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Old 07-13-2008, 12:55 PM   #21
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They are probably right but I find it to be cute that bond fund managers (financial industry experts) who likely had no idea this was coming and were probably leveraged to the hilt, are now assuring us everything is ok since "they are too big to fail". This is too much.
I can see how you might think this in general. But I don't think this generalization applies to the bond gurus at Metropolitan West.

Some other papers from them: MetWest Our Thoughts

Also a general note: If the bond market is not concerned about agency debt (given that the credit spreads have not seriously widened on agency paper in spite of the agency stock doing so poorly), money markets should have even less worry.

Audrey
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Old 07-13-2008, 03:17 PM   #22
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there's a world of difference between holding Fannie Mae and Freddie Mac bonds and holding their stock ...mmfunds should be okay.
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Old 07-13-2008, 03:17 PM   #23
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Hopefully my WAMU account is safe since it's FDIC insured. I notice that the stock is under $5 so the stockholders are probably nervous. Looking at Indymac it took it about 2 months to go from $5 to near zero now. These are the times to understand the different risk levels for different financial instruments and who is taking on the most risk. A few months ago when Countrywide was in the center of the news, Larry Swedroe said he was advising a relative to put money into their CD's which were paying better then average because of the bad news. Apparently he viewed those insured CD's as extremely low risk. Perhaps the WAMU account is paying well right now for similiar reasons.
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Old 07-13-2008, 03:24 PM   #24
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I can see how you might think this in general. But I don't think this generalization applies to the bond gurus at Metropolitan West.

Some other papers from them: MetWest Our Thoughts

Also a general note: If the bond market is not concerned about agency debt (given that the credit spreads have not seriously widened on agency paper in spite of the agency stock doing so poorly), money markets should have even less worry.

Audrey
I don't know anything about them, just lumped them in. Sorry if they don't deserve it.

P.S. I just read one of their latest articles "This time is different". They made the bullish case for buying distressed MBS. It think it was written in early June. They may be right, but maybe not, I'm not sold.
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Old 07-13-2008, 07:20 PM   #25
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P.S. I just read one of their latest articles "This time is different". They made the bullish case for buying distressed MBS. It think it was written in early June. They may be right, but maybe not, I'm not sold.
These guys are known for sometimes taking a very long term view and walking out pretty far on the risk curve. It's good to realize that before you invest in one of their bond funds - you can suffer some serious short term gyrations.

Audrey
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Old 07-13-2008, 07:24 PM   #26
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FWIW - sure enough the Fed and Treasury spent the weekend working on a plan to provide a more explicit "backstop" to Fannie and Freddie.
US spells out Fannie-Freddie backstop plan

Audrey
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Old 07-13-2008, 07:30 PM   #27
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FWIW - sure enough the Fed and Treasury spent the weekend working on a plan to provide a more explicit "backstop" to Fannie and Freddie.
US spells out Fannie-Freddie backstop plan

Audrey
Good call, the SP500 futures are up 11 points on the news.

This story is also out there:

Government not expected to help more companies: Financial News - Yahoo! Finance

What does it all mean?
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Old 07-13-2008, 07:31 PM   #28
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Good call, the SP500 futures are up 11 points on the news.

This story is also out there:

Government not expected to help more companies: Financial News - Yahoo! Finance

What does it all mean?
If I tell you. Will you go crazy and call me names?
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Old 07-13-2008, 07:34 PM   #29
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If I tell you. Will you go crazy and call me names?
Not if you are nice about it
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Old 07-13-2008, 07:34 PM   #30
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Not if you are nice about it

Well never mind then. I wouldn't be nice.
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Old 07-13-2008, 07:36 PM   #31
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Well never mind then. I wouldn't be nice.
Each of us has to evaluate the risks we take
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Old 07-13-2008, 07:39 PM   #32
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Each of us has to evaluate the risks we take
Well when you are getting 6% for your annuities you can throw out crazy things right..
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Old 07-13-2008, 07:52 PM   #33
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Well when you are getting 6% for your annuities you can throw out crazy things right..
Just to set the record straight, I'm not sure where you are coming from. I do believe that if I buy a SPIA at age 53 and live to age 86 using current Vanguards payouts, I will be getting an IRR of 6%.

I could go back and show you a few older links where several people, even a few who are apparently not my friends anymore, confirmed that the IRR is 6% on that investment.

You, and my best friend, still don't believe it?
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Old 07-13-2008, 07:55 PM   #34
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Just to set the record straight, I'm not sure where you are coming from. I do believe that if I buy a SPIA at age 53 and live to age 86 using current Vanguards payouts, I will be getting an IRR of 6%.

I could go back and show you a few older links where several people, even a few who are apparently not my friends anymore, confirmed that the IRR is 6% on that investment.

You, and my best friend, still don't believe it?
Whats with the personal attacks?
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Old 07-13-2008, 07:57 PM   #35
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Whats with the personal attacks?
Just answer my question please, do you believe it or not?

P.S. I waited about 20 minutes, no answer. Maybe I've been purged, or just got put on another ignore list. SPIA annuities are not really a horrible investment. If you are risk adverse they are likely comparable to the return you can get from CD's or bonds with no volatility. You have Insurance Company Risk (and possibly increased inflation risk) though, don't forget that. For those who care, the IRR for a SPIA is around 6% if you take it out at 53 and live to 86. Many of you would have a similar IRR if you think you will live to the mid to late 80's. It goes up, peaking over 7% if you live long enough. If you die at the table age of around 78 or 79, it drops to about 5.25%. Why don't we just all agree that is true (or actually do something to prove it is not) and move on instead of dredging this up over and over again.
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Old 07-14-2008, 11:28 AM   #36
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Just answer my question please, do you believe it or not?

P.S. I waited about 20 minutes, no answer. Maybe I've been purged, or just got put on another ignore list. SPIA annuities are not really a horrible investment. If you are risk adverse they are likely comparable to the return you can get from CD's or bonds with no volatility. You have Insurance Company Risk (and possibly increased inflation risk) though, don't forget that. For those who care, the IRR for a SPIA is around 6% if you take it out at 53 and live to 86. Many of you would have a similar IRR if you think you will live to the mid to late 80's. It goes up, peaking over 7% if you live long enough. If you die at the table age of around 78 or 79, it drops to about 5.25%. Why don't we just all agree that is true (or actually do something to prove it is not) and move on instead of dredging this up over and over again.
I guess I, or this thread, must have been restricted because I get emails with responses but they don't show up here. Maybe the truth is too painful, too much.
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Old 07-14-2008, 03:33 PM   #37
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Hopefully my WAMU account is safe since it's FDIC insured. I notice that the stock is under $5 so the stockholders are probably nervous. Looking at Indymac it took it about 2 months to go from $5 to near zero now. These are the times to understand the different risk levels for different financial instruments and who is taking on the most risk. A few months ago when Countrywide was in the center of the news, Larry Swedroe said he was advising a relative to put money into their CD's which were paying better then average because of the bad news. Apparently he viewed those insured CD's as extremely low risk. Perhaps the WAMU account is paying well right now for similiar reasons.
Hmmm...maybe I was too confident, maybe I should panic? WAMU took a 35% drop today to $3.23 per share. I may need some hand holding . And we're going on a long vacation next week.
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Old 07-14-2008, 04:07 PM   #38
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Back to the original focus of the thread...if an institution with the size and integrity of Vanguard ever breaks the buck (ie, fails to bail out a money fund whose net asset value has fallen below $1.00), I'd hope by that point to be long only canned goods and ammunition. That scenario is indeed a long way off, not to be fretted over today.

Tom
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Old 07-14-2008, 04:13 PM   #39
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Hmmm...maybe I was too confident, maybe I should panic? WAMU took a 35% drop today to $3.23 per share. I may need some hand holding . And we're going on a long vacation next week.
Your WAMU account is FDIC insured, right? I think that as long as you are under the $100K limit, you will be fine.
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Old 07-14-2008, 04:20 PM   #40
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I found another thread on the same or similar topic as this thread, over at Bogleheads. I guess I should have looked there first! Anyway, it has 30 posts so if anyone is interested here it is:

Bogleheads :: View topic - Prime Money Market Fund F.May & F.Mac exposure
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