Chart of the Day

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Montecfo said:
This is why (IMHO) you want to avoid bond indices tied to the Agg.
Click to expand...

Well, it's a new year and I looked over my MC 401k holdings and performance. I hold a combination of SP500 fund (largest holding) and several 401k "age-based Life Time hybrid funds" which include some "Principal Bond Market Index SP" fund. The bond index fund percentage of holdings range from 9% for 2050 retirement date fund to 30% for 2025 retirement date.

My bond idx total exposure is around 8% of 401k balance. It is a new year and now would be a good time to address any potential exposure.

I want to retire ASAP.

Should I change my 401k AA to minimize the bond index risk?

I thought about rolling the 401k over to my traditional IRA (which has more options for bond/preferred stock exposure) but have read that the 401k has creditor/lawsuit protection compared to Traditional IRA holdings. Any thoughts on this?
 
Enough of Random Markets Trend Valuations Matter - In Long Run

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Born2Fish said:
Well, it's a new year and I looked over my MC 401k holdings and performance. I hold a combination of SP500 fund (largest holding) and several 401k "age-based Life Time hybrid funds" which include some "Principal Bond Market Index SP" fund. The bond index fund percentage of holdings range from 9% for 2050 retirement date fund to 30% for 2025 retirement date.



My bond idx total exposure is around 8% of 401k balance. It is a new year and now would be a good time to address any potential exposure.



I want to retire ASAP.



Should I change my 401k AA to minimize the bond index risk?



I thought about rolling the 401k over to my traditional IRA (which has more options for bond/preferred stock exposure) but have read that the 401k has creditor/lawsuit protection compared to Traditional IRA holdings. Any thoughts on this?
Click to expand...



I don’t know your age but another advantage of 401ks is being able to access them penalty-free earlier than IRAs thanks to the Rule of 55. My DW is doing this now and I will too, this year.
 
Montecfo said:
This is why (IMHO) you want to avoid bond indices tied to the Agg.
Click to expand...

And yet I notice that well respected “core” active index funds have a much higher exposure to BBB rated and below. DODIX holds 3x the amount of BBB compared to FXNAX (Fidelity US Bond Index) as well as exposure below BBB. Fidelity Total Bond Fund has almost 2x BBB compared to FXNAX plus more exposure below BBB.
 
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These charts would be a lot more interesting if you would add some comments to explain we're supposed to take away from the chart. Maybe I'm the only one though, and everyone else gets it.
 
prudent_one said:
These charts would be a lot more interesting if you would add some comments to explain we're supposed to take away from the chart. Maybe I'm the only one though, and everyone else gets it.
Click to expand...

I believe the BDI is a shipping index. One could assume if it's going down, fewer goods are being shipped around the world. But I may be incorrect.
 
To me. the index appears to be cyclical, and back to level of 2018/2019 changeover. That is my first glance.
 

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prudent_one said:
These charts would be a lot more interesting if you would add some comments to explain we're supposed to take away from the chart. Maybe I'm the only one though, and everyone else gets it.
Click to expand...
The bonds chart is showing that total quantity of lower quality bonds is increasing - while the actual financial quality of the range is in decline. The BDI is a shipping index which shows it is 78% cheaper to contract to ship something now than it was last summer, which either indicates a lack of demand for international shipping or an oversupply of freight availability. I view it as an indicator of future economic activity, but only as one piece of a bigger picture.

The most important chart is probably the amount and change in the debt holdings of the Fed.
 
prudent_one said:
These charts would be a lot more interesting if you would add some comments to explain we're supposed to take away from the chart. Maybe I'm the only one though, and everyone else gets it.
Click to expand...

I have always liked this thread BECAUSE THERE ARE FEW WORDS ATTACHED TO THE CHARTS.

It allows the viewer to see a picture that says a thousand words and THINK for THEMSELVES about the implications before listening to someone else’s interpretation.
 
I don't disagree, but when there is NO interpretation, and my intuition about the chart is wrong, I can't learn anything.
 
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Chart of the value of worldwide negative interest rate bonds, starting to turn up strongly again.
 
If you look at one of the above charts with Corporate debt, you could see with 8 trillion of corporate debt if 50% goes bad the FED needs 4-5 Trillion of those bonds in addition to funding the 2-3 trillion national deficit for 2020. Then you take the losses corporations are going to have that will be backstopped by US government and you have another 1-2 trillion. CNBC is calling for unlimited US government loans to any business or industry. so you'd end up with 10 trillion the FED would have to buy on top of the 1.5 trillion for unclogging the "plumbing" all while revenues plummet. Fed balance sheet will be approaching 15 trillion dollars at this rate.
 
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