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reduced rates: gummint can spend less buying back its behemoth debt, right? A dollar that's TOO strong vs. other currencies would be a problem. But we are a world away from THAT right now. Universal tariffs on imports is a yucky idea. Ever-expanding gummint spending gets us nowhere in reducing the debt-beast. Facilitating and streamlining LEGAL immigration, and therefore expanding the pool of labor, would be a great thing. Need more Immigration and Customs workers. Is that stuff being farmed out to the private sector, like TSA?
Hank's got it. And msf offers that intermediate term bond funds are as far out on the curve as seems prudent to him.
PRSNX. 4.46 years (global, USD hedged.) WCPNX 5.6 years DODIX 6.22 years. Stretching things, eh? DLFNX. 5.95 years I own none of them--- yet. I'm thinking that when rates go down, my junky stuff will throw a party in the streets. Eh?
@Crash : Have you seen any sign that the party in the street is about to martialize ? Some of my two & three year T-bills show a raising of value. Party on, Derf
- For income, stability, safety the short to intermediate part of the curve (1-5 years) is easier to ride. Much less volatile. Not a lot of difference now in rates.
-There may be reasons to go further out if you believe rates will be lower than. Plain vanilla bonds might work better however, than a fund.
- I sometimes use longer term bond funds as a volatility hedge - but only the highest quality ones. Depends on a lot of factors like how volatile your portfolio is, what current interest rates are, how much growth you are willing to exchange for the reduction in volatility.
- I am surprised by the extent WEA has served to dampen equity volatility on down days. Might just be freakish exception. Have only owned it a couple months.
- I have my eyes on JMBS - mortgage backed bonds. High quality. Actively managed. Reasonable fees. It does tend to rally on big equity down days. But the flip side that it can fall quite a bit on solid equity days - much more than a short term bond fund typically does. Expected growth is low unless we enter another 2008 during which only the highest credit quality bonds held up.
Hi @hank. I hadn't heard of WEA before so I took a look. That looks like one wild ride when added to the trend chart along-side my usual suspects.
On JMBS, I took some advice from something Junkster noted in another thread. Floating rate and mortgage backed securities may not be the best place to be going forward. Same with HY. The suggestion, as I remember, was high quality corporates and munis (I think). I believe an article in Barrons had the same drift. I'm far from a bond expert so take that with a grain of salt.
"It wasn't until fairly recently that I became aware that I had helped build an enormous coal-fired generating complex. Who knew?"
@Old_Joe, that was the Navajo Generating Station, and it was demolished in 2020, so it's no longer messing with regional air quality and the climate. Video of the three smokestacks coming down here: Vox article.
"I didn’t sense as much angst among the public back then over rising prices as today. ... I think it came on gradually over many years and people got used to it. They say if you put a frog in a pot of cold water and heat it up to a boil slowly the frog will die of the heat rather than jump out."
Inflation is expressed in annual change of price. If inflation goes up from 17% in one year to18% inflation the next year, people will know they are paying 18% more in price than what they paid the previous year. Not sure how people can get used to it.
It is possible your memory is kind to previous generations or the current populations are more whiny - you have to figure that out for yourself.
Watch a movie like Network. It's clunky to watch these days, but yeah, people were "mad as hell" about a lot of things, including inflation.
Growing up through that era is the main reason I'm not convinced we're out of the woods yet.
I speak only of short term hedges against equity volatility if that’s your game. Very few here mention hedging risk on their own. So, I assume it’s not important to most. Likely, they count on funds like JHQAX to do that for them.
@rforno did allude recently in the B/S thread that he opened a small short position on the S&P. Takes guts to hedge that way when the market feels like a locomotive endlessly climbing a mountain. I merely submit that high quality bonds might offer an alternative hedge. And yep, the higher up the ladder you go in credit quality and the farther out you go on the curve the stronger that hedge should be. In the case of higher credit quality, you sacrifice some yield. In the case of duration, you accept more risk of the unknown (the future of rates).
Re @Junkster. I’m in complete agreement with him on floaters and HY. Other than a relatively short duration muni HY fund I’m staying as far away as possible. MBS - I’m not really up to speed on. But I would never second guess Junkster.
I have never owned JMBS. Credit quality should be better than say BBB corporates. But perhaps I’m misguided about that. And I haven’t liked the action either watching it. GNMAs offer little return and a wild ride. Other than as a possible hedge against downside in equities I’d stay away. One intriguing thought (JMBS) is that it’s low cost for a managed fund - but still not drinking the Kool Aid.
Of course WEA is a wild ride. Most leveraged CEFs are. It’s an area I’m willing to gamble in, but not any type of recommendation. My mention was only that it has served to hedge on down days in the couple months I’ve owned it. (A surprise.) Not a recommendation in any way, shape or form. Most would be better off avoiding CEFs.
So, preparing for rate cuts,eh? Our portfolio remains about 60% income from bond fund ( BAGIX ) and Fidelity MMK'Ts. Obviously, the MMK'Ts won't benefit from rate cuts, but BAGIX would. BAGIX (Investment Grade, active managed) is 20% of our total portfolio, and we have a 'Draftkings' kind of bet for 2% of the total portfolio with the etf TMF (Direxion Daily 20+ Year Treasury Bull 3X). We don't usually have such a holding or for such a small percentage. We bought this last March for 'play time' investing. The investment will pay nicely, IF long term yields move down more.
Hi @hank. I hadn't heard of WEA before so I took a look. That looks like one wild ride when added to the trend chart along-side my usual suspects.
On JMBS, I took some advice from something Junkster noted in another thread. Floating rate and mortgage backed securities may not be the best place to be going forward. Same with HY. The suggestion, as I remember, was high quality corporates and munis (I think). I believe an article in Barrons had the same drift. I'm far from a bond expert so take that with a grain of salt.
@MikeM. It was JBBB that l was worried about - CLO fund. For now at least that worry has been proven wrong as many in that market are back to new highs and I have returned to some CLOs. Still leery though about the floating rate bank loan category. I actually like the MBS market especially the legacy non agency RMBS and hold a fund there. Also hold DHEAX due to its persistency of trend as well as CBYYX among a few others. With CBYYX though, this time of year you are one catastrophic hurricane away from disaster so don’t hold a large position.
But as economist Jim Bianco worries, there seems to be a record number of both the smart money and dumb money bullish on bonds. That seldom ends well.
I think looking at the positioning of a Total Return bond fund gives one the indication of that bond house thoughts about the direction of interest rates, assuming they do not tie themselves too hard to the AGG.
Gold keeps rising....the typical gold bar (~400 troy ounces x $2,500 spot price) is now worth $1M.
Of course, I keep my bullion stacked in a little fortress formation in the middle of my concrete panic room. ...just kidding
I think it will get nutty. Too old & conservative to join in the celebration. A couple of my funds have some limited exposure. Prefer to play it that way: PRPFX, GAA / Also own some investment grade Morgans. All that garbage tends to rise together.
Thanks @Junkster. I really appreciate your input. Out of all the options you mentioned, DHEAX strikes my fancy. I have to say, you sure do find the smooth trending funds, but I know that is your forte. I invested in CSOAX a few months ago. I know it is labeled HY by M*, but it has strategic in its name, so I'm guessing, hoping, it adjusts to changing conditions. I also started buying IGIB to get some intermediate corporate bond exposure, but that trend, though positive lately, is pretty bumpy. I've held the more conservative RPHYX, RSIVX and FLRN in my conservative withdrawal bucket for a while now.
I haven't closed a post with this in a while, but it is getting to that time... GO BILLS.
Gold keeps rising....the typical gold bar (~400 troy ounces x $2,500 spot price) is now worth $1M.
Of course, I keep my bullion stacked in a little fortress formation in the middle of my concrete panic room. ...just kidding
With USAGX I was able to turn a 5% position in the IRA into a 1.24% position since August 2011. Now that I'm approaching green, I'm wondering if I should hold on just a little bit longer or chuck that durn thang.
In my mind, playing a gold ETF versus playing the miners is 2 very different games. IAU has been a nice, reasonable trend for me since 2020. I know I couldn't handle trading in and out of miners to make a buck.
@WABAC: one could infer from your experience that all the other holdings in your IRA went up so much that the precious metals now represent only 1.24% of the account. Look on the bright side!
@WABAC: one could infer from your experience that all the other holdings in your IRA went up so much that the precious metals now represent only 1.24% of the account. Look on the bright side!
I do. But I can't brag about success all the time.
And I won't torture myself with thoughts of where that position would be if I had put the money in gold instead of miners.
@hank, I would hesitate to call any duration bond fund as a "hedge." It is a volatility damper or ballast, but IMHO only cash or T-bills or a skilled execution of a puts/shorts/options strategy constitutes a true "hedge".
@hank, I would hesitate to call any duration bond fund as a "hedge." It is a volatility damper or ballast, but IMHO only cash or T-bills or a skilled execution of a puts/shorts/options strategy constitutes a true "hedge".
It’s probably age showing. We old folks have a tendency to live in the past. However, in 2008 I was happy to hold Price’s GNMA fund (PRGMX). It rose +5.62% that year while the S&P tumbled about -38%. PRGMX also posted returns in the vicinity of 6% in the year before (2007) and the year after (2009). I don’t have the fund’s duration at the time, it’s typically about a 5-7 years. Even better was Price’s Long-Term Treasury Bond Index (PRULX) which rose +23% in 2008. Tell me longer dated high quality bonds aren’t a good equity hedge.
If you’re wondering how cash performed back then, 2008 began with the FOMC overnight lending rate at 3.5% and ended with the rate at 2.0%.
Nothing fancy here. We have been increasing total bond index fund since spring. Now shifting some floating rate bonds and high yield to BND and other investment grade intermediate term bonds. It is time to dial down the risk in case things get ugly, i.e. more geopolitical risk.
Like @Sven, lightening up on floating rate. Moving into low vol real estate income fund FRIFX which has trended well in the past and starting to again.
If you still like stocks and consider adding (bearing norecession) these vehicles seem extremely attractive if hold few yrs Been adding to IWM Continue dca into banks (kre xlf or dpst) seem attractive and already took off past few months but all these seem so high but they may go higher Growth stocks solar and EVs seem Beat down tremendously past 2 3 yrs and maybe revived again - Tan sedg enph rivn tsla Ccp stocks (yinn fxi) maybe options too since they also been beat down too harsh Retailers also benefits w low rates environments (lulu hd target low elf ulta)
@johnN, good to see you posting again. Bonds are low hanging fruits - say 5-7% total return with low to moderate risk. Stocks are richly valued right now. Swings between recession and euphoria may offer long term opportunities.
Stocks are richly valued right now.Swings between recession and euphoria may offer long term opportunities.
Truth. For the "major," famous, crowded name trades, eh? I have hung onto BHB regional bank in northern New England since rates began to rise in '22, was it? Finally paying off, and at a P/E of 11.8, not in the 20s or 30s like the Big Dawgs. Forward P/E is just 11.7.
On the other hand, Telus TS turned out to be a stinker. Sold it all recently. A value trap.
The market broadened out last few week to smaller stocks. I think better opportunities are here and not the big tech stocks. I use active managed funds for smaller cap stocks. Many smaller cap stocks are not profitable and end up as value traps as you stated.
Few funds I have good experience with are: FMI common stock, FMIMX. Mid cap blend. Also a Great Owl fund Osterweis Opportunity growth, OSTGX, small cap growth
Comments
Hank's got it. And msf offers that intermediate term bond funds are as far out on the curve as seems prudent to him.
PRSNX. 4.46 years (global, USD hedged.)
WCPNX 5.6 years
DODIX 6.22 years. Stretching things, eh?
DLFNX. 5.95 years
I own none of them--- yet. I'm thinking that when rates go down, my junky stuff will throw a party in the streets. Eh?
Party on, Derf
-There may be reasons to go further out if you believe rates will be lower than. Plain vanilla bonds might work better however, than a fund.
- I sometimes use longer term bond funds as a volatility hedge - but only the highest quality ones. Depends on a lot of factors like how volatile your portfolio is, what current interest rates are, how much growth you are willing to exchange for the reduction in volatility.
- I am surprised by the extent WEA has served to dampen equity volatility on down days. Might just be freakish exception. Have only owned it a couple months.
- I have my eyes on JMBS - mortgage backed bonds. High quality. Actively managed. Reasonable fees. It does tend to rally on big equity down days. But the flip side that it can fall quite a bit on solid equity days - much more than a short term bond fund typically does. Expected growth is low unless we enter another 2008 during which only the highest credit quality bonds held up.
On JMBS, I took some advice from something Junkster noted in another thread. Floating rate and mortgage backed securities may not be the best place to be going forward. Same with HY. The suggestion, as I remember, was high quality corporates and munis (I think). I believe an article in Barrons had the same drift. I'm far from a bond expert so take that with a grain of salt.
I wonder if @OldJoe's called bonds were for the Kaiparowitz project that was cancelled.
Growing up through that era is the main reason I'm not convinced we're out of the woods yet.
I speak only of short term hedges against equity volatility if that’s your game. Very few here mention hedging risk on their own. So, I assume it’s not important to most. Likely, they count on funds like JHQAX to do that for them.
@rforno did allude recently in the B/S thread that he opened a small short position on the S&P. Takes guts to hedge that way when the market feels like a locomotive endlessly climbing a mountain. I merely submit that high quality bonds might offer an alternative hedge. And yep, the higher up the ladder you go in credit quality and the farther out you go on the curve the stronger that hedge should be. In the case of higher credit quality, you sacrifice some yield. In the case of duration, you accept more risk of the unknown (the future of rates).
Re @Junkster. I’m in complete agreement with him on floaters and HY. Other than a relatively short duration muni HY fund I’m staying as far away as possible. MBS - I’m not really up to speed on. But I would never second guess Junkster.
I have never owned JMBS. Credit quality should be better than say BBB corporates. But perhaps I’m misguided about that. And I haven’t liked the action either watching it. GNMAs offer little return and a wild ride. Other than as a possible hedge against downside in equities I’d stay away. One intriguing thought (JMBS) is that it’s low cost for a managed fund - but still not drinking the Kool Aid.
Of course WEA is a wild ride. Most leveraged CEFs are. It’s an area I’m willing to gamble in, but not any type of recommendation. My mention was only that it has served to hedge on down days in the couple months I’ve owned it. (A surprise.) Not a recommendation in any way, shape or form. Most would be better off avoiding CEFs.
So, preparing for rate cuts,eh? Our portfolio remains about 60% income from bond fund ( BAGIX ) and Fidelity MMK'Ts. Obviously, the MMK'Ts won't benefit from rate cuts, but BAGIX would. BAGIX (Investment Grade, active managed) is 20% of our total portfolio, and we have a 'Draftkings' kind of bet for 2% of the total portfolio with the etf TMF (Direxion Daily 20+ Year Treasury Bull 3X). We don't usually have such a holding or for such a small percentage. We bought this last March for 'play time' investing. The investment will pay nicely, IF long term yields move down more.
But as economist Jim Bianco worries, there seems to be a record number of both the smart money and dumb money bullish on bonds. That seldom ends well.
Of course, I keep my bullion stacked in a little fortress formation in the middle of my concrete panic room. ...just kidding
I haven't closed a post with this in a while, but it is getting to that time... GO BILLS.
And I won't torture myself with thoughts of where that position would be if I had put the money in gold instead of miners.
If you’re wondering how cash performed back then, 2008 began with the FOMC overnight lending rate at 3.5% and ended with the rate at 2.0%.
https://www.cnbc.com/2024/08/20/stock-market-today-live-updates.html
Many old folks bring from their past, the experiences that allow them to build upon the present and the future.
https://stockcharts.com/freecharts/perf.php?Frifx
Been adding to IWM
Continue dca into banks (kre xlf or dpst) seem attractive and already took off past few months but all these seem so high but they may go higher
Growth stocks solar and EVs seem Beat down tremendously past 2 3 yrs and maybe revived again - Tan sedg enph rivn tsla
Ccp stocks (yinn fxi) maybe options too since they also been beat down too harsh
Retailers also benefits w low rates environments (lulu hd target low elf ulta)
Truth. For the "major," famous, crowded name trades, eh? I have hung onto BHB regional bank in northern New England since rates began to rise in '22, was it? Finally paying off, and at a P/E of 11.8, not in the 20s or 30s like the Big Dawgs. Forward P/E is just 11.7.
On the other hand, Telus TS turned out to be a stinker. Sold it all recently. A value trap.
Few funds I have good experience with are:
FMI common stock, FMIMX. Mid cap blend. Also a Great Owl fund
Osterweis Opportunity growth, OSTGX, small cap growth
Here are David’s profiles on OSTGX
https://mutualfundobserver.com/2020/09/osterweis-emerging-opportunity-ostgx/