When all assets are overvalued

[redduck]

Quote:

Originally Posted by OldShooter Every one of these chattering monkeys is in the same situation. If any of them actually had any skill, what would they be doing? They would be using their skill to make themselves rich. They would not be typing away on the internet desperately...

I'm becoming confused: Are the chattering monkeys the same monkeys as the typing monkeys and where do the dart-throwing monkeys fit-in? So many monkeys, so little time.

[samclem]

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Originally Posted by Bikechuck A three year ladder might make sense in the current environment. Or perhaps a four year with the second and fourth year rungs composed of Ally's "raise your rate" CDs.

I bought Ally "Raise Your Rate" CDs for my MIL, but my reservations about them have only increased. You can only ask for a bump-up in the rate if Ally offers a higher rate for that same product. And guess what: they have a bunch of customer money in these 2 and 4 year CDs and they haven't been raising the rate for these products as they increased their other rates (they appear to have caught up a bit recently). While they remained static and below the going rate, nobody who owned them could ask for a higher rate. I predict next they'll let them lag again, but to capture more suckers inflows of new money, they'll offer Raise Your Rate CDs with terms of 18 and 36 months at attractive rates (higher than the 24 and 48 month products now on the street) and then do the same thing to those people. Next, it will be 12 months, 30 months and 42 months. Etc. The game will go on until folks wise up.

[googily]

Quote:

Originally Posted by samclem I bought Ally "Raise Your Rate" CDs for my MIL, but my reservations about them have only increased. You can only ask for a bump-up in the rate if Ally offers a higher rate for that same product. And guess what: they have a bunch of customer money in these 2 and 4 year CDs and they haven't been raising the rate for these products as they increased their other rates (they appear to have caught up a bit recently). While they remained static and below the going rate, nobody who owned them could ask for a higher rate. I predict next they'll let them lag again, but to capture more suckers inflows of new money, they'll offer Raise Your Rate CDs with terms of 18 and 36 months at attractive rates (higher than the 24 and 48 month products now on the street) and then do the same thing to those people. Next, it will be 12 months, 30 months and 42 months. Etc. The game will go on until folks wise up.

I wandered through here today specifically with the intent of seeing what people were saying about CD ladders in the current environment. I have a decent amount of cash on hand that I don't expect to need access to for the next year, and was thinking about an Ally high-yield 12-month CD (2% for $25k but early withdrawal penalties).

I actually wondered about laddering their high-yield CDs but on a short-term basis, to not be caught in long-term CDs with rates probably rising. The 6 month high-yield CD for $5k-$24,999 is 1.6%, 9-month is 1.65%, 12 month is 1.85%. Is it just silly to do anything like that? Otherwise it's sitting at Ally (and AmEx) currently earning 1.45%.

[samclem]

Quote:

Originally Posted by googily I actually wondered about laddering their high-yield CDs but on a short-term basis, to not be caught in long-term CDs with rates probably rising. The 6 month high-yield CD for $5k-$24,999 is 1.6%, 9-month is 1.65%, 12 month is 1.85%. Is it just silly to do anything like that? Otherwise it's sitting at Ally (and AmEx) currently earning 1.45%.

It's not silly if the (slight) hassle of setting it up is worth it to you. Just make some assumptions about where interest rates will go and plug in your amounts to see if it is worth your time.

Another option: Their $25K 11 month no penalty CD yields 1.5% right now, which is >slightly< better than their 1.45% rate on savings, and if you buy the CD at least the rate won't go down on you, as it >could< with the savings account (not a big risk IMO, but stranger things have happened and I'm a bit less sure of my assumptions as everything seems to be getting more skittish of late). If rates go up, you could move your whole stash to the higher-rate CD (incl a ladder) without needing to wait.

[OldShooter]

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Originally Posted by redduck I'm becoming confused: Are the chattering monkeys the same monkeys as the typing monkeys and where do the dart-throwing monkeys fit-in? So many monkeys, so little time.

Sorry. I probably miscategorized the OP's favorite monkey. I think he is more a typing monkey than a chattering monkey. It is the chattering monkeys who appear on televison, youtube, etc. Chattering and typing are not mutually exclusive though; some monkeys do both.

Interestingly, Nate Silver in his book "the signal and the noise" reports that chattering monkeys are generally more dramatically wrong than typing monkeys. This is because getting the chattering gigs depends on the monkey being dramatic.

The dart-throwing monkeys are mostly employed by people who conduct stock picking competitions. They are hired for their hand/eye skills and do not claim any market expertise. This modesty differentiates them from the chattering and typing classes.

[jazz4cash]

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Originally Posted by jazz4cash Ticker symbols in threads is one of my pet peeves These are Schwab small cap and an S&P ETF fund.

So I screwed the 2nd one up which is a long bond ETF, not S&P.

[gayl]

The point I was making is that I've always been 100% Equity ETF and individual equities. But since January I've been slowly moving away from those and into CDs and a long-term Bond Fund. I now have got a bond ETF, a bond fund and six CDs

[HFWR]

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Originally Posted by gayl The point I was making is that I've always been 100% Equity ETF and individual equities. But since January I've been slowly moving away from those and into CDs and a long-term Bond Fund. I now have got a bond ETF, a bond fund and six CDs

Neither chattering, nor typing, nor dart-throwing, but is now the best time for a long bond fund?

[redduck]

Quote:

Originally Posted by OldShooter Sorry. I probably miscategorized the OP's favorite monkey. I think he is more a typing monkey than a chattering monkey. It is the chattering monkeys who appear on televison, youtube, etc. Chattering and typing are not mutually exclusive though; some monkeys do both. Interestingly, Nate Silver in his book "the signal and the noise" reports that chattering monkeys are generally more dramatically wrong than typing monkeys. This is because getting the chattering gigs depends on the monkey being dramatic. The dart-throwing monkeys are mostly employed by people who conduct stock picking competitions. They are hired for their hand/eye skills and do not claim any market expertise. This modesty differentiates them from the chattering and typing classes.

I'm impressed. I'm willing to bet that you know more about monkeys than most early retirees. Much more. However, I neglected to include in this list a fourth type of monkey https://youtu.be/VNcqV_dC_gE. Wanna' guess which of three types of monkeys (chattering, typing, dart-throwing) has the most in common with this fourth type of monkey? The answer is revealed at about 1:15 into the video.

[NW-Bound]

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Originally Posted by redduck ... a fourth type of monkey https://youtu.be/VNcqV_dC_gE...

I had forgotten about this band.

But these are the monkeys that I know.

[gayl]

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Originally Posted by HFWR Neither chattering, nor typing, nor dart-throwing, but is now the best time for a long bond fund?

probably not but this is my first venture into bonds. Still it's 30-Day SEC yield 4.41% beats my 12 month CD yielding 2.1%.

Please help me understand why it was a dumb move

[hesperus]

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Originally Posted by OldShooter Tough? Maybe, but I"m going from very simple logic: Every one of these chattering monkeys is in the same situation. If any of them actually had any skill, what would they be doing? They would be using their skill to make themselves rich. They would not be typing away on the internet desperately hoping to make a living from advertiser clicks, Amazon sales commissions, or selling training courses. And for sure they would not be publishing the recipe for the secret sauce so that everyone could use it. The surest thing in investing is that any publicly known trick that works will eventually be useless as the hoards try to take advantage of it. What keeps things going is first that people want to believe in skill and luck. That's why the casinos and lotteries will never go out of business. But second, when something happens there are so many monkeys that one or a few of them will have predicted it. They will then be anointed genius monkeys and sit in that throne until their next few pronouncement turn out to be busts. Since there are always genius monkeys many people always have the hope of finding the genius monkey ahead of time. If they do, it is pure luck, but they will conclude from that luck that they, too, are geniuses.

You could have just called them charlatans and used a lot less words

[NW-Bound]

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Originally Posted by gayl probably not but this is my first venture into bonds. Still it's 30-Day SEC yield 4.41% beats my 12 month CD yielding 2.1...

People are afraid that the low-interest-rate era is ending, and interest rate and inflation will rise.

That bond fund has a duration of 14 years. If interest rate goes up 0.5%, the bond price will drop 7%.

The fund yield is higher than CD to compensate for that risk.

[gerntz]

My assets are not overvalued by me. I wouldn't have them if they were. But I much prefer having them to giving them all away.

[GravitySucks]

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Originally Posted by gerntz My assets are not overvalued by me. I wouldn't have them if they were. But I much prefer having them to giving them all away.

+1 same arguments from '11 - '17 everything is overpriced and being artificially pumped up by ...( Name your fav conspiracy) .... Would have missed a heck of a run by going to cash.

[HFWR]

Quote:

Originally Posted by gayl probably not but this is my first venture into bonds. Still it's 30-Day SEC yield 4.41% beats my 12 month CD yielding 2.1%. Please help me understand why it was a dumb move

Not “dumb”, and though it’s “dirty market timing”, parking it in a CD for a few more months, while the Fed is busy raising rates, would lessen the likelihood of a drop in price, which, given the duration of a 30-yr (long) bond, could be significant.

I’m a bit over plan on cash right now, and low on bonds, but not drastically enough that I can’t wait for at least a couple more tightenings, i.e. maybe six months.

[gcgang]

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Originally Posted by gayl ... I now have got a bond ETF, a bond fund and six CDs

FIVE GOLD(en) ETFs,
Four hi yield funds,
Three T Bills,
Two MLPs,
And a partridge in a pear tree.