Balanced Portfolio market frustration continues..

[mikes425]

Is it just me? Hopefully not. As bond FUNDS continue to suffer NAV losses or otherwise do basically nothing to offset equity volatility. Not the carnage of last year as far as NAV but...just a frustration to see, essentially, bonds perfectly canceling out any equity gains on a consistent basis. My bond funds are Ultra Short and Short Term. I've not exited into guaranteed 5% Money Markets. I already have plenty of candidates to max out any tax loss harvesting and have basically done that.

Occasional, hourly FA continues to suggest things generally may be rocky for a year or more longer before any significant stabilization and presumably, before bonds begin to act the way they have traditionally been 'intended to' perform in terms of a role in a traditional long-term-strategy, 50/50 AA, PF. At this stage is seems rather pointless to be bailing on the bond funds to achieve marginally better dividend/yield.

Thanks for allowing me to vent, haha. I guess in the grand scheme of things, as someone basically semi retired and with "enough" as far as FireCalc etc would suggest -- it gives me a little consolation to reflect on someone's comment on this a couple of months ago or so... something to the effect of... "at least you can consider that your PF has experienced pretty much the worst the market can throw at it" and...held up without a bigger drawdown than last year brought from the disastrous bond dive.

 

[JBTX]

It is frustrating, but I’ve always been prepared for it. It happened in the 70s/early 80s and I always knew perpetually lowering interest rates were unlikely.

I actually feel pretty good about bonds and TIPS right now. I’m not sure about stocks, one could easily argue that they are overvalued given what has happened to stocks. But I’m not changing anything materially.

 

[bloom2708]

Having 2-3 years of expenses in cash/money market/high yield savings doesn't seem to be a bad idea. The Vanguard Money Market (Settlement Fund) is 5.28%.

That is sure better than when cash was .3%.

Everything is clear looking backwards. Have enough cash to let your portfolio do what it does. If stocks go to zero and bonds go to 25% we'll all be in the same boat. At least cash would be 20%

 

[target2019]

I was talking to a Schwab VP financial consultant (aka Sales Guy) today. Altogether that's two calls, more than an hour of my time. I'm trying to be a nice guy. What's in it for me?

Reminded me of car salesmen from the past. Nice guy. He was like Ali, trying to get me on the ropes, looking for an opening.

I hit him like Tyson would. "You know, you and I have the same problem, neither one of us can predict the future."

 

[OldShooter]

I really haven't been paying much attention. We are long-term investors and from what little I read it seems that we are in a period of fairly normal market behavior -- random and unpredictable.

Why don't you just stop watching if it makes you so unhappy?

 

[Al18]

I would dump all bond funds. Fidelity’s FTBFX Total Bond Fund has average annual returns of 1.04% over the past 5 years. By comparison, Fidelity is paying about 5% per year on many Money Market funds or you can lock in interest rates for up to 5 years at about 4.75% o with a CD. Terms less than 5 years are paying slightly more.

 

[COcheesehead]

Mods, combine threads?
https://www.early-retirement.org/fo...io-and-frustration-of-this-market-117994.html

 

[mikes425]

Mods, combine threads?
https://www.early-retirement.org/fo...io-and-frustration-of-this-market-117994.html

Or just ignore this one, if its that big of a deal to you.

 

[mikes425]

I really haven't been paying much attention. We are long-term investors and from what little I read it seems that we are in a period of fairly normal market behavior -- random and unpredictable.

Why don't you just stop watching if it makes you so unhappy?

Sounds like a plan.

 

[mikes425]

I would dump all bond funds. Fidelity’s FTBFX Total Bond Fund has average annual returns of 1.04% over the past 5 years. By comparison, Fidelity is paying about 5% per year on many Money Market funds or you can lock in interest rates for up to 5 years at about 4.75% o with a CD. Terms less than 5 years are paying slightly more.

So you would just wholesale dump them all -taking the NAV losses. even if divs are really roughly the same as the funds. Are you anticipating the NAVs on all ultra short and ST funds to go radically lower from here?

 

[Al18]

That’s what I said exactly 5 months ago - check message #57 on the previous thread you started and linked above.

I kept my balanced funds, but dumped all bond funds.

 

[GhostofTomJoad]

Stocks expensive? That's a moving target. But a single-digit P/E is surely not expensive, as with the regional bank I own: P/E of 7.72.

Others:
-oil/gas midstream LP: 11.53. not bad.
-oil patch tubular goods: 5.42
-aluminum: 9.22.
-postal REIT: OK, THAT one is crazy, off the charts.

Bonds: some held in BRUFX and PRWCX. MOST are in junk. In terms of total return, I'm down slightly. Nothing to write home about. I'm sticking with the dividends they offer:
Fund A =7.57% yield.
Fund B = 7.00%.

But junk is not ballast; it's like a less-volatile stock proxy.

 

[target2019]

Or just ignore this one, if its that big of a deal to you.

I would offer that it would be informative to place this thread in the context of other thread(s) you've posted.

You might look at this site from time to time:

A lazy portfolio is a set-and-forget collection of investments that require little or no maintenance. Most portfolios consist of a small number of low-cost funds that are easy to implement and rebalance. Lazy portfolios are designed to perform well in most market conditions, making them the perfect choice for long-term investors. Here you can find a list of the most popular lazy portfolios implemented with ETFs. https://portfolioslab.com/lazy-portfolios

What portfolio there has better performance? The choices within the portfolio make the difference. I learn a lot by jealously considering a "better" portfolio, only to find out that it too is not a perfect solution.

Since you have bond funds, that story is still playing out. If it wasn't explained in the other thread, bond returns don't always cancel out equity volatility.

As much as I hope for my intermediate bond fund to fully recover in 2023, that is not gonna happen. My ultra short fund is not setting the world on fire either. Come to think of it, it never will.

Growing out MMF is a tactical choice I'm glad I made. Others are very satisfied with longer CD ladders, individual bonds, and so on.

 

[COcheesehead]

Or just ignore this one, if its that big of a deal to you.

We are trying to help you and the original thread provides more context and provides some great feedback so that you don’t get redundant answers.

 

[Sanstar]

No bonds for me for years. Broad US market ETF’s 90% and 10% money market and more recently: laddered CD’s. Dividends go to MM. Rebalance 2-3 x year.

Two significant influences that guide my portfolio decisions are Warren Buffet’s autobiography (no bonds) and a CFO I worked with, and greatly respected, who stated on several occasions, “never bet against the USA”. So, no foreign investments for me.

I do check the markets during trading hours but only check my portfolio when the NASDAQ and SP 500 are up. Keeps my anxiety down.

If I was heavy into bonds, not sure if I’d cut my losses or keep my fingers crossed. No crystal ball so I suspect that decision would be driven more by personality; and past experiences related to sitting tight vs cut and run.

 

[Montecfo]

I would dump all bond funds. Fidelity’s FTBFX Total Bond Fund has average annual returns of 1.04% over the past 5 years. By comparison, Fidelity is paying about 5% per year on many Money Market funds or you can lock in interest rates for up to 5 years at about 4.75% o with a CD. Terms less than 5 years are paying slightly more.

Apples to oranges.

Any bond vehicle with duration has suffered.

Why didn't you compare the two investments over the same period?

Just curious.

 

[Montecfo]

Mikes425,

It goes back to why you own what you own. If the reasons have not changed then stay the course. Most of the rate carnage is over, though booking gains on funds might be a slow and steady process after rates have peaked (which could be now but it is certainly soon).

If the reasons you own the funds you own no longer apply then it is not a bad time to reposition. Just understand that all the folks that bought bonds or bond funds of any duration also have generated losses as rates have risen.

Only exception would be TIPS or variable rate bonds.

The great Zig Ziglar used to say "Don't be a 'wandering generality', be a 'meaningful specific'.

Food for thought.

 

[Lsbcal]

In recent months intermediate Treasuries (and corporates) have a had surge up. I don't know what comes next. But having bought VFIDX in June (10% of portfolio, avoided 2022 bond market) I intend to hold through the recent storm.

Rates do go down too. Fingers crossed.

 

[flyingaway]

I was too lazy to do anything in early 2022, and I am too lazy (too late?) to do anything now. Hope everything will get even eventually. I hold everything long term, really long term.

 

[mikes425]

I was too lazy to do anything in early 2022, and I am too lazy (too late?) to do anything now. Hope everything will get even eventually. I hold everything long term, really long term.

Yep, I think that sums up my situation pretty well.

 

[mikes425]

We are trying to help you and the original thread provides more context and provides some great feedback so that you don’t get redundant answers.

Sorry for the redundancy on my part. I kind of spaced out on the earlier thread(s) and didn't recall some of the later posts there...or didn't assimilate the points made. I know this shouldn't be an outlet for ranting. So much of financial advice is about emotion and ones' ability to ignore the noise and (relatively) short term fluctuations. I think I'm just fatigued. This is easily the most frustration I've felt in more than a decade but I appreciate that I simply have to keep it in perspective and commit to trusting that this portfolio will hold up and as someone else points out, rates WILL eventually go lower. Thanks for all insights given.

 

[COcheesehead]

Keep in mind, when rates go lower, it’s good for bonds, but the adjustment in rates will likely be as the result of an economic slow down so equities might get pinched.

 

[mikes425]

My FA guy does not believe the correction has yet run its course. His take as of earlier this month is that Inflation won't get to 2% in 2024, nor 2025, and that this should be well recognized by the first quarter of '24 signaling a beginning of the end of the softening..and though there will be some further softening, the market should end the year with a year over year gain. He thinks we should then see further improvement and get back closer to the all-time high set at the end of 2021." (Or not ; )

 

[COcheesehead]

My FA guy does not believe the correction has yet run its course. His take as of earlier this month is that Inflation won't get to 2% in 2024, nor 2025, and that this should be well recognized by the first quarter of '24 signaling a beginning of the end of the softening..and though there will be some further softening, the market should end the year with a year over year gain. He thinks we should then see further improvement and get back closer to the all-time high set at the end of 2021." (Or not ; )

Ask him what his track record is predicting the future. Mine is pretty bad.

 

[mikes425]

Ask him what his track record is predicting the future. Mine is pretty bad.