A bullish assessment of the rebound from the march lows and the prospects for the year ahead...

American consumers almost never disappoint us. I often have observed that when Americans are happy, they spend money and when they are depressed, they spend even more money—because shopping releases dopamine in our brains, which makes us feel good.
The October 2 update of the Atlanta Fed’s GDPNow model showed that Q3’s real GDP is tracking at a record jump of 34.6% (at a seasonally adjusted annual rate, or saar) following the record 31.4% drop during Q2. That’s certainly a V-shaped recovery so far.
...there is still enough “potential” fiscal stimulus left over to provide “kinetic” energy to consumer spending over the next few months, in our opinion.
The pace of the recovery is bound to slow in 2021, and there could be setbacks. However, so far, the recovery has been impressive.

blog.yardeni.com/2020/10/tale-of-two-economies-housing-related.html

https://www.sec.gov/Archives/edgar/data/720309/000119312520266471/d46556d497k.htm
AMG Managers Cadence Emerging Companies Fund
Supplement dated October 8, 2020 to the Summary Prospectus, dated October 1, 2020
The following information supplements and supersedes any information to the contrary relating to AMG Managers Cadence Emerging Companies Fund (the “Fund”), a series of AMG Funds III (the “Trust”), contained in the Fund’s Summary Prospectus (the “Summary Prospectus”), dated as noted above.
At a meeting held on October 8, 2020 (the “Meeting”), the Trust’s Board of Trustees (the “Board”) approved the appointment of GW&K Investment Management, LLC (“GW&K” or the “Subadviser”) as the subadviser to the Fund on an interim basis to replace Cadence Capital Management LLC (“Cadence”), effective October 8, 2020 (the “Implementation Date”). The appointment of GW&K was pursuant to an interim subadvisory agreement between AMG Funds LLC (“AMGF”) and GW&K (the “Interim Subadvisory Agreement”), to be effective until the earlier of 150 days after the termination of the former subadvisory agreement between AMGF and Cadence with respect to the Fund (the “Former Subadvisory Agreement”), which occurred on October 8, 2020, or the approval of a new subadvisory agreement between AMGF and GW&K by the Board and Fund shareholders. At the Meeting, the Board also approved the longer-term appointment of GW&K as the subadviser to the Fund, a new subadvisory agreement between AMGF and GW&K (the “New Subadvisory Agreement”), and the submission of the New Subadvisory Agreement to Fund shareholders for approval. The rate of compensation to be received by GW&K under the Interim Subadvisory Agreement approved by the Board is the same rate of compensation that Cadence would have received under the Former Subadvisory Agreement.
In connection with the hiring of GW&K, effective as of the Implementation Date, the Fund (i) changed its name from AMG Managers Cadence Emerging Companies Fund to AMG GW&K International Small Cap Fund, (ii) made changes to its investment objective, principal investment strategies and principal risks, and (iii) replaced its existing benchmark index with the MSCI World ex USA Small Cap Index.
In addition, effective as of the Implementation Date, the Summary Prospectus is amended as follows:
All references to the name of AMG Managers Cadence Emerging Companies Fund shall refer to AMG GW&K International Small Cap Fund.
The section titled “Investment Objective” on page 1 is deleted and replaced with the following:...
Also from AMG website,
https://www.amgfunds.com/products/gwk_international_small_cap_fund_mecax.html
Fund Notice:
Effective October 8, 2020, the subadviser of AMG Managers Cadence Emerging Companies Fund (the “Fund”) changed from Cadence Capital Management LLC to GW&K Investment Management, LLC (“GW&K”). The appointment of GW&K is pursuant to an interim subadvisory agreement in anticipation of shareholder approval of a definitive subadvisory agreement. Also effective October 8, 2020, the Fund changed its name to AMG GW&K International Small Cap Fund and changed its investment objective, principal investment strategies and principal risks. For more information regarding these and other changes to the Fund, please see the Fund’s prospectus.

solid analysis, imo
https://nymag.com/intelligencer/2020/10/wall-street-got-what-it-wanted-from-trump-ready-for-biden.html

In the current interest rate environment, I would require "near cash" to:
(a) be only slightly volatile - the more volatile a fund is, the longer one might have to wait to cash out even accepting a modest loss;
(b) have relatively small max drawdowns - it could take "forever" to recover from a significant drop
Bonds are more predictable than stocks in the sense that one can say, given a particular condition, how a particular bond will behave. If one bond with basic attributes (maturity, duration, credit quality) similar to another pays more, there's a reason.
Even (and perhaps especially) if a fund has never exhibited a risk, if it is yielding more, there's a risk there somewhere. The rule of thumb I follow is that the less obvious the risk and the less likely it is to happen, the more catastrophic it will be if the risk is realized.
I think one objective for "near cash" is to reduce the likelihood, however small, of such a catastrophic event. "Near cash" is not an investment one is planning to hold for many years. It does not have the time to prove its long term mettle.
VCORX has 2½ times the volatility of BSV (3.67% vs 1.51% over three years). It has a duration of 6.4 years (per Vanguard). No wonder it (and BIV) took off since March 20th. But do you really expect interest rates to drop again just as much? That would be a drop to 0.0%. (Between March 18th and October 8th, 7 year treasury rates dropped from 1.08% to 0.54%; another 0.54% drop would take them down to 0.0%.)
Regarding BSV, this still carries some interest rate risk, some volatility, some credit risk. Its 30 day SEC yield is 0.34%. These don't compare favorably with no-penalty CDs from Ally Bank (11 month, 0.60% - 0.65%), and Marcus Bank (7 month, 0.55%). Though the ETF does have the advantage of finer granularity (you don't have to cash out everything) and ETFs can be easier to invest in than CDs with an IRA.
As to bonds in general, I substantially agree with one of the quotes in the Barron's article that @hank cited in another thread: "Rieder recommends more stocks and, in the bond portfolio, only half in traditional fixed income, with the other half split between alternatives and cash."
Personally, I'm not into alternatives, but increasing equity and using cash rather than bonds to protect against sequence of return risk makes sense to me. Especially since one doesn't do much better with bonds these days than with cash unless one is taking outsized risks.

And, it will undoubtedly go up more from here....for better or worse...

The Treasury Department won't put out final numbers for fiscal year 2020 until later this month. But if the CBO's estimates are on the mark, the country's total debt owed to investors -- which is essentially the sum of annual deficits that have accrued over the years -- will have outpaced the size of the economy, coming in at nearly 102% of GDP, according to calculations from the Committee for a Responsible Federal Budget.
The debt hasn't been that high since 1946, when the federal debt was 106.1% of GDP.

https://cnn.com/2020/10/08/economy/deficit-debt-pandemic-cbo/index.html

One Excerpt:

Accept that you are flawed, he says, and you will have a chance of doing the right thing. “Do not aim to be coldly rational when making financial decisions,” he says. “Aim to be pretty reasonable. Reasonable is more realistic and you have a better chance of sticking with it for the long run.”
Mr. Housel offers two examples of reasonableness: Try to defer gratification, recognizing that wealth is created by not spending today so that you have more options in the future. And try to maintain a long horizon.
“Time is the most powerful force in investing,” he says. “It makes little things grow big and big mistakes fade away.”

mutfund/money-hacks-psychology-of-money

@derf
This takes an hour and has no specific names, ( other than mutual fund these guys run GRHAX) but they compare the current values in energy to "death of Equities" BusinessWeek cover 1981, Gold etc..
https://thefelderreport.com/2020/10/07/leigh-goehring-on-the-generational-opportunity-in-energy-stocks-today/
XOM market cap now equal to NEE and ZOOM. Which one do yo think will be higher in a year or two (CVX probably safer bet though)

@Roy,
The maximum drawdown data I posted was from MFO premium that started from Jan 1, 2020 to 8/30/2020.

@msf
So I don't have a TRP "brokerage account". Honestly I did not know they had one else would have opened that one when I transferred IRA to them from an old 401k several years back.
My best bet is to see if they use someone else for ACATS clearing.
Next best bet is to file that IBKR form and see if they will wire money directly to IBKR account.
Last resort I have to do things old fashioned way and have them mail be an FBO check I can send IBKR. This is 2020. IF I have to do this, no one is ever going to Mars, ever.

Things to chew on from Brian Gilmartin at SA:
Summary
° There seem to be too many different types of risks developing around the Presidential election.
FD: the usual --> do nothing
° Personally, I still think Financials in general and bank stocks in particular are more "value" than "value trap" but more patience will be required.
° It's another dry week for S&P 500 earnings releases, but the fireworks really start once again in the week of October 12th, 2020 when the big banks and many financial companies kick off 3rd quarter earnings.
FD: I don't see why anybody would look at Financials or invest in one category when most just need /want SPY/QQQ. Financials don't move markets anymore because the category is much smaller than before without much growth.
Article Here

Yes, the IRS might vigorously pursue your small potatoes. For several years, though underfunded, the IRS has chosen to continue auditing low earners at the same rate while reducing the number of audits on high earners.
https://www.propublica.org/article/irs-now-audits-poor-americans-at-about-the-same-rate-as-the-top-1-percent
Apparently, the IRS doesn't "get" Willie Sutton. Banks may be harder to break into than a tenement, but the payoff still makes them the better target. Same for tax evaders.

In 1989, the real estate mogul Leona Helmsley was sentenced to four years in prison for tax evasion after she tried to write off improvements to her estate in Greenwich, Conn., as business expenses.
One of her lawyers was Alan Dershowitz, who defended Mr. Trump during the impeachment proceedings.
The United States attorney who brought the charges? Rudolph W. Giuliani, who appeared this week with Mr. Trump to denounce The Times’s reporting and has called Mr. Trump a “genius” for finding ways to shrink his tax bill.

https://www.nytimes.com/2020/10/06/business/trump-taxes-hair.html

For the most part, this is a solid, sensible piece, worth the read. However, one part, quoted below, gives me pause. The recommendation is solid, the representation of the tax laws, less so.

For example, while selling VOO (Vanguard S&P 500 ETF) to buy SPY (SPDR S&P 500 ETF) would definitely generate a wash sale, selling VWO (Vanguard FTSE Emerging Markets ETF) to buy IEMG (iShares Core MSCI Emerging Markets ETF) wouldn’t.

How do I know? Because Betterment, one of the domain experts on tax loss harvesting, lists IEMG as the security alternate for VWO in their taxable accounts.

While no sane tax advisor would suggest swapping VOO for SPY when harvesting a loss, Betterment like many professionals does not say that this is definitely a wash sale. Rather, Betterment writes:

Less clear is the treatment of two index funds from different issuers (e.g., Vanguard and Schwab) that track the same index. While the IRS has not issued any guidance to suggest that such two funds are “substantially identical,” a more conservative approach when dealing with an index fund portfolio would be to repurchase a fund whose performance correlates closely with that of the harvested fund, but tracks a different index.

https://www.betterment.com/resources/tax-loss-harvesting-methodology/#wash-sales
Fairmark (Kaye Thomas) writes:

Because there is no direct authority dealing with this question, reasonable minds may disagree. It’s always possible to identify differences between funds managed by different companies, such as expense ratios and tax load. Some people conclude on this basis that funds maintained by two different companies are never substantially identical.
My feeling is that those differences aren’t enough to prevent the two funds from being substantially identical. The point of the wash sale rule is to determine whether you’ve changed your position relative to the market. If you can lay the price graph for your new investment on top of the price graph for the old one and never see a significant disparity (as would be the case for two high quality S&P 500 funds), the investments should be considered substantially identical for purposes of the wash sale rule.

https://fairmark.com/investment-taxation/capital-gain/wash/substantially-identical-securities/
What's interesting is the choice of S&P funds. Forget about their ERs and tax efficiency. They have different structures; SPY cannot reinvest stock dividends as they are received. So while your exposure to equities remains relatively steady (near 100%) over time in VOO, it follows a sawtooth pattern in SPY. Equity exposure as a percentage of portfolio declines over the quarter as unreinvested dividends accumulate. Then they are distributed, and the fund is once again nearly 100% invested in equities. Is this enough to make a substantial difference? I wouldn't bet on it, but it is a clear distinction.

This report focuses mostly on CEFs but it does discuss some OEFs including IOFIX.

We noted how AlphaCentric Income Opportunities saw a "run on the fund" where shareholders all liquidated en masse causing a downward spiral in prices.

(Writing about CEFs)....most NAVs are still well below where they were in February even when including the distribution paid since. As we've noted, these securities take the elevator down and stairs back up. We still expect prices to return to around an average price of 90 cents on the dollar but that it would take at least 6 months and more like 18-24 months to do so.

https://seekingalpha.com/article/4377703-update-on-non-agency-mbs-sector

A successful tax loss harvesting strategy should generate a tax loss in the short run without generating an actual monetary loss in the long run. What I mean by this is that you should never make it an explicit goal to lose money just for the tax benefits. Losing money is always bad for you as an investor. As Warren Buffett’s once said:
The first rule of investment is don’t lose. And the second rule of investment is don’t forget the first rule. And that’s all the rules there are.
However, a good tax loss harvesting strategy can generate losses as they appear without losing money in the long run. How does it do this?
First it sells a security at a loss, and then it takes the proceeds from that sale and buys an “alternate security” that behaves similarly, but not identically to the original security. Why does it purchase an alternate security? Because it wants to generate a tax loss without changing your exposure to the underlying asset class.
For example, let’s say you owned $10,000 of VWO (Vanguard FTSE Emerging Markets ETF) in a taxable account as of January 1, 2020. The optimal tax loss harvesting strategy would have sold your VWO on March 23, 2020 (i.e. the coronavirus bottom) to generate the largest tax loss possible, and then would have immediately taken the proceeds from that sale ($6,817) and bought shares of IEMG (iShares Core MSCI Emerging Markets ETF) to replace it.

tax-loss-harvesting

So beware that the bonds in the fund are consisted of lower quality, i.e. junk bonds. In the longer term the risk-reward tilts in his favor. The drawdown in March 2020 was -13.7%. The fund recovered in 6 months and keeps on moving upward.

And the moment he's gone I'll be bailing.

So beware that the bonds in the fund are consisted of lower quality, i.e. junk bonds. In the longer term the risk-reward tilts in his favor. The drawdown in March 2020 was -13.7%. The fund recovered in 6 months and keeps on moving upward.

I never heard of Victory Capital (VC) until they bought USAA Asset Management.
VC susbsequently replaced MFS on the USAA World Growth Fund and the USAA International Fund.
I'm fairly certain other changes were made as well.

Things to chew on from Brian Gilmartin at SA:
Summary
° There seem to be too many different types of risks developing around the Presidential election.
° Personally, I still think Financials in general and bank stocks in particular are more "value" than "value trap" but more patience will be required.
° It's another dry week for S&P 500 earnings releases, but the fireworks really start once again in the week of October 12th, 2020 when the big banks and many financial companies kick off 3rd quarter earnings.
Article Here