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.
Support MFO
Donate through PayPal
LewisBraham
Hi Hank,
Your satire came across very well. Don't worry about the user name.
Best,
Lewis
I would say all bonds and bond funds are affected by duration, but if you hold an individual bond to maturity you don't notice it. If you choose to sell that 5-year TIPS in a rising rate environment prior to maturity, you would realize losses from t…
@larryb You are correct. When the reverse occurs and rates fall, bonds will have a significant rally just so long as they do not default. With a falling rate scenario, generally in a recession, the concern becomes credit risk as opposed to duration.…
If you look at a fund's average duration, theoretically for every 1 year of duration, the fund should fall one percentage point for every one percentage point increase in interest rates. So, if a fund has a duration of six years, and rates rise from…
The shorter the maturity of a TIPS fund or individual bond, the more it acts like a pure inflation hedge and less like a Treasury bond. As the maturity increases, it encounters the same duration risk, the same interest rate risk as regular Treasurie…
Not a bad strategy, but it’s a mistake to compare past performance to future expectations as in “I don’t own a single bond fund that can come close to that over the past five years and only one that tops that over 10 years.” It’s the next five- and …
@BennyB Karl Rove agrees with you, but that doesn’t mean his ads accurately reflect Warren’s position on banking regulation and bailouts:
https://cbsnews.com/news/crossroads-elizabeth-warren-responsible-for-bank-bailouts/
@Sma3 I am retired without a pension, so what I got is all I am going to get! I see you're factoring in Social Security and, hopefully, Medicare to help pay your bills, which, although not enough for many people, is nothing to be sneezed at. That s…
@Yogibearbull That sounds plausible. Would both divest here or just Credit Suisse? I would think just CS as it is the one that received government assistance.
Agreed. I’m fairly certain there are computerized quantitative trading systems that react immediately regarding rate news, selling stocks at the slightest whiff of an increase and buying on any declines. So, the market overreacts.
Not a large stable of U.S.-sold funds at either company, but they may have many more for European investors. I would expect some of the funds will merge or liquidate and there will be manager and strategy shifts.: https://am.credit-suisse.com/us/en…
@larryB Hey!!!! Recessions are a part of life in our system. They come and they go. For whatever the reason the next recession is always somewhere in the future. But they are inevitable.
I'm fine with accepting this idea so long as there is a social…
It seems less likely to me to be a trigger of a recession than an indicator that we are already in the early stages of one because of the aggressive rate increases. These bank failures were caused by rates surging quickly in the first place, so they…
Just a heads up that there is a fair amount of finger wagging from the usual sources where I suspect Baseball gets his info that SVB is a "woke bank" and that's why it failed. Apparently, the bank made a few loans to ESG concerns and celebrated gay …
@sfnative This summarizes and links to the three-part expose the NYT did on arbitration in 2015: https://citizen.org/news/epic-nyt-expose-tells-in-depth-story-of-how-forced-arbitration-denies-our-rights/
@Crash It sounds like you can handle the vol, Crash, but still only you know for sure what your situation is. I think the thing to do is what Sven said, first have an asset allocation plan and then stick to it. Ask yourself how many months of an eme…
That would be tricky for a public mutual fund. Also, I imagine that the, say, thousands of accounts at Schwab might count as one "omnibus account." I'm not sure how they calculate that. But I've seen a number of times funds launched in the same styl…
@Devo. The GIPS report is in the link I just provided, here again: https://ncgrowth.com/wp-content/uploads/2023/03/Small-Cap-Growth-2022.pdf
GIPS is the performance reporting done for private institutional accounts that have been independently audit…
I remember Jundt, one of the few mutual funds to do any hedging way back when. Still, it is instructive to look at the GIPS report for private accounts here: https://ncgrowth.com/wp-content/uploads/2023/03/Small-Cap-Growth-2022.pdf Recently, they've…
To me the weak link at brokers and banks isn't necessarily the FDIC or SIPC, but the formal agreement to undergo arbitration in the event of problems that they make you sign before opening an account. If anything goes wrong, the arbitration system i…
Most funds unless they have a flexible go-anywhere investment objective are evaluated based on performance relative to their fund category peers. If a manager runs a tech sector fund and tech stocks are down 20% in the past year but the fund is only…
@Crash I'm not sure what more you could expect from Seafarer. The fund's beaten 91% of its emerging market fund peers in the past five years and 88% in the past ten with less volatility and downside risk. That's a strong record. It sounds like you h…
Well, since we don't know Crash's age and financial situation today as compared to the 2008 crash, we don't know if he can handle it. That was--hard to believe--15 years ago. It's a mistake to assume everyone should keep a stiff upper lip, keep calm…
I think Olstein and Dreifus can afford to be concentrated from a balance sheet perspective, but there are of course other risks concentration brings. The regional banks Olstein owns probably won't go bankrupt. That doesn't mean, however, regional ba…
RYSEX also has a CPA accountant manager: Charles Dreifus. I also think the more concentrated a fund with fewer holdings is, the more such forensic balance sheet analysis is necessary. The manager with 100 stocks can worry less about a single problem…
I feel many fund companies including this one would benefit from having a CPA specializing in forensic accounting and detecting problematic balance sheets on staff. But very few fund companies have such employees, choosing the CFA or MBA manager/ana…
@larryb I was thinking the same thing. VW certainly has had its own scandals. I wonder what Subaru, Toyota and the other Japanese makers are doing with EVs.
Stocks are different from commodities, though, as to who owns them and how they're trading. Entire nations and oil companies themselves buy and sell oil futures. This move in oil is rather unsettling.
AndyJ is right about trend following. Managed futures funds have trouble adjusting during inflection points when trends suddenly shift. One thing I wonder if the smartest managers aren't doing is adjusting the duration of their signals. Markets move…
@WABAC But the chance for an average saver to get a safe return of 5-6% on their money will raise Maggie Thatcher from the dead, legitimize neocolonial revanchism, bring back the Cold War order, destroy unions that no longer exist, and, wait for it,…
Inflation can indeed be a real PITA for average people, but not having a job to pay for anything is worse for many people than being employed but having to pay more for everything. A balance of these interests needs to be recognized in the rate disc…
There are parallels to the 1970s but it's not the same today and the 1970s and their resolution weren't the way they are often described: https://foreignpolicy.com/2022/07/01/global-economy-policy-financial-crisis-1970s/
@hank But you might make an argument that inflation harms the wealthy more than the working class.
There are a number of I think mistaken assumptions in your post. One is that the wealthiest keep most of their money on deposit. The more money someon…
I see 1-year Treasuries at 4.9% currently, and six month ones at 5.2%: https://ustreasuryyieldcurve.com/
But that assumes you are buying Treasuries directly I imagine.
