SFBayDuck
Footballguy
I'm awfully close to triggering a rebalancing band (I use +25%/-15%) in one of my accounts on GOVZ.
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Stock Thread (12 Viewers)
- Thread starter St. Louis Bob
- Start date
I'm awfully close to triggering a rebalancing band (I use +25%/-15%) in one of my accounts on GOVZ.
Desert_Power
Footballguy
Hah, I was just thinking I need to look up some individual STRIPs to buy.
SFBayDuck
Footballguy
I own GOVZ and EDV.
Sand
Footballguy
The Fed follows the market. And at least right now the market is saying that the money supply is too high and inflation is high and going yet higher. As we found out in the 70s, once you stoke the inflation fires, they are hard to put out. We have done a spectacular job in the last few years of throwing C4 into the inflation fire.
I wouldn't be surprised at rate increases this year. I anticipate no cuts.
Sand
Footballguy
MMT is moronic. That's the nice version - the accurate comments about this would get me banned.
Redwes25
Footballguy
I would set up a bond latter. I have Fidelity and they help set them up for you.
If buying in taxable account consider munis.
Nugget
Footballguy
Taxation would be one tool. Stimulus checks were tax cuts and people want to blame them for inflation. I think lack of things to buy was a larger cause (supply side). Either way, many of the policies that are being discussed could be inflationary. I tried to time the market and got bit. Don't fight the Fed.
Redwes25
Footballguy
We are not getting to 6% on the 30 year.
Ridgeback
Footballguy
Try owning TLT for the last 5 years.
Desert_Power
Footballguy
What you're really fighting here is expectations that these policies will actually be implemented and that their effects will not be recessionary
BeTheMatch
Footballguy
I've got some munis (very few, and they stink) in my taxable. This is in traditional IRA.
When I see 4.68% and know my brokerage accounts are 4.2-4.3, it doesn’t want to make me lock in for 10 years. Not sure when I will hit retirement but I’d say I’m definitely in a 10 year range. I’m a bit on the aggressive side mainly because we had to be to even think about retirement 10 years ago. That said, locking in at a rate just above the cash rate makes me more want to build up my cash position for what seems like an inevitable bear market. What I would hate more is to see a 2018, 2020, 2022 or god forbid even worse happen again and see tons of bargains that I can’t buy.
SFBayDuck
Footballguy
Interesting look at the performance of various asset classes in 2024.
Any surprises to y'all?
I heard somewhere that this is the first time in history that both gold and the S&P were up 25% or more in the same year.
Any surprises to y'all?
I heard somewhere that this is the first time in history that both gold and the S&P were up 25% or more in the same year.
BeTheMatch
Footballguy
And what if it goes down? That's great to keep it in money markets right now (and for a while now), but eventually, the rates have to go down, you'd think. If that happens, then it will be beneficial that I locked that rate in longer term. I'm only doing it with my "preservation" money in a traditional IRA.
BeTheMatch
Footballguy
I am keeping some smaller amount of cash on the sidelines in my Roth to use when the market crashes. Not a big piece or anything. But some. Just because. I'm not a time the market guy with any meaningful amount of money.
I’m talking about going to a lot of cash, like not losing money in the market. If interest rates comes down as I would expect if there is a draw down, that would likely push stocks back up. When you look over 10 year periods, its more likely to get those 10% type returns.
I just wouldn’t want to lock in an extra 0.4% for 10 years when I feel like we are getting close to being able to get some bargains. Might be a rough road, but it could be another opportunity and it’s worth the risk IMHO for me. Everyone’s different and if I felt like I could lock in everything I needed, I’d probably go more conservative as well.
I may be wrong but damn, I don’t feel really good about the market right now. Not thinking crash but feeling like it’s very frothy.
Todem
Footballguy
It is…..I have been building cash personally. Any tax harvesting I did is sitting in cash as well and now that we are in a new year I am trimming and building more cash . A correction or two should more than likely happen this year. Nothing wrong with having 10-20% sitting in some tactical cash to deploy on an inevitable whoosh down of 10-12%
I still think we finish positive for 2025 in the mid to high single digits but what’s wrong with buying stuff on sale?
The market is waiting (in the very short term) with baited breath to see what policy will be, tariffs, and if the administration is truly going to cut the deficit (this is the 800 LB gorilla long term).
I don’t see myself fully retiring for 20 more years…..I am typically 95% equity in my portfolios and 5% Alternatives. Bonds? Not in my personal portfolio’s. Not with my time
Horizon.
Clients is a totally different story. And rightfully so. They have different time horizons and risk tolerances than I do.
⚡DEADHEAD⚡
Footballguy
Constellation Energy. You are spectacular. I wish EXC would follow in your track.
How do hedge funds do it? For the sake of argument, let's say a retail investor like one of us schlubs is sitting on $100K in equities. Let's also say we want to hedge against a potential 10% drop in the S&P. My understanding is that hedge funds go both long and short, meaning to mimic them we would keep a chunk of that $100K in equities but we would devote some amount of it to buying puts, as an example, as a hedge.
Again. let's assume a 10% drop of SPY which is trading at $583 at the moment. That would imply that we'd lose $10K of our portfolio if it's all in equities like SPY or other correlated tickers. And for the sake of simplicity, let's use a time horizon of a few months so we'll look at March puts. A 10% drop of SPY would take it to $525.
So let's say that we purchase a put that expires March 21 with a strike price of $580, again just for the sake of argument, which currently costs $1400 to buy. That put, should the SPY fall to 525, would be worth at least $5500, a profit of about $4000. That means to protect our nest egg of $100K, we should buy 3 puts for a total outlay of $4200 (so that now we have $95800 going long and $4200 short). Then we would be resilient to a 10% drop in SPY since we'd lose $9580 in the longs but we'd make $12K in the shorts.
Does that all sound correct? If so, it means we would constantly be devoting about 4% of our portfolio to protecting to a 10% downside risk. In most three month time horizons, that does not happen so we would lose much of that 4% hedge money. That's the crux of my question--how can they keep laying out hedging protection if nine times out of ten they know it's going to be lost? Of course, in a rising market, the vast majority of our money is going long so we will still stand to make a gain, just not as much as if we did not have the hedge on.
The only natural conclusion seems counterintuitive which is that these funds probably hedge much more than to break-even on a 10% decline. I suspect they load up on the short side when they think this is a more likely scenario since the short bet pays essentially four to one. Obviously their long/short mix is constantly changing based on market conditions and expectations. But does it sound plausible that they'd ramp up the short side quite a bit to get that heavy payout on a big-time pullback? Can a retail investor mimic this or is it a recipe to slowly drain your principal via all this hedging? Sorry, just thinking out loud here and I don't know who else to talk to about these questions.
Again. let's assume a 10% drop of SPY which is trading at $583 at the moment. That would imply that we'd lose $10K of our portfolio if it's all in equities like SPY or other correlated tickers. And for the sake of simplicity, let's use a time horizon of a few months so we'll look at March puts. A 10% drop of SPY would take it to $525.
So let's say that we purchase a put that expires March 21 with a strike price of $580, again just for the sake of argument, which currently costs $1400 to buy. That put, should the SPY fall to 525, would be worth at least $5500, a profit of about $4000. That means to protect our nest egg of $100K, we should buy 3 puts for a total outlay of $4200 (so that now we have $95800 going long and $4200 short). Then we would be resilient to a 10% drop in SPY since we'd lose $9580 in the longs but we'd make $12K in the shorts.
Does that all sound correct? If so, it means we would constantly be devoting about 4% of our portfolio to protecting to a 10% downside risk. In most three month time horizons, that does not happen so we would lose much of that 4% hedge money. That's the crux of my question--how can they keep laying out hedging protection if nine times out of ten they know it's going to be lost? Of course, in a rising market, the vast majority of our money is going long so we will still stand to make a gain, just not as much as if we did not have the hedge on.
The only natural conclusion seems counterintuitive which is that these funds probably hedge much more than to break-even on a 10% decline. I suspect they load up on the short side when they think this is a more likely scenario since the short bet pays essentially four to one. Obviously their long/short mix is constantly changing based on market conditions and expectations. But does it sound plausible that they'd ramp up the short side quite a bit to get that heavy payout on a big-time pullback? Can a retail investor mimic this or is it a recipe to slowly drain your principal via all this hedging? Sorry, just thinking out loud here and I don't know who else to talk to about these questions.
Sand
Footballguy
I think we've just locked this in.
Bossman
Footballguy
Obviously I don't know enough about bonds... maybe someone here can learn me.
Wanting to diversify and move some money into a "safe space" I purchased Vanguards Core Plus bond mutual fund.
I was assuming this is a 5%- 8% guarantee like a CD or a savings account. "bonds go UP". After 45 days it's down 1.5%.
Apparently bonds loose value? Or is it because it's a mutual fund and not buying bonds straight up?
I could get a guaranteed 4% in a CD at my bank. This bond stuff is silly.
Wanting to diversify and move some money into a "safe space" I purchased Vanguards Core Plus bond mutual fund.
I was assuming this is a 5%- 8% guarantee like a CD or a savings account. "bonds go UP". After 45 days it's down 1.5%.
Apparently bonds loose value? Or is it because it's a mutual fund and not buying bonds straight up?
I could get a guaranteed 4% in a CD at my bank. This bond stuff is silly.
jvdesigns2002
Footballguy
I definitely lean this way. On top of that-I think that inflation just got a lot more messy and sticky with the California wildfires. We’re looking at a lot of people displaced and in need of homes in an already short supplied housing market. The amount of regulations in California will make the rebuilding process slow and this could raise the prices of lumber and keep it high for a while. Insurance rates will rise across the country. If the main motivation of the fed is to fight inflation—I think that their biggest chance of success to do this is to maintain the strength of the dollar or to strengthen it further.
jvdesigns2002
Footballguy
You can get pretty close to 4% guaranteed interest in a lot of savings accounts without the restrictions that come with a CD. I opened up a savings account with US Bank several weeks back—and the interest was something like 3.7%
Redwes25
Footballguy
Bonds trade constantly (just like stocks so they can lose value or gain value) and bonds prices move inversely to interest rate. So when interest rates go up the price of bonds go down so that the yield on your bond matches the market rate. When interest rates go down the price of your bond goes up. If you are buying a mutual fund (just like a stock fund) its price will fluctuate with the underlying value of the assets it own.
There are benefits of both approaches of owning in a mutual fund and own individual bonds. If you own individual bond and hold to maturity then you don’t have to worry about price action (though you will see it in your brokerage account and can impact you if you sell prior to maturity). So if you are just looking to get income then I recommend that approach. Owning a fund itself acts as a bit of hedge though so can have value. This is not always the case (today for an example and most notably 2022) but usually when stock prices are going down there is a flight to safety and bond prices go up as people are selling stocks and buying bonds pushing yield/interest rate on bonds down and the price up. Also if you want returns over like 5 percent you will only get that in a mutual fund unless you are buying individual HY bonds which I wouldn’t recommend and not sure you could do anyway as an individual (I do think there is a place for HY). Also no guarantee of any of those returns.
I personally own a fair chunk of my portfolio in fixed income - typically 20 to 25 percent. I buy mutual funds in my retirement accounts mostly treasuries and some HY. I am not a big fan of IG corporates. I don't want my retirement accounts just being bonds so to keep that ratio or so in non-retirement accounts I buy individual munis given I live in a high tax jurisdiction (actually highest in country given I am an NYC resident) and my marginal rate is at the highest rate bracket. I am also looking at them as more of interest income and preservation of value (vs. hedge aspect of owning fund). I am also not a big fan of muni bond funds for a few reaons I won't get into and I don't want more income that is taxable in non-retirement accounts so don't do other bond funds. I stick to AAA and AA rated with a ladder approach (e.g. buying a bunch of bonds that all mature in sequential order such as buying 1-, 2-, 3-, 4- and 5-year bonds all at once and then reinvesting when the near term maturity bond matures back in a new 5-year). I like Munis for me in my tax situation given my after tax yield typically is higher then treasuries and very little credit risk. Of course your mileage may vary.
Depending on what you are looking for there are many options and most brokerage houses can help you set this up and help you buy them if doing individual bonds. I use Fidelity personally and like them. I hope this helps and let me know if other questions. Another option is closed end bond funds, which typically are at a discount to underlying assets so gives a bit of protection to trading (though not much).
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SFBayDuck
Footballguy
Leverage. Credit lines, options, futures. Don't think most of them are just buying SPY as their equity exposure. With that comes increased risk, hence the hedge part.
At least that's my (very) basic understanding.
tommyGunZ
Footballguy
As a Californian who wants extremely expansive and aggressive home building, I hope that one of the silver linings from this awful tragedy is that it forces some changes to remedy the huge problem. Every crisis is an opportunity - hopefully Newsom uses this to cut a bunch of regulation and CA will build build build.
Desert_Power
Footballguy
7.24% Mortgage rates
Sand
Footballguy
Do what? Underperform passive investments year after year?
The SP 500 Index Out-performed Hedge Funds over the Last 10 Years. And It Wasn't Even Close
In 2007, Warren Buffett entered into a famous bet that an unmanaged, low-cost S&P 500 stock index fund would out-perform an actively-managed group of high-cost hedge funds over the ten-year period from 2008 to 2017, when performance was measured net of fees, costs, and expenses. See previous CD...
www.aei.org
Bossman
Footballguy
You're obviously making money or you wouldn't be dealing with bonds. The ladder approach is a pretty neat idea.
From what little I understand, bonds pay interest so it seems strange that this can lose value to the point where I'm losing money.
Seems that a Tax advantage would be the main draw to investing in bonds (municipalities) but what good is that if you're in the negative?
I'll be seeking "interest income and preservation of value" elsewhere. I'd rather have the additional income and pay tax on it than lose money and not pay tax.
SFBayDuck
Footballguy
Doubled my cost basis....today!
RedWes25 pretty much answered all of this, but you are still receiving the guaranteed coupon rate that you thought you would receive even if the fund goes down in price. If at the time you purchased it was yielding 5% and you invested $10,000, you will still receive the $5,000/year in coupon payments.
I don't buy bonds, don't like them.
Redwes25
Footballguy
Well number is 500 a year in coupon payments a year but that is basic concept. However, the cost to buy that stream of income payments can vary. Think of it this way - as interest rates go up and I am looking to buy a bond of an older issued bond is yielding 5% but another bond is yielding 5.5% then no one goes and buys that 5% bond. So to sell the bond and for me to buy it - you have to buy it at a dscount to par (100% price) so the the yield (interest coupon payments plus amount you get paid at maturity) equals the 5.5% bond. So you go buy it at some discount to par (I am not sure of exact math for price). Same is true if interest rates decrease. My bond I bought at 5% is worth more because new bonds issued now only pay interest rate of 4.5% so if I sell it I am only going to take a price that nets the new buyer 4.50% and I will sell it for a price above par.
If you hold a bond at issue (hard for an individual investor) and hold to maturity then no issues with any of this stuff and you get paid back your original amount you bought it for.
Obviously other routes to get a stream of income - CDs, savings account, money market fund. Usually pay a bit less then a bond and not a fixed rate of income (other than CD but that is usually for a short period).
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fruity pebbles
Footballguy
What are the thoughts on AMD, off nearly 50% from its high?
Sand
Footballguy
Bondpocalypse, part 2. The current action is the biggest increase in yields after a first rate cut ever.
Jerome - hanging head time, bud. There was no reason for a cut and you caved. An increase is in order at the moment and it's pretty awful we're hearing nothing of the sort.
Jerome - hanging head time, bud. There was no reason for a cut and you caved. An increase is in order at the moment and it's pretty awful we're hearing nothing of the sort.
Pretty incredible that it's had such a haircut and yet the PE is still over 100. I prefer Micron.
fruity pebbles
Footballguy
They had some extraordinary expense from purchases I believe. Their forward PE is only in the low 20s.
It’s definitely cheap now IMHO. I’m not buying anything new right now anyway and may sell more if we have another swing up. I still have some AMD and I’m just holding it. If I find something I like better, I could easily sell it and for that something better.
fruity pebbles
Footballguy
You planning for a sharp down move?
Not sure but the positive momentum sure seems gone. I still like my top positions, but it does feel like we are in a rut right now.
Orange&Blue
Footballguy
It's all bright green!!
General Malaise
Footballguy
UAMY presenting at a Maxim conference tomorrow. Lots of attention on Antimony at the moment. Curious if its use as a fire retardant is getting some attention at the moment.
SFBayDuck
Footballguy
Yeah this stock stuff is totally easy.
Desert_Power
Footballguy
Even bonds joining the party.
Dr. Octopus
Footballguy
Bob Sacamano
Footballguy
Northland Capital Markets analyst Michael Latimore maintains SoundHound AI (SOUN.NaE) with a Market Perform and raises the price target from $6 to $8.
I do not accept their thesis for 2025 market performance.
I do not accept their thesis for 2025 market performance.
Bob Sacamano
Footballguy
McBokonon
Footballguy
Leaving behind a pretty decent track record. Good short sellers are valuable, IMO.
