We are entering a "Golden Period" for fixed income investing

[f35phixer]

so what if you don't need to withdraw from the IRA's? We bring home 13k/month with Pensions and SS.

Between FAGIX and FTBFX last couple months have been ~100 extra shares reinvested x 10years ~12,000 extra shares before RMD come into effect. I have ~251K in FAGIX and 135K in FTBFX .

So do I really need to worry about TIPS/Ladders/CDs etc?

Thanks, You all make my head hurt ;-)

[Freedom56]

Fidelity is hosting a live webinar on 6/24/22 at 12:00 eastern.

https://fidelityevents.com/insights-live-062422

Insights Live: Strategies for Rising Interest Rates. It's Free.

If they start pushing bond funds, just hang up.

[Sasquatch1]

Quote:

Originally Posted by npage So looks like Federal Farm are tax exempt at state level. They appear to pay a ever so slight premium over like term treasury. I presume due to a slightly higher default risk, though very low. Funny, never paid attention to all the fix income options out there until now having learned the bond fund lesson the hard way. I can still find a place for a bond fund knowing what I know now presuming the right entry price, rising rate environment and duration matching. But if I can buy a treasury, agency, muni or brokered CD for about what I get there or higher, I may be a convert.

So true, we haven’t had these opportunities to consider for so many years…but now that rates are attractive again…

I’m just appreciative of the community to bounce ideas off of.

[jazz4cash]

Quote:

Originally Posted by Freedom56 Fidelity is hosting a live webinar on 6/24/22 at 12:00 eastern. https://fidelityevents.com/insights-live-062422 Insights Live: Strategies for Rising Interest Rates. It's Free. If they start pushing bond funds, just hang up.

I think it would be cool to discuss the webinar on a thread here. I will plan to listen and I hope they will archive the session in case I can’t view it live. It’s a pretty good resource at Fidelity.
Ok, I’m registered. FYI you can post a question to be addressed in the session. This is open to anyone even if you don’t have an account at Fidelity.

[Freedom56]

Quote:

Originally Posted by jazz4cash I think it would be cool to discuss the webinar on a thread here. I will plan to listen and I hope they will archive the session in case I can’t view it live. It’s a pretty good resource at Fidelity. Ok, I’m registered. FYI you can post a question to be addressed in the session. This is open to anyone even if you don’t have an account at Fidelity.

I pre-emptively asked that if we should be avoiding bond funds in this environment given their low distribution yields relative to risk free CDs and treasuries. However they rarely respond to questions that don't fit their sales agenda.

[jazz4cash]

Quote:

Originally Posted by Freedom56 I pre-emptively asked that if we should be avoiding bond funds in this environment given their low distribution yields relative to risk free CDs and treasuries. However they rarely respond to questions that don't fit their sales agenda.

I know what you mean. I noticed all the presenters are from Fidelity and may have an objective to reduce bond fund redemptions for all I know. I've noticed they sometimes use 3rd party presenters that may or may not be pushing a product/service. Our job is to not take the bait, if any. I'll think about asking a similar question.

[gcgang]

I dunno. Seems like we’ve just ended a 40 year secular bull market in bonds.

Watch out that your Golden Period doesn’t come with a Golden Shower.

[JBTX]

I guess I am on another planet. I’m not excited about nominal bonds yields. If yields are 3% and inflation is pushing 10% that is a disaster. I disagree with some who think this inflation just sorts itself out quickly. I’m closer to the Larry Summers school of thought that it is now baked in and will require some pain to extract it. Some of the things that lead to long term low inflation seem to be structurally changing. Also that doesn’t factor in if China decides to invade Taiwan if that happens all bets are off.

[madatrub]

Quote:

Originally Posted by Freedom56 The AAA/AA+ rated 5.48% 6/27/42 Agency GSE bond is now sold out on Fidelity. The CIBC 4.47% 42 month note is sold out at Fidelity. Some new notes are posted from the Bank of Montreal at 3.75% (18 months) and 4.1% (24 months). Morgan Stanley 4.5% (5 year) and 5% (10 year). I'm passing on those for now.

I bought some of those CIBC. Thanks for the info!

[madatrub]

Quote:

Originally Posted by JBTX I guess I am on another planet. I’m not excited about nominal bonds yields. If yields are 3% and inflation is pushing 10% that is a disaster. I disagree with some who think this inflation just sorts itself out quickly. I’m closer to the Larry Summers school of thought that it is now baked in and will require some pain to extract it. Some of the things that lead to long term low inflation seem to be structurally changing. Also that doesn’t factor in if China decides to invade Taiwan if that happens all bets are off.

Where else are you going to get yield with lower risk? Insurance at the blackjack table?

[jazz4cash]

Quote:

Originally Posted by gcgang I dunno. Seems like we’ve just ended a 40 year secular bull market in bonds. Watch out that your Golden Period doesn’t come with a Golden Shower.

Well, that’s not so helpful…and kinda gross.

[Freedom56]

Quote:

Originally Posted by madatrub I bought some of those CIBC. Thanks for the info!

I was going to buy it on the secondary market but the dude at Fidelity assigned to my account warned me that demand was strong for the CIBC notes and they were selling out their allotment. So I placed an order yesterday for the new issue and it was filled today.

[Freedom56]

Ignore all the inflation talk. The inflation story has been discounted already. Watch yields and the yield curve. Yields are falling back down and we are beginning to see the yield curve normalize. This is after Powell's testimony today. The 3.8% Fed funds rate is old news. Remember markets discount the future not the past or present. If inflation is a concern next year, yields would be rising not falling back.

https://www.bloomberg.com/markets/ra...nment-bonds/us

The bubble in oil prices is about to implode. Ignore the nonsense about gas tax holidays. The real story is the supply/demand imbalance created by heavily discounted Russian oil sold on the market. The second and third largest consumer of oil (China and India) are buying heavily discounted Russian oil below $70. This is causing a supply/demand imbalance with Middle East producers forcing them to discount oil.

[JBTX]

Quote:

Originally Posted by Freedom56 Ignore all the inflation talk. The inflation story has been discounted already. Watch yields and the yield curve. Yields are falling back down and we are beginning to see the yield curve normalize. This is after Powell's testimony today. The 3.8% Fed funds rate is old news. Remember markets discount the future not the past or present. If inflation is a concern next year, yields would be rising not falling back. https://www.bloomberg.com/markets/ra...nment-bonds/us The bubble in oil prices is about to implode. Ignore the nonsense about gas tax holidays. The real story is the supply/demand imbalance created by heavily discounted Russian oil sold on the market. The second and third largest consumer of oil (China and India) are buying heavily discounted Russian oil below $70. This is causing a supply/demand imbalance with Middle East producers forcing them to discount oil.

I don’t have a crystal ball, but here is why I don’t buy the rapid disinflation scenario:

- rent prices in price indexes tend to lag rent inflation, as people renew leases mostly once every year
- wage inflation has set it already. Labor is still scarce and will continue to be unless there is a severe recession
- demographically the available workforce is shrinking relative to population, making labor more valuable. This is happening in US and other parts of the world, even China
- the changing worldwide geopolitical environment and supply chain instability will not be as conducive to wide open free trade
- even if Russia Ukraine sorts out soon, which seems unlikely the food supply disruptions will continue for a year or two after
- while oil prices will eventually stabilize, to a degree it is a dying industry, and as such will garner decreasing capital investment. An example is refining. Energy companies and shareholders have learned that it is better to constrain supply and development. Yet at the same time energy usage will continue to increase, plans are to move more on the grid and phase out fossil fuels. Green energy will fill part of the void but it isn’t clear it’s ready to be available as a consistent steady source of primary energy. Existing nuclear plants are old and phasing out and new ones are likely a decade or more down the road. All this points to ongoing supply and demand imbalances putting pressure on price.
- none of this even contemplates a new major geopolitical event like a China Taiwan invasion.

This doesn’t mean I expect 10% inflation for years but I could very well see 3-5% a couple of years out. The implicit real yields on bonds just seem way too low.

[Exchme]

I was going to join the discussion with what I predict and then realized that I had no consistent set of thoughts, just a jumble of positive and negative possibilities about the future outlook.

Then it dawned on me that I was exactly right.

The world is too complex, self interacting and full of random events for me to make actionable predictions that are better than what the sum of everyone else already sees. I guess I'll just stick to my boring plan.

[OldShooter]

Quote:

Originally Posted by Exchme ... The world is too complex, self interacting and full of random events for me to make actionable predictions that are better than what the sum of everyone else already sees. I guess I'll just stick to my boring plan.

+100

On some of these threads, I am frequently reminded of the Dunning Kruger effect. The gist of it is that the people that know the least are the ones who are most certain of their opinions.

[Chuckanut]

Quote:

Originally Posted by gcgang I dunno. Seems like we’ve just ended a 40 year secular bull market in bonds. Watch out that your Golden Period doesn’t come with a Golden Shower.

It's all relative.

In the mid 1970's the stock market was in the dump. A very big dump. Down well over 40%. Young Chuckanut a recent college graduate, and just started doing crazy things like investing for his long term goals. He started buying into common stocks at this time when the market was low, Low and LOW. Perfect? No. Examples: Young Chuckanut could not invest in an IRA account. And Index funds were almost unknown. His first investment had an 8% load!!! He bought stops that did not go up! But, he learned. That was the last load fund he ever bought. He scanned the Forbes mutual fund issue and only bought into funds that scored an A or B in up and down markets. He found managed funds that were no-load and a mutual fund outfit called Vanguard. He realized he could not pick stocks very well.

Looking back it sure seemed like a golden time to invest for his situation.

[GenXguy]

Quote:

Originally Posted by daylatedollarshort I put an order in last night. We're going to start dollar cost averaging them again as the real yields go up.

I put a chunk of my Roth (@Vanguard) into TIPS last evening for today's reopening. It had been sitting in a money market that was losing big to inflation.

As a side note, last night, I had my best night of sleep in over 4 months!

[Taco]

Quote:

Originally Posted by OldShooter +100 On some of these threads, I am frequently reminded of the Dunning Kruger effect. The gist of it is that the people that know the least are the ones who are most certain of their opinions.

Here is some interesting reading on the DK effect. The effect has been replicated from random data and the concept, while tantalizing, appears to not be real.

https://economicsfromthetopdown.com/...tocorrelation/

[JBTX]

Quote:

Originally Posted by OldShooter +100 On some of these threads, I am frequently reminded of the Dunning Kruger effect. The gist of it is that the people that know the least are the ones who are most certain of their opinions.

Not a particularly helpful post. If you have a specific opinion state it instead of ambiguous “some people in this thread are dumb” posts.