ted mentioned that he'd not worry about the performance of a holding that constituted less than 5% of his stuff. I'd not give a small-cap fund any more than such minimal room along with my other stuff.
But I wish you well with it. I hope you don't need Vanguard's customer "service."
Thanks! I've owned VTMSX for ~10.75 years. The fund's longer-term performance has been good when compared to the small-blend category (10 Yr. - top 8%; 15 Yr. - top 11%). VTMSX returns have lagged S&P 500 returns during these periods since large caps were in favor. I don't need to contact Vanguard customer service often but it's definitely not something I look forward to!
Bought a handful more of BHB shares today. Of course, the share price fell hard from there. ORK! Stinky poopy. Bar Harbor Bank. I note they just lately filed a form with the SEC. The reason is that they were going to run past a deadline because the mutual fund Manager connected with their 401k or pension fund had recently been changed. Doesn't sound like a big deal, but the Market overreacts to EVERYTHING, eh?
@Crash, to me it looks like BHB is just following the regional bank index ETF KRE, at least it has since the small bank failures earlier this year. Doesn't matter what bank you bet on, they will likely all move in unison for a while. Hopefully the tarnish on this sector will wear off and it will shine when faith in small regional banks comes back. Now might be the time to add a few more shares for the long haul.
Sold 1 stock Friday that constituted a bit under 5% of portfolio. Took equity exposure down from around 45% to closer to 40%. Most of that’s thru funds (but still own 2 stocks). The $$ went into a new position in a CEF that can invest in virtually any type of fixed income / related hybrid product + use leverage. So may have leapt from kettle into flame.
PS - The only rationale I can give is that fixed income has begun to look interesting with the 10-year above 4%. In addition, equities have had a nice run since mid 2022.
While July has historically shown to be a good month for stocks I'm of the opinion that we will see the market hold or drift down over the next few months rather than surge to the tune of a new bull market. If the institutional folks are not buyers at these levels there's no reason for me to be either. Therefore I sold DIVO and 25% of my SCHD position. I captured no gain or loss on DIVO and a small short term loss on SCHD. In return I gather a 4.7% distribution which is greater than either of these two ETF"s were paying by contributing the proceeds to my MM position while I wait and see what happens. I could be wrong but I'm used to it.
I bought the wrong CEF Friday. Historical performance too volatile and fees too high. Have better one in sight, but need to wait for $$ to settle before selling the former. Meanwhile it has bumped up nearly 1.5% today. With some luck will be able to pocket a few dollars from the short hold. Casino for sure. But nice to be able to trade in out of these vehicles almost at will.
I’m certainly not in the euphoric camp as equities go. But who knows?
@Level5 - 5.5% is a nice return for sitting on your hands.
ET Energy Transfer plodding higher. The court's decision about an extension re: the Lake Charles facility is a setback. But the chief players in this L.P. seem oblivious as to how much money they throw into projects and acquisitions. I'm holding. Amazing divs. Selling HYDB and SCHP when both dividends from 10 July get recorded in my account. Proceeds will go into BHB.
I don’t know anything about energy. I do think the precious metals / miners are starting to look interesting. Silver’s had a hot run this year. So, gold’s probably more promising at this point. Miners popped 2% today.
Personally, I’m looking to increase exposure to a CEF that dabbles in energy and the metals (precious & industrial). At that point I’ll vacate my meager position in GLTR. A consolidation move - not increasing exposure..
The CEF I mentioned is labeled a ”Global Natural Resources” fund. A bit misleading as they do hold a significant portion in mining stocks (WPM & RIO, for example, which I used to own). Leveraged CEFs are crazy animals. Not for everyone.
Any particular reason? Are you averaging down? Sorry, I don’t follow this particular stock.
Personally, I’m down to just 2 stocks - both small speculative mid-cap plays. Prefer managed funds for the most part. Less risk. I’ve been consolidating all year. More committed today to a static hands-off approach and less to f*** around with stuff. Down from 18-20 holdings a year ago to 14 today - counting the core money market. I think it was the big sell-off in 2022 that prompted me to pick up a lot of different things that were temporarily depressed and do some gambling on individual stocks. Gets crazy. (And, I’d prefer not to re-live that year.)
Any particular reason? Are you averaging down? Sorry, I don’t follow this particular stock.
Personally, I’m down to just 2 stocks - both small speculative mid-cap plays. Prefer managed funds for the most part. Less risk. I’ve been consolidating all year. More committed today to a static hands-off approach and less to f*** around with stuff. Down from 18-20 holdings a year ago to 14 today - counting the core money market. I think it was the big sell-off in 2022 that prompted me to pick up a lot of different things that were temporarily depressed and do some gambling on individual stocks. Gets crazy. (And, I’d prefer not to re-live that year.)
Unless Henny Penny has her day, BHB will be a long-term holding. The purchase was a consolidation, but not by much: I eliminated just two tiny ETF positions that were doing less than nothing for me. HYDB and SCHP. I exited them both after a tiny loss. So, after a few months of keeping tabs on them, I dumped them and threw the proceeds into BHB. .......So, that's 2 line-items eliminated. Consolidating.
Our own @MikeM has noted that BHB has been following the Regional Bank ETF, KRE. I believe him. And that's ok. I want to grow my stake while the stock is depressed by -31% (according to M*.) The Market Cap on BHB is still just $371M. It's not in the same League as RF Regions at $17.5B. Or ZION at $4.5B. Or HBAN Huntington at $16B. (numbers from M*.). But I did not want to be competing in that league, anyhow. I'm more comfortable with "Crash Davis" and "Annie Savoy" and "Nuke LaLoosh" down in single-A Durham. (But these days, the Bulls have moved up in the world: AAA status.)
The BHBdividend is up by just a bit: a product of its fallen share price, but the bank has raised the div. by just a couple of pennies, as well. Payout ratio is sustainable at 33.12......Currently, shares are selling for less than Book Price. VOLUME in the Markets today was a bit higher than the 65-day avg... P/E is still just 7.81. "Short" interest is just 0.81%....14day Relative Strength: 47.5%. (source: Barchart.) ...Price to Sales is 2.34. (Does that apply to banks?)...Earnings Yield is rather higher than in previous years, at 13.06...Net Margin = 30.52%.
I am VERY slowly but steadily growing the size of the brokerage account. Apart from an annual small chunk removed from the T-IRA each year in January, I'm letting that one just sit, to grow. ("Hands-off.") PRWCX is tonight back down to just below 39% of my total. I own 5 OEFs in the T-IRA. That's not TOO many irons in the fire. (Wife has a T-IRA with BRUFX, but it's only just over $10k.) There's a sweep account in the brokerage, but there's never much in there, apart from a period earlier in the year, when PRTXX yielded almost 5%. But for the long-term, I can do better deploying money outside of the Treasuries and Treasury futures.
Why grow that taxable account? Taxes for us are simply not a worry. Wifey can "get at" the $$$ in the JOINT brokerage account without worrying about inherited IRA rules, when that time comes. So, why not? It puts her at ease. There are 5 single-stocks in taxable. I deliberately wanted to cover the waterfront with sector-investments, the best I could without managing so many that I might as well be running my own mutual fund: BHB regional banks. NHYDY aluminum, green energy, recycling. ET oil/gas midstream. JRSH clothing manufacturer. Absolutely getting crushed in 2023. Tiny holding. PSTL Real Estate.
Other considerations: this is for heirs. I don't need it to live on. She's already fixed up nicely back in the home country. She won't stay here after I'm gone. She's not quite yet eligible for SS (40 quarters,) but I think she just doesn't care.
Sorry, this is way more than you asked for. Just thinking "out loud," I guess.
Over the past 2 weeks I made several moves, all surrounding financials. As @Yogibearbull noted in a review of recent Barron's commentary, preferred shares may offer near term opportunities.
Specifically, they indicated, "You can get a bit more yield than cash and still stay in high-quality securities if you look in some less obvious corners of the fixed-income markets. Preferred shares, often issued by large and highly rated banks, yield around 6%....Preferreds offer an interesting opportunity in an investment-grade asset with yields of more than 6%, .They are also relatively cheap due to the regional-bank crisis in March. “Rarely is there this big a discount to par for preferreds.”
That view is shared by many firms, who admittedly have funds focused in that area. Cohen and Steers wrote:
"4 Reasons to own preferred securities today"
1. Current discounts to par value represent uncommon value 2. High-quality preferreds offer some of the highest yields in fixed income 3. Performance historically has been strong following market corrections 4. An end of Fed rate hikes is a possible catalyst for price appreciation
So....I added to PTD and established a new position in PTA. I also added to C (Citibank) and added a new position in USB (US Bank). All of these offer an attractive distribution and are selling at attractive prices. The banks may be a bit volatile this week due to earnings and possible revised capital requirements. However, the light CPI print released just this morning may suggest we are nearing the end of Fed tightening, helping all financials.
Be aware that most preferreds now are bank preferreds. And most bank preferreds are noncumulative - a regulatory requirement to be counted as bank capital. Some won't touch noncumulative preferreds. This shouldn't be an issue for the best too-big-to-fail banks.
Today I sold the rest of FMIJX to get it out of Roth. One can't take foreign tax paid off Fed taxes. The question for me , what to put into the Roth ? SC or MC ?
@Derf, what does that mean. I'm not Derf, but... I THOUGHT there was a way on the 1040 to deduct foreign taxes paid against domestic taxes owed. But in my own case, there's no domestic tax bill to deduct foreign tax paid against. (NHYDY. I just have to eat the foreign tax paid, if I'm going to own it. The amount is withheld "at the source." So TRP tells me.) @Derf, is that along the lines of what you meant?
@Crash : I believe IRA's are not eligible for credit or deductions for foreign taxes paid on Fed taxes. That's why I'm moving to taxable account. Correct me if I'm wrong
I don't understand the concern for international funds in a Roth IRA, but that's ok. I did google a little on the subject and it's complicated, but I'm still not concerned after reading. Apparently Schwab isn't either. I found this in one of their articles on the subject:
Foreign taxes in retirement accounts Unfortunately, foreign investments in retirement accounts don't qualify for either a tax credit or deduction.
Because income in a tax-deferred account—such as an individual retirement account (IRA) or 401(k)—isn't subject to U.S. tax (at least not until you begin making withdrawals), you can't deduct foreign taxes paid on investments held in the account. But don't worry—the foreign taxes reduce the income earned in that account. That is, when you eventually withdraw funds from your account, you'll be taxed on the net amount only.
If you have a Roth IRA, the situation is a bit different. Withdrawals from Roth accounts are tax-free, so you won't benefit from the foreign taxes you paid. But don't let the lack of a tax benefit deter you from holding foreign investments in your Roth account; it could still make sense to include foreign assets for diversification and potential growth.
Comments
So far, I have sold all commodity futures and alternatives to fund short term bonds, VGSH and allocation funds, FBLAX. Will buy more T bills as older T bills and CDs mature.
VTMSX is my only dedicated small-cap fund.
I ran Portfolio X-Ray for the period ending June 30 earlier today.
VTMSX constitutes 7.7% of my portfolio.
But I wish you well with it. I hope you don't need Vanguard's customer "service."
I've owned VTMSX for ~10.75 years.
The fund's longer-term performance has been good when compared to
the small-blend category (10 Yr. - top 8%; 15 Yr. - top 11%).
VTMSX returns have lagged S&P 500 returns during these periods since large caps were in favor.
I don't need to contact Vanguard customer service often but it's definitely not something I look forward to!
PS - The only rationale I can give is that fixed income has begun to look interesting with the 10-year above 4%. In addition, equities have had a nice run since mid 2022.
I’m certainly not in the euphoric camp as equities go. But who knows?
@Level5 - 5.5% is a nice return for sitting on your hands.
I don’t know anything about energy. I do think the precious metals / miners are starting to look interesting. Silver’s had a hot run this year. So, gold’s probably more promising at this point. Miners popped 2% today.
Personally, I’m looking to increase exposure to a CEF that dabbles in energy and the metals (precious & industrial). At that point I’ll vacate my meager position in GLTR. A consolidation move - not increasing exposure..
Personally, I’m down to just 2 stocks - both small speculative mid-cap plays. Prefer managed funds for the most part. Less risk. I’ve been consolidating all year. More committed today to a static hands-off approach and less to f*** around with stuff. Down from 18-20 holdings a year ago to 14 today - counting the core money market. I think it was the big sell-off in 2022 that prompted me to pick up a lot of different things that were temporarily depressed and do some gambling on individual stocks. Gets crazy. (And, I’d prefer not to re-live that year.)
Our own @MikeM has noted that BHB has been following the Regional Bank ETF, KRE. I believe him. And that's ok. I want to grow my stake while the stock is depressed by -31% (according to M*.) The Market Cap on BHB is still just $371M. It's not in the same League as RF Regions at $17.5B. Or ZION at $4.5B. Or HBAN Huntington at $16B. (numbers from M*.). But I did not want to be competing in that league, anyhow. I'm more comfortable with "Crash Davis" and "Annie Savoy" and "Nuke LaLoosh" down in single-A Durham. (But these days, the Bulls have moved up in the world: AAA status.)
The BHB dividend is up by just a bit: a product of its fallen share price, but the bank has raised the div. by just a couple of pennies, as well. Payout ratio is sustainable at 33.12......Currently, shares are selling for less than Book Price. VOLUME in the Markets today was a bit higher than the 65-day avg... P/E is still just 7.81. "Short" interest is just 0.81%....14 day Relative Strength: 47.5%. (source: Barchart.) ...Price to Sales is 2.34. (Does that apply to banks?)...Earnings Yield is rather higher than in previous years, at 13.06...Net Margin = 30.52%.
I am VERY slowly but steadily growing the size of the brokerage account. Apart from an annual small chunk removed from the T-IRA each year in January, I'm letting that one just sit, to grow. ("Hands-off.") PRWCX is tonight back down to just below 39% of my total. I own 5 OEFs in the T-IRA. That's not TOO many irons in the fire. (Wife has a T-IRA with BRUFX, but it's only just over $10k.) There's a sweep account in the brokerage, but there's never much in there, apart from a period earlier in the year, when PRTXX yielded almost 5%. But for the long-term, I can do better deploying money outside of the Treasuries and Treasury futures.
Why grow that taxable account? Taxes for us are simply not a worry. Wifey can "get at" the $$$ in the JOINT brokerage account without worrying about inherited IRA rules, when that time comes. So, why not? It puts her at ease. There are 5 single-stocks in taxable. I deliberately wanted to cover the waterfront with sector-investments, the best I could without managing so many that I might as well be running my own mutual fund:
BHB regional banks.
NHYDY aluminum, green energy, recycling.
ET oil/gas midstream.
JRSH clothing manufacturer. Absolutely getting crushed in 2023. Tiny holding.
PSTL Real Estate.
Other considerations: this is for heirs. I don't need it to live on. She's already fixed up nicely back in the home country. She won't stay here after I'm gone. She's not quite yet eligible for SS (40 quarters,) but I think she just doesn't care.
Sorry, this is way more than you asked for. Just thinking "out loud," I guess.
@Crash Thanks. Nice write up. Sounds like a plan!
Specifically, they indicated, "You can get a bit more yield than cash and still stay in high-quality securities if you look in some less obvious corners of the fixed-income markets. Preferred shares, often issued by large and highly rated banks, yield around 6%....Preferreds offer an interesting opportunity in an investment-grade asset with yields of more than 6%, .They are also relatively cheap due to the regional-bank crisis in March. “Rarely is there this big a discount to par for preferreds.”
That view is shared by many firms, who admittedly have funds focused in that area. Cohen and Steers wrote:
"4 Reasons to own preferred securities today"
1. Current discounts to par value represent uncommon value
2. High-quality preferreds offer some of the highest yields in fixed income
3. Performance historically has been strong following market corrections
4. An end of Fed rate hikes is a possible catalyst for price appreciation
https://www.cohenandsteers.com/insights/4-reasons-to-own-preferred-securities-today/
So....I added to PTD and established a new position in PTA. I also added to C (Citibank) and added a new position in USB (US Bank). All of these offer an attractive distribution and are selling at attractive prices. The banks may be a bit volatile this week due to earnings and possible revised capital requirements. However, the light CPI print released just this morning may suggest we are nearing the end of Fed tightening, helping all financials.
I am still below target for equity exposure but do not think now is the time to increase it. I have only a relatively small % in the Big Seven
I am waiting for a decent pullback, hopefully what has gone way up will eventually come down.
I'm not Derf, but...
I THOUGHT there was a way on the 1040 to deduct foreign taxes paid against domestic taxes owed. But in my own case, there's no domestic tax bill to deduct foreign tax paid against. (NHYDY. I just have to eat the foreign tax paid, if I'm going to own it. The amount is withheld "at the source." So TRP tells me.) @Derf, is that along the lines of what you meant?