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So, if you had to pick a space in the market to invest money until December 31, 2017, where would you go? And, let's say it's big money.....like $100k. I need your best picks......your Rock(s) of Gibraltar-type stuff. How sure are you? How good are you? Are you going for singles and doubles or going for the long ball? What say you??!! God bless the Pudd p.s. No more than 4 to 6 funds lest Ted gets upset. lol....
PRIDX ..... International "smid" 20 PRJPX.... Japan 30 MSCFX..... domestic small-cap 10 TBGVX Foreign Large Value. (I owned it long ago. Hedges to the US dollar.) 30 MAPOX dom. LV on the equity side. It's a "balanced" fund, includes bonds. 10 (I can't choose PRWCX, because it's closed to new investors.)
This is supposed to be just through the end of 2017. Alright, then...Will you remind me at the start of 2018 that I should have followed my own advice?
Here's what I just did with 10K that we won't need until late November. --- Put 100% into Price's Short-Intermediate tax free PRFSX. Keeping with your sports analogies, that's a bunt, offering the chance of (1) possibly moving a runner along, (2) perhaps getting on base somehow (3) but, most importantly, avoiding an inning-ending double play.
It would depend on how hard and fast that end of year date is. If you must pull money out then, I would follow hank's suggestion and bunt. However, I'd use cash, not bonds. For example, GSBank currently yields 1.20%, while PRFSX has an SEC yield of 0.85% (federally tax free).
The SEC yield is a reasonable approximation of what you'd get out of the fund if you sold at the end of your period. That is, it incorporates the declining value of premium bonds - bonds priced above par because their yield is above market. In a 28% tax bracket, you'll pretty much break even vs. the bond fund, but with no interest risk and no credit risk (FDIC).
If you want to go the short term muni route, consider BTMIX. Its SEC yield is above what you could get in a bank, even before you consider the tax savings. That's worth an infield single. The management team did a fine job at BMO before they moved over to Baird, which is itself a solid bond house.
I wouldn't go for extra bases in what amounts to the 8th or 9th inning unless I were way behind (i.e. needing to gamble on a big rally).
"Sure, except for its nontrivial dip starting last November which took till mid-Feb to recover from!"
This differs from PRFSX how? My point was that if one wants to use a short term muni fund, there are other options out there that can help justify the risk.
Three month recovery time is fairly insignificant if the deadline is not hard and fast
Was responding to BenWP's assertion; get a grip. Was not I re PRFSX either.
Sorry, race conditions in posts, especially when one takes time to compose them. Hard to tell what a given post is responding to without context. Many bond funds had dips in that timeframe.
>> If I wanted to be sure I still had the $100K in six months I'd put it all in PTIAX.
That is what I was responding to, with unclear mapping.
As for 'many bond funds', maybe, but compare shorter recovery of FSICX and nonexistent dip, or close, of PONDX, PDI, and PTY. Did not look at other Pimco etfs.
It would be instructive to look at multiple data points, i.e. other time frames in addition to that one recent bond market blip.
A fundamental analysis of the funds listed would highlight the fact that they tend to hold junk and thus track equities more closely than do pure investment grade bond funds. Over the short term that will make them more risky, even if their credit diversification adds to long term stability.
As to the CEF funds, they're leveraged (28%/PTI, 46%/PDI), which adds another layer of risk (and reward).
Something I've been meaning to post on is what strikes me as unappreciated risk profiles of non-vanilla investments. Leverage, embedded options (MBS), other forms of investment "engineering" can enhance performance on average. But ISTM that comes at an increased risk of catastrophic failure, by which I mean a disproportionately large and fast drops in value compared to vanilla securities.
Not likely to be sure, but more likely than with more mundane investments. It's that likelihood that seems to make them less well suited as "Rock of Gibraltar" investments, even if they are the best among their peers.
To continue with the sports metaphor, pumped up sluggers are good for walk off homers. Is that what's needed here?
At current stock & bond market valuation along with the short time period it would be small ball for me so I'd go with a six month CD which can currently be found with annual yield paying around 1.25%. Now, if the market were to have a good pullback, during the summer, I'd most likely go long the stock market heading into fall if the stars (so to speak) were properly aligned. But, under current conditions ... it's small ball to play the Fed's rising interest rate environment. Currently, about half of my cash invested in a CD ladder with maturities at 6 months, 1 year and 18 months.
A single is fine for that time horizon. I'd go with RPHYX or ZEOIX. I plan to put half of the proceeds from the sale of a house into RPHYX next month. I plan revisit that investment towards the end of the year....or if there is a substantial market correction before then...
Some thoughts thoughts from the right field bench.
First, my mention of PRFSX was in no way meant to be a recommendation. Doing a lot of business with TRP and having the various accounts there (Retirement & TOD) linked to various bank accounts made them an easy choice for me. Of course there are more profitable (or safer) options.
Second, the funds are earmarked for some home refurbishings in the late fall/early winter months, so we have more discretion in our case (carpet quality, type of furniture, etc.) than others might. I felt that putting the ball in motion in this game would be a good call. Bunting seemed a good way of taking a bit of risk while not grounding into a double or triple play. A fortuitous bounce in short term bonds could even allow for a safe slide into first. But, this is hardball. And should Mr. Market decide to serve-up a high hard one, I'm prepared to hit the deck, dust myself off, and than alter the game plan a bit - or make up the loss from other (bull-pen) resources.
Lastly, at risk of sounding like the broken record that is MonteCarlo, the first thing I always do when considering a new fund is read the Prospectus. The first thing I look at there is the 10-year fund performance chart. Over the last 10 years PRFSX has finished positive every year. It gained 3% in 2008, a harsh year for most investment types. Worst quarter was -1.38% in 2013. At current rates we're not talking home runs or World Series here. On a 10K 6-month investment, the gain/loss is likely to be only about $50-$100 - peanuts! Of course PH has 10 times the amount to invest (ball park franks?) - so do the math.
" Over the last 10 years PRFSX has finished positive every year."
The prospectus is dated November 29, 2016 so it does not include last year's -0.30% performance.
As I've written, a fund like this is a good suggestion for a moderate (6 mo - 2 year) time frame. For an investor using TRP, PRFSX is fine. I prefer other funds in the class, but I'm willing to waste my time and effort shopping around and managing multiple accounts. As you noted it isn't going to make a big difference one way or the other.
I continue to suggest that people look beyond simple numbers, whether they be 10 year fund performances or Monte Carlo simulations. These figures aren't adjusted for the fact that we've been in a 35 year bond bull market. Because of that large tailwind, almost any bond funds' past performance will look pretty good. Going forward, one needs to keep in mind that those tailwinds are diminishing if not reversing.
On the taxable front, I agree that something like RPHYX seems sensible. Though with $100K, RPHIX is available at a 0.24% lower ER. I'm not sure I'd move up from there to ZEOIX, but that fund has its fans and it does sit within the same space of funds.
>> Something I've been meaning to post on is what strikes me as unappreciated risk profiles of non-vanilla investments. Leverage, embedded options (MBS), other forms of investment "engineering" can enhance performance on average. But ISTM that comes at an increased risk of catastrophic failure, by which I mean a disproportionately large and fast drops ...
That would be awesome, and something you might want to do for a wider-read site than this one. A lot of PONDX owners would be interested if it was included.
" The prospectus is dated November 29, 2016 so it does not include last year's -0.30% performance."
-- Absolutely correct. I was aware of that from the Lipper stats, but overlooked it this morning. Thanks for the correction.
"As I've written, a fund like this is a good suggestion for a moderate (6 mo - 2 year) time frame."
-- I'm not even certain it's a good suggestion, but agree with your time-frame. At under 6-months I'm using it for something it wasn't intended for.
"I continue to suggest that people look beyond simple numbers ... These figures aren't adjusted for the fact that we've been in a 35 year bond bull market. Because of that large tailwind, almost any bond funds' past performance will look pretty good. Going forward, one needs to keep in mind that those tailwinds are diminishing if not reversing. "
-- A+ observation here. I'm afraid that even my (normally skeptical) self has been lulled a bit into complacency by that 35 year tailwind. New normal? Lots of fodder for another thread on that one.
It's hard to tell what you are asking. You want to invest only until end of year and you want to hit a single, double, home run? With that statement you are willing to lose principle, possibly a lot of principle. If you want guaranteed return and slight profit on your investment, there are a lot of on line money market accounts paying around 1%. If you are parking it for use later, that is what I would do - have done.
As pointed out by others its hard to know what the op is really after and how big a deal loss of principal is. but since no one else has suggested it I will go with FFRHX or perhaps the similar TRP fund. DEfinitly not an ETF as I want management
Hi Skeeter! I will try to keep it short. My problem is one side of the 401 (the company side).....the money has to stay there. You can't move it to the brokerage side (I'm sure I got the memo but don't remember when this happened). Soooooo, brokerage is now all in and I need $cash$......can't get any. Was going to keep 401 in retirement but not now. It's my money and you make the rules.....I think not. So I have a lump sum coming soon. It's going into this account (401), so I must wait. Then, going to Fidelity-IRA so there will be cash to invest as I don't want to take Vanguard funds into Fidelity. There will be a pile of cash to invest, so, hence the question. I just picked a date. The end of the year sounded good at the time. God bless the Pudd
Comments
You'll be looking at a 6% return to year end, eh?
50/50 in FSPHX and PONDX, as the dollar value is too low for PIMIX, so a bit will be lost to ER.
Second place choice would be DSEEX, the whole boat load worth. I am allowed a choice two, yes?
PRJPX.... Japan 30
MSCFX..... domestic small-cap 10
TBGVX Foreign Large Value. (I owned it long ago. Hedges to the US dollar.) 30
MAPOX dom. LV on the equity side. It's a "balanced" fund, includes bonds. 10
(I can't choose PRWCX, because it's closed to new investors.)
This is supposed to be just through the end of 2017. Alright, then...Will you remind me at the start of 2018 that I should have followed my own advice?
rocklike ? --- some good short-term-bond etf
homer swing? --- CGMFX
or an individual stock. Barnes. Some biopharm. A fang, or all of them.
Come on, a wack question.
else put half in something like REXX and pray that nat gas prices take off
The SEC yield is a reasonable approximation of what you'd get out of the fund if you sold at the end of your period. That is, it incorporates the declining value of premium bonds - bonds priced above par because their yield is above market. In a 28% tax bracket, you'll pretty much break even vs. the bond fund, but with no interest risk and no credit risk (FDIC).
If you want to go the short term muni route, consider BTMIX. Its SEC yield is above what you could get in a bank, even before you consider the tax savings. That's worth an infield single. The management team did a fine job at BMO before they moved over to Baird, which is itself a solid bond house.
I wouldn't go for extra bases in what amounts to the 8th or 9th inning unless I were way behind (i.e. needing to gamble on a big rally).
GABCX might be a better bet, maybe, in the mostly-nonbond space, and there are others of course
This differs from PRFSX how? My point was that if one wants to use a short term muni fund, there are other options out there that can help justify the risk.
Three month recovery time is fairly insignificant if the deadline is not hard and fast
I would use an equal mix of DSEEX, GLIFX, QLEIX and PIMIX.
Kevin
Was responding to BenWP's assertion; get a grip.
Was not I re PRFSX either.
>> If I wanted to be sure I still had the $100K in six months I'd put it all in PTIAX.
That is what I was responding to, with unclear mapping.
As for 'many bond funds', maybe, but compare shorter recovery of FSICX and nonexistent dip, or close, of PONDX, PDI, and PTY. Did not look at other Pimco etfs.
A fundamental analysis of the funds listed would highlight the fact that they tend to hold junk and thus track equities more closely than do pure investment grade bond funds. Over the short term that will make them more risky, even if their credit diversification adds to long term stability.
As to the CEF funds, they're leveraged (28%/PTI, 46%/PDI), which adds another layer of risk (and reward).
Something I've been meaning to post on is what strikes me as unappreciated risk profiles of non-vanilla investments. Leverage, embedded options (MBS), other forms of investment "engineering" can enhance performance on average. But ISTM that comes at an increased risk of catastrophic failure, by which I mean a disproportionately large and fast drops in value compared to vanilla securities.
Not likely to be sure, but more likely than with more mundane investments. It's that likelihood that seems to make them less well suited as "Rock of Gibraltar" investments, even if they are the best among their peers.
To continue with the sports metaphor, pumped up sluggers are good for walk off homers. Is that what's needed here?
First, my mention of PRFSX was in no way meant to be a recommendation. Doing a lot of business with TRP and having the various accounts there (Retirement & TOD) linked to various bank accounts made them an easy choice for me. Of course there are more profitable (or safer) options.
Second, the funds are earmarked for some home refurbishings in the late fall/early winter months, so we have more discretion in our case (carpet quality, type of furniture, etc.) than others might. I felt that putting the ball in motion in this game would be a good call. Bunting seemed a good way of taking a bit of risk while not grounding into a double or triple play. A fortuitous bounce in short term bonds could even allow for a safe slide into first. But, this is hardball. And should Mr. Market decide to serve-up a high hard one, I'm prepared to hit the deck, dust myself off, and than alter the game plan a bit - or make up the loss from other (bull-pen) resources.
Lastly, at risk of sounding like the broken record that is MonteCarlo, the first thing I always do when considering a new fund is read the Prospectus. The first thing I look at there is the 10-year fund performance chart. Over the last 10 years PRFSX has finished positive every year. It gained 3% in 2008, a harsh year for most investment types. Worst quarter was -1.38% in 2013. At current rates we're not talking home runs or World Series here. On a 10K 6-month investment, the gain/loss is likely to be only about $50-$100 - peanuts! Of course PH has 10 times the amount to invest (ball park franks?) - so do the math.
The prospectus is dated November 29, 2016 so it does not include last year's -0.30% performance.
As I've written, a fund like this is a good suggestion for a moderate (6 mo - 2 year) time frame. For an investor using TRP, PRFSX is fine. I prefer other funds in the class, but I'm willing to waste my time and effort shopping around and managing multiple accounts. As you noted it isn't going to make a big difference one way or the other.
I continue to suggest that people look beyond simple numbers, whether they be 10 year fund performances or Monte Carlo simulations. These figures aren't adjusted for the fact that we've been in a 35 year bond bull market. Because of that large tailwind, almost any bond funds' past performance will look pretty good. Going forward, one needs to keep in mind that those tailwinds are diminishing if not reversing.
On the taxable front, I agree that something like RPHYX seems sensible. Though with $100K, RPHIX is available at a 0.24% lower ER. I'm not sure I'd move up from there to ZEOIX, but that fund has its fans and it does sit within the same space of funds.
>> Something I've been meaning to post on is what strikes me as unappreciated risk profiles of non-vanilla investments. Leverage, embedded options (MBS), other forms of investment "engineering" can enhance performance on average. But ISTM that comes at an increased risk of catastrophic failure, by which I mean a disproportionately large and fast drops ...
That would be awesome, and something you might want to do for a wider-read site than this one. A lot of PONDX owners would be interested if it was included.
Thanks for the additional insights.
Now that you have been to the board and consulted the Wizzard(s) ... hopefully, gainning some good wisdom ... What would you do?
I will try to keep it short. My problem is one side of the 401 (the company side).....the money has to stay there. You can't move it to the brokerage side (I'm sure I got the memo but don't remember when this happened). Soooooo, brokerage is now all in and I need $cash$......can't get any. Was going to keep 401 in retirement but not now. It's my money and you make the rules.....I think not. So I have a lump sum coming soon. It's going into this account (401), so I must wait. Then, going to Fidelity-IRA so there will be cash to invest as I don't want to take Vanguard funds into Fidelity. There will be a pile of cash to invest, so, hence the question. I just picked a date. The end of the year sounded good at the time.
God bless
the Pudd