I knew we hit the top ...

[SoonToRetire]

... when I saw this forum

[TromboneAl]

I think you forgot the link again, Soon.

[SoonToRetire]

Originally Posted by TromboneAl

I think you forgot the link again, Soon.

No, I meant this forum, the stock picking forum.

[Sam]

That's funny!

[dex]

Good point.

[brewer12345]

Meh, nothing new. Market goes up, market goes down. There is money to be made in both cases. Since I was up about 30% since mid-january, I can't say it was a huge shock to see a correction. Justwish I had sold a touch more before the downleg started.

What is actually surprising this time is that the bond market has taken it in the butt at the same time as the stock market got hit. Pretty unusual, I would say.

As in just about all the past corrections, a few well chosen purchases when everyone is panicking will almost certainly prove to be very profitable.

[SoonToRetire]

Originally Posted by brewer12345

As in just about all the past corrections, a few well chosen purchases when everyone is panicking will almost certainly prove to be very profitable.

I agree. I no longer invest in individual stocks, but have dry powder that I'll pour into my balanced funds if we get a significant downleg. We're due for one but, then, we've been due for one for a few years now. When was the last time the S&P had a 10% or more correction? If I'm not mistaken I think it was back when the tech bubble burst.

[cute fuzzy bunny]

I have enough dry powder to do some heavy damage to a small country.

[Nords]

Originally Posted by cute fuzzy bunny

I have enough dry powder to do some heavy damage to a small country.

Speaking of powder kegs, how's the house sale going?

[cute fuzzy bunny]

Painting is almost done. Carpet starts tuesday or wednesday next week. Up for sale by friday, i'd imagine.

Then we'll see how it goes. Should show better than anything else in the same value range, given its got all new paint, carpet and appliances.

[bright eyed]

Originally Posted by cute fuzzy bunny

I have enough dry powder to do some heavy damage to a small country.

atchway ethay alktay aboutway ethay ydray owderpay, ethay
atriotpay actway isway atchingway ouyay!

[cute fuzzy bunny]

Shoot I had to use the pig latin to english translation page on that one.

Which by the way, the atriotpay folks also probably have engaged...

Imagine if a major terror plot was put upon us and it turned out that all of their communications slipped by the feds because they used pig latin. That'd make our WWII usage of Navajo seem paltry in comparison.

[LOL!]

Originally Posted by SoonToRetire

I agree. I no longer invest in individual stocks, but have dry powder that I'll pour into my balanced funds if we get a significant downleg. We're due for one but, then, we've been due for one for a few years now. When was the last time the S&P had a 10% or more correction? If I'm not mistaken I think it was back when the tech bubble burst.

Every other equity category had a more than 10% correction last year from May to June. SPY, MDY, IWM, EFA, EEM were down 8%, 12%, 14%, 16%, and 26%, respectively.

SPY was down more than 10% in the first 3 months of 2003.

[bright eyed]

Originally Posted by cute fuzzy bunny

Shoot I had to use the pig latin to english translation page on that one.

Which by the way, the atriotpay folks also probably have engaged...

Imagine if a major terror plot was put upon us and it turned out that all of their communications slipped by the feds because they used pig latin. That'd make our WWII usage of Navajo seem paltry in comparison.

do ya think they're that sophisticated?

and i'm not a total geek, i used the translator too...

[bpp3]

Come to think of it, a bond picking forum would be more useful to me at this point, since it seems like that is where all my new money is going these days. (Which is also probably a market top signal, heh.)

[brewer12345]

Originally Posted by bpp3

Come to think of it, a bond picking forum would be more useful to me at this point, since it seems like that is where all my new money is going these days. (Which is also probably a market top signal, heh.)

That's a tough one, simply becausethe bond market is not nearly as liquid and open to retail investors as the equity market is. Unless you are buying treasuries at auction or agencies and munis at issue, the brokers screwing you frictional costs on corporate trades generally eat up much of the potential return. If you are willing to buy beaten down stuff and junk, you may be able to do OK, but you have to be able to do credit analysis.

If you buy stuff other than treasuries/agencies/munis at issue, I would suggest confining yourself to NYSE-listed bonds and stuff that trades on an exchange like a stock.

[bpp3]

Originally Posted by brewer12345

That's a tough one, simply becausethe bond market is not nearly as liquid and open to retail investors as the equity market is. Unless you are buying treasuries at auction or agencies and munis at issue, the brokers screwing you frictional costs on corporate trades generally eat up much of the potential return. If you are willing to buy beaten down stuff and junk, you may be able to do OK, but you have to be able to do credit analysis.

If you buy stuff other than treasuries/agencies/munis at issue, I would suggest confining yourself to NYSE-listed bonds and stuff that trades on an exchange like a stock.

What I have available locally is mostly sovereigns (US, France, Germany, Australia, NZ, Canada...), but not at auction. The bult-in markup from the broker for a bond purchased from inventory tends to run around 1%, which for, say, a 5-year holding period comes to roughly an effective expense ratio of 0.2% (more for shorter, less for longer, obviously). This doesn't seem too bad to me, so I have been buying them, but is there anything I may be overlooking here?

Other than that, there is mostly stuff from World Bank and similar entities (Asian Development Bank, State Bank of Bavaria, etc. -- all AAA entities), denominated in various currencies, which can be acquired at issue. Higher yield than the comparable sovereign, but of course somewhat higher risk, presumably. Any opinion on these? I have gone for a couple of these in the past when a sovereign of the desired currency/maturity has not been available.

One thing I stay away from is "step-up" bonds or bonds with complicated maturation rules (the currency of maturation depending on exchange rate movements, e.g.). They look to me like invitations to get skinned. I also avoid corporates, on the principle that there is probably too much equity risk built into them, of which I have already enough via the stock market.

[brewer12345]

Originally Posted by bpp3

What I have available locally is mostly sovereigns (US, France, Germany, Australia, NZ, Canada...), but not at auction. The bult-in markup from the broker for a bond purchased from inventory tends to run around 1%, which for, say, a 5-year holding period comes to roughly an effective expense ratio of 0.2% (more for shorter, less for longer, obviously). This doesn't seem too bad to me, so I have been buying them, but is there anything I may be overlooking here?

Other than that, there is mostly stuff from World Bank and similar entities (Asian Development Bank, State Bank of Bavaria, etc. -- all AAA entities), denominated in various currencies, which can be acquired at issue. Higher yield than the comparable sovereign, but of course somewhat higher risk, presumably. Any opinion on these? I have gone for a couple of these in the past when a sovereign of the desired currency/maturity has not been available.

One thing I stay away from is "step-up" bonds or bonds with complicated maturation rules (the currency of maturation depending on exchange rate movements, e.g.). They look to me like invitations to get skinned. I also avoid corporates, on the principle that there is probably too much equity risk built into them, of which I have already enough via the stock market.

Seems like a reasonable strategy. On the sovereigns, just make sure you stick with top shelf credits (AA or better) and you should be fine. I haven't honestly looked at the world bank, etc., but I guess I would pay attention to who the guarantor is and what the entity's credit profile is. I'd probably be comfier with the State Bank of Bavaria and some of the Landesbanks than the ADB or the world bank, personally. I tend to view the Federal Home Loan Bank as equivalent to the US govt, but with a smidge higher yield.

The complicated structures are also best generally avoided. The one area I will play in is shorter term callables. Last month I bought a 1.5 year FHLB bond. It was callable at 6 months (one shot opportunity). For accepting this (minor) risk, I got 35BP more yield than 1.5 year paper and about the same as 6 month paper. If the trade goes against me, its short term AAA paper, so no big deal.

When the credit markets crack (and they will), be ready to buy some corporates. They will become a very attractive deal at some point.

[ziggy29]

Originally Posted by brewer12345

What is actually surprising this time is that the bond market has taken it in the butt at the same time as the stock market got hit. Pretty unusual, I would say.

Not really. When the stock market is falling mostly because of inflation and interest-rate fears, bonds to tend to "take it in the butt" along with stocks.

When stocks are falling because of slow growth or fears of a recession, that tends to cause interest rates to drop and THAT creates a bull market in bonds. But this market is more afraid of inflation than slower growth, thus betting interest rates will move up if anything...and taking bonds down with stocks.

What's more unusual, IMO, is that gold has also been taking it in the butt lately. Usually when market action is dominated by inflation fears, that would be bullish for gold, but not lately. It seems cash is king right now.