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Old 07-19-2020, 03:51 PM   #41
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Instead of bonds, for my "safer" money I do a mix of holding cash and selling covered calls on solid stocks.

So like if you have $400,000 in cash and you sell calls for a 10% one year premium on $400,000 worth of stocks, then you net a 5% return on the $800,000. I do a bit better than those numbers because I take more risk than a 10% premium would give you.
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Old 07-19-2020, 06:40 PM   #42
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If you are changing your AA to follow your IPS (ie. "I will maintain an AA of age in bonds, and I will do that on 1/1 every year), that's not market timing.

Changing your AA because you think you know what the market will do in the future is.
All hail the great definer!

A rose by any other name would...smell.

But in any event I think bond strategy is more interesting.
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Old 07-19-2020, 06:55 PM   #43
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monte,

You seem, well, less nice than most of the folks on this site ... I appreciate everyone’s comments.
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Old 07-19-2020, 08:03 PM   #44
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monte,

You seem, well, less nice than most of the folks on this site ... I appreciate everyone’s comments.
No, he just posts faster. I was thinking the same thing.
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Old 07-20-2020, 03:50 PM   #45
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Gah - after a couple days of light research, into a regime I am not particularly familiar with, I come up with: now is not a good time to be buying bonds - this seems to be what everyone is saying about sitting on the cash for awhile, and be opportunistic?

Is this the lesson I should be learning?

Checking about 0.45%
Fidelity MMF about 0.5%
One year CDs about 1%
SPTS (St Treasury ETF) about 1.7%
SPSB (ST Corp ETF), IGSB, and other ST and IT Corp Bond ETFs/funds ... is yield really about 2.5%?

I recognize the greater risk in corporate bonds, especially when investment grade, but to interest rate change risk, the NAVs of SPTS, SPSB, IGSB all look pretty stable ...
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Old 07-20-2020, 03:56 PM   #46
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Gah - after a couple days of light research, into a regime I am not particularly familiar with, I come up with: now is not a good time to be buying bonds - this seems to be what everyone is saying about sitting on the cash for awhile, and be opportunistic?

Is this the lesson I should be learning?

Checking about 0.45%
Fidelity MMF about 0.5%
One year CDs about 1%
SPTS (St Treasury ETF) about 1.7%
SPSB (ST Corp ETF), IGSB, and other ST and IT Corp Bond ETFs/funds ... is yield really about 2.5%?

I recognize the greater risk in corporate bonds, especially when investment grade, but to interest rate change risk, the NAVs of SPTS, SPSB, IGSB all look pretty stable ...
That is all about right. You could sniff around for an online savings account and get around 1% with no risk whatsoever, but there really is no "fat pitch" in fixed income right now.
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Old 07-20-2020, 04:13 PM   #47
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Sigh ...

So, given I understand and can live with the higher risk corporate bond holdings, I could put the cash in an ETF with limited NAV fluctuation? Looks like most of those I mentioned have NAVs about 2% higher than last year's "range?"

2.5% (close to inflation) sounds a lot better than 1% ...
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Old 07-20-2020, 04:19 PM   #48
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Sigh ...

So, given I understand and can live with the higher risk corporate bond holdings, I could put the cash in an ETF with limited NAV fluctuation? Looks like most of those I mentioned have NAVs about 2% higher than last year's "range?"

2.5% (close to inflation) sounds a lot better than 1% ...
Depends on your goals. With corporates you accept somewhat higher risk for a higher yield. The problem with corporates is that they tend to take a beating when stocks get clobbered. By contrast, treasuries generally rally in times of trouble.

You also want to look at something called SEC yield to see what yield will be going forward rather than looking at historical yield.
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Old 07-20-2020, 04:37 PM   #49
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Originally Posted by mrfeh View Post
If you are changing your AA to follow your IPS (ie. "I will maintain an AA of age in bonds, and I will do that on 1/1 every year), that's not market timing.

Changing your AA because you think you know what the market will do in the future is.
+1
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Old 07-20-2020, 07:55 PM   #50
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Sigh ...

So, given I understand and can live with the higher risk corporate bond holdings, I could put the cash in an ETF with limited NAV fluctuation? Looks like most of those I mentioned have NAVs about 2% higher than last year's "range?"

2.5% (close to inflation) sounds a lot better than 1% ...
Depends on what your definition of "limited" is.

Bond fund NAVs are higher because interest rates have dropped.
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Old 07-21-2020, 05:54 AM   #51
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So, working some basic math on SPST, as an example, the NAV fluctuated around $30 most of the last year, prior to the C19. Popped to around 30.70 and has been relatively stable since then.

About 2.2% increase in NAV, then add the SEC 30 day yield (which is a mandatory reporting calculation for a year at the last 30 day interest and dividends rate - ie annualized), and the total is around 2.3% ...

Is this rough estimate process generally correct?

If, so, even CDs look better, way better, right?
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Old 07-21-2020, 06:12 AM   #52
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About 2.2% increase in NAV, then add the SEC 30 day yield (which is a mandatory reporting calculation for a year at the last 30 day interest and dividends rate - ie annualized), and the total is around 2.3% ...
I don't understand - are you expecting an increase in NAV over the next year because that's what happened the last 12 months?

If you are, don't.

Might want to do some reading on bond funds at bogleheads; here are some examples:

https://www.bogleheads.org/forum/viewtopic.php?t=281208
https://www.bogleheads.org/forum/viewtopic.php?t=294539
https://www.bogleheads.org/forum/viewtopic.php?t=293040
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Old 07-21-2020, 06:16 AM   #53
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No, that is my point ... Only expecting the 30 day SEC yield, at least based on last 30 days annualized ... because rates already went down which caused the NAV rise.

For NAV to increase rates would need to continue lower, right?
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Old 07-21-2020, 06:20 AM   #54
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For NAV to increase rates would need to continue lower, right?
Yes.
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Old 07-21-2020, 07:23 AM   #55
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I agree there are risks all over the place....many are saying that both stocks and bonds are way expensive, inflation may show up at some point, interest rates may go up, down stay the same....who knows. Every single decent finance book I have read has advocated creating a portfolio consistent with risk tolerance and time horizon containing, stocks, bonds, reits, materials and so on. If I sit here and look at current interest rates, PE ratios, CAPE, etc. and I wasn't invested, I would likely be parallelized by the possibilities of things going one way or the other. Since I'm currently invested in a portfolio that I have thoughtfully constructed over many decades, I do my best to not worry about anything (sometimes it's incredibility difficult). If something bad happens, well, something bad happens...the sun will rise again tomorrow.
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Old 07-21-2020, 08:56 AM   #56
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I agree there are risks all over the place....many are saying that both stocks and bonds are way expensive, inflation may show up at some point, interest rates may go up, down stay the same....who knows. Every single decent finance book I have read has advocated creating a portfolio consistent with risk tolerance and time horizon containing, stocks, bonds, reits, materials and so on. If I sit here and look at current interest rates, PE ratios, CAPE, etc. and I wasn't invested, I would likely be parallelized by the possibilities of things going one way or the other. Since I'm currently invested in a portfolio that I have thoughtfully constructed over many decades, I do my best to not worry about anything (sometimes it's incredibility difficult). If something bad happens, well, something bad happens...the sun will rise again tomorrow.
+1 Great way to look at investing.
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Old 07-22-2020, 07:39 AM   #57
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OK, thanks!

Now, given the lack of good options for bond funds, and my slow decision process :-) where should I "store" the funds now sitting in the brokerage accounts at Vanguard and Fidelity?

Anyone have advice on where while I figure out next steps?
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Old 07-22-2020, 08:14 AM   #58
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OK, thanks!

Now, given the lack of good options for bond funds, and my slow decision process :-) where should I "store" the funds now sitting in the brokerage accounts at Vanguard and Fidelity?

Anyone have advice on where while I figure out next steps?
You can buy 30 day and 90 days CDs directly in brokerage account. You don't need to move money.
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Old 07-22-2020, 08:31 AM   #59
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I have most my cash parked in VSGDX. 1.2% SEC 30-day yield, 1.2% distribution yield, 1.9 year average duration... not great but IMO the best looking horse in the glue factory.
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Old 07-22-2020, 09:05 AM   #60
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I have some cash parked in ISTB (core 1 - 5 year bond ETF) which has a lot of Govvies in it and the SEC yield is a little over 1%.

https://www.ishares.com/us/products/...-us-bond-etf#/
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