With stock valuations high and bond yields low ... Where is the best place to put new money? I am also in a quandary. I don't see Covid disappearing and I think it will cause at the best a "W" recovery. While these extremely low interest rates do sorta justify the sky high PEs we are seeing, I am always leary putting more money into equities when valuations are stretched like this. We ( SP500) are at tops not seen since the dot.com bust ( But back then the 10 year treasury was yielding what 5%?)
The additional disaster is the basement low bond yields. The country might keep chugging along without inflation, but to believe this I think you have to assume there will be no economic recovery.
At some point, either covoid will be controlled, the market will blast off and inflation with it, and bonds crater, or covid will continue the economy sputter, bankruptcies take off and the market crash.
Thus you can either assume the worse and get a capital gain out of your Treasuries, or party on and hope American Ingenuity will beat Covid, convincingly.
I am light on equities but don't see bonds as providing the ballast they used to and am stuck in cash.
i have bought small amounts of blue chip dividend stocks, esp Health care, consumer staples etc staying away from REITS and Utilities, hoping to add more when the market tanks
If I felt comfortable with options I could follow some of the strategies to profit in both scenarios without risking the nest egg.
With stock valuations high and bond yields low ... Where is the best place to put new money? Hi sir...what are your thoughts about more junks bonds or small portions in good companies like att binds or deltair airline bonds/ford. More risks but more rewards.
We bought kohl's bond 24 months ago, they are asking us to consider give them options and calling them. Personally I think we are /maybe start of new bull market. We are in same boat thinking what to do w new monies. We owe lots taxations so lucky those bonds partly called so would prob will pay w these restore new monies to taxes
As stated before been buying Fidelity 2020, JNK and more bonds indexes in Mama retired portfolio. These are good long term sustainable vehicles for med long terms and capital preservations IMHO.. unless economy miraculously turn around extremely quickly and rates are set higher...I did read somewhere Feds likely to keep rates low for quite awhile so could be good for 12 24 months w these bonds. Think she has > 60s% bonds and very little equities
You can also look at corp bonds at schwab, all BBB rated or higher,, won't bankrupt but yields could be low 3 4 % (but could be much better than cash and at pars at what you are doing)...probably best continue Dca into those vehicles that did work out for you longer terms. why fix when its not broken?
Whatever you do could be good because you do have many options currently
A Tax-Free 5% Dividend Set To Soar This Fall
RYJUX reverse split
What do you hold in taxable accounts? Bummer! You have several choices:
1. If you wish to stay with Fidelity, you need to find another substitute global balanced fund.
2. If you are willing to open a brokerage at Vanguard, then you can buy all the Vanguard funds plus other on their NTF platform.
I took the second route when I rollovered my old 401(K) to either Fidelity or Vanguard. At that time I had Vanguard Primecap and Capital Opportunity funds that I want to keep and they were not available at Fidelity.
I consider VGWLX as a conservative value oriented funds. As you noted there are several growth stocks, Microsoft, Cisco System and Taiwan semiconductor on its top ten holdings, that suggested that Wellington is more flexible in their stock picking.
Thursday close @Derf,
One theory advanced by some is that what you observed is a reflection of people chasing the indexes / index funds higher and higher. (Call it
“The elephant chasing his tail” syndrome.) So, while several indexes were propelled higher by indiscriminate buying (including from the Robin Hood crowd), the overall market which is owned by (hopefully ) saner managers didn’t rise as much.
Here it is from one experienced observer. I’ve limited the excerpt which is from a paid subscription.
“ ... while today the popular stocks beneath the surface, whether that's Apple or Tesla, (continue) to melt up. It doesn't take much knowledge of historical valuations or an understanding of math for folks to realize that there are so many companies where the valuations are beyond absurd ..... When an index fund gets money, it just goes out and buys and the price makes no difference, which is not what occurs when an active manager gets money. They tend to use some common sense as to what might be too expensive to buy or too cheap to sell.” (Bill Fleckenstein / Aug. 21,
2020)
https://www.fleckensteincapital.com/dailyrap.aspx?rapdate=08-21-2020© Copyright 2003–
2020 by Fleckenstein
Capital.com LLC
Old_Skeet's Market Barometer ... Spring & Summer Reporting ... and, My Positioning Thx...
We picked up GM, bought fordbonds ytm 7.07% rated bb+ never bankruptcybefore, added more to vanguard wellington and vang2045, also got new commodities-silver bars...
For mama portfolio - bought more fidelity2020 and fbnd bnd pci...she is complaining making too much from portfolio last yr and paying more to uncle Sam this yr lol...I guess something is heading right directions. I told her If something drastic happens to 2021 election may not be a rosey pictures in terms of capital gains /stocks bonds performance/and taxations changes 2021
We Have Crossed the Line Debt Hawks Warned Us About for Decades The debt of the United States now exceeds the size of its gross domestic product. That was considered a doomsday scenario that would wreck the economy. So far, that hasn’t happened.
Here is one explanation for why that hasn't happened yet.....
.....since the 2008 financial crisis, traditional thinking about borrowing by governments — at least those that control their own currencies — has further weakened, as central banks in major developed markets became enormous buyers in government bond markets.
“Fiscal constraints aren’t nearly what economists thought they were,” said Daniel Ivascyn, chief investment officer for PIMCO, which manages nearly $2 trillion in assets, mostly in bonds. “When you have a central bank essentially funding these deficits, you can take debt levels to higher debt levels than people envisioned.”
https://nytimes.com/2020/08/21/business/economy/national-debt-coronavirus-stimulus.html
What do you hold in taxable accounts? I’ve tried to keep it simple and tax-efficient in taxable accounts. Our largest holdings in order are TAIFX, FZROX, FLTMX and FTABX. We also keep about a year’s worth of potential income needs in cash, currently mostly money markets. We had a CD ladder when interest rates are higher, but that is winding down, and we’re not reinvesting in CDs at current rates.
We used to have sizable amounts in PRBLX and PARMX, but they were having huge taxable capital gains distributions each year, so we transferred those funds to FZROX, which has a 0% expense ratio and minimal distributions. Aside from money markets and CDs, all of our investment income is from muni bonds.
Exciting New Territory for the S&P 500
What do you hold in taxable accounts? Yes, FSMEX opened again on April 1, 2020
1 Yr 3 Yrs 5 Yrs 10 Yrs Life
26.36% 21.42% 18.37% 19.91% 15.23%
Thanks for that. I'll keep an eye on it.
5 Automakers Lock In a Deal on Greenhouse Gas Pollution The five — Ford, Honda, BMW, Volkswagen and Volvo — sealed a binding agreement with California to follow the state’s stricter tailpipe emissions rules.
https://www.nytimes.com/2020/08/17/climate/california-automakers-pollution.htmlOne highly placed person feels that auto makers outside of these five will “produce far less expensive cars for the consumer, while at the same time making the cars substantially SAFER.” OTOH, "Stanley Young, a spokesman for California’s Air Resources Board, said the agreement achieved “continuous annual reductions in greenhouse gas emissions while saving consumers money.”
So which is it? Should someone looking at the auto industry invest in companies that make cars that may be less expensive off the shelf, or companies that make cars with potentially lower TCO, depending on miles driven, price of gas, etc.? (I ask this as someone who has put 3500 miles on our car since purchasing it three years ago.)
One benefit of the agreement is certainty for the five companies. Usually that's something the stock market likes.
“This represents consistency from a policy point of view,” said Bob Holycross, vice president for sustainability, environment and safety engineering with Ford.
“Whether it is from one political party to another or the changes from elections or what the makeup of Congress is, we have to have regulatory certainty beyond just political cycles governing the investments we make,” he said.
The next bubble: Passive investing in ETFs
What do you hold in taxable accounts? Yes, FSMEX opened again on April 1, 2020
1 Yr 3 Yrs 5 Yrs 10 Yrs Life
26.36% 21.42% 18.37% 19.91% 15.23%
