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Old 09-14-2021, 06:34 AM   #381
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This month's batch of market-linked CDs have been posted at Fidelity. Pretty much the same ones as last month.
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Old 09-14-2021, 01:52 PM   #382
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This month's batch of market-linked CDs have been posted at Fidelity. Pretty much the same ones as last month.
The one I dipped into has only a 125% participation rate this month (vs. 140%). The 200% CDs are enticing ... I'll have to think about it.

The thing is, I'd like to see the results of my plunge when the books are settled in 2016. But I may have lost my cognition by then -- who knows?
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Old 09-14-2021, 03:51 PM   #383
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The one I dipped into has only a 125% participation rate this month (vs. 140%). The 200% CDs are enticing ... I'll have to think about it.

The thing is, I'd like to see the results of my plunge when the books are settled in 2016. But I may have lost my cognition by then -- who knows?
I'm continuing with my standard procedure - picking up a few of each of the 200%...I already entered my orders to prevent me from spending the money between now and end of the month.

With interest rates down again today, I got some good bids and sold a couple of munis, then turned around and picked up one of the long term zeros which was being given away.
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Old 09-14-2021, 03:53 PM   #384
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2016? 2026?
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...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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Old 09-14-2021, 07:18 PM   #385
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2016? 2026?
Sorry, 2026. That cognition thing.
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Old 09-16-2021, 01:38 AM   #386
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The one I dipped into has only a 125% participation rate this month (vs. 140%). The 200% CDs are enticing ... I'll have to think about it.

The thing is, I'd like to see the results of my plunge when the books are settled in 2016 2026. But I may have lost my cognition by then -- who knows?
Sure, a crystal ball would be nice.

To determine the participation rate, I'm guessing they use some function which takes into account interest rates along with customer interest in getting to the amount of money they expect to take in with each issue. Since they lowered the JPM from 140% to 125%, they probably had too many folks subscribe last month so now they believe they can offer less for the product. On the 200%, they probably got the level of customer interest that they were looking for.
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Old 09-16-2021, 05:43 AM   #387
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CA State Muni just called. More to reinvest next month.

https://emma.msrb.org/P11527305-P11180999-P11597638.pdf
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Old 09-16-2021, 10:15 PM   #388
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I got a call today from a Fidelity fixed-income broker. He seemed to think my cash pile is getting a little too big.

Afterwards I found a follow-up message on the phone from a local Fidelity rep. If I arrange a sit-down with her, do you think she'd buy me lunch?
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Old 09-17-2021, 12:25 AM   #389
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Interesting. I'd go to hear what she has to say and what they are suggesting. I have a very good relationship with my local Fidelity guy. It's very hands off - I send him an Amazon gift card every Christmas, he never calls me (that's what we agreed first meeting). But when I drop him an email, or need to meet, he is all over it. If he did call and leave a message such as yours, I'd certain go and sit down with him for an hour. I'd actually buy him lunch. He's a nice guy.
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Old 09-17-2021, 01:22 PM   #390
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Well, I didn't get a free lunch, or even a sit-down, just a phone call. They have no silver bullets. She knows my goals -- I'm 67 and retired, how complex can it be. I explained that the muni milk cow I've been milking has dried up, and cash investing opportunities are limited, especially in fixed income. Yes, that's hard to argue with.

I raised the subject of structured CDs and kinda drew a blank. She recovered fairly quickly but didn't have a lot to contribute on the subject.

I took a second look at the Goldman Sachs Momentum Buider Focus ER-based structured CD offering. To my surprise, the SEC tracks this obscure index. https://www.sec.gov/Archives/edgar/d...qd0g000002.jpg It's a pretty flat line, although if you wade through the 92-page prospectus, that's not surprising.

According to the SEC, which extrapolates a lot of data in this computation, the index would have gained maybe 20% over the 5 years ending in January 2021. The index prospectus reports a 5% volatility cap and something like a 0.65% management fee, so again, that makes sense.

A 200% participation rate would double that return, of course. It's starting to look pretty good.

While the CD bases its return on this index. I doubt that GS is basing its investments on that. I'm guessing strip mines and slum rentals.

I've owned GS bonds before and was surprised that their ratings and NAV premiums were relatively low. I did OK with them. Seriously, banks make the economy turn, and I don't really think GS is in the slumlord business. (Although the local newspaper reports that large investment pools have been buying up rental units in inner-city Milwaukee. I'd hate to live in one of those.)

I'm going to consult with my distaff partner on the GS CD, just because it's something out of the ordinary. She should know the implications, particularly the big early-withdrawal penalty she'd pay if she tried to redeem these vehicles. After that, we'll probably take the plunge.
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Old 09-17-2021, 02:02 PM   #391
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Thanks for the summary. Makes you wonder what were they going to suggest for your cash pile? Did she actually have any recommendations? Fidelity mutual funds?

On the market-linked CDs, I liked what I saw in the historical (backtested) returns for the ones I've purchased over the past two years. Again, wasn't a significant point for me in the end once I understood my objective in purchasing...worst case, even if everything falls apart I get the original money back and compared to the 1% 5-year CD rate at this time, not much opportunity cost. Best case, the index does perform and I get 5% a year or maybe a bit more. As I mentioned, the Goldman ones I purchased 2 years ago October/November are currently up 10.73% and 9.94%. The Morgan Stanley ones I purchased just after those are up 9.49% and 11.48%. The 11.48% is based on the Euro Stoxx 50 index with 100% participation rate.
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Old 09-18-2021, 01:48 AM   #392
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As I just pointed out on another thread, there are rumblings on Bogleheads that the November rate reset on I Bonds may put them at 6%+ for the following 6 months. For those who don't already have a Treasury Direct account, it's a good time to set it up now.

Graybeard - that may be a place to put a bit of that growing cash pile...$20k/couple/year. You could put $20k in now, and then another $20k Jan 1 or after.
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Old 09-18-2021, 05:57 PM   #393
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As always, I appreciate your ideas, Howie. Thanks for offering them up.

The Fidelity folks really had nothing to suggest. I don't expect much from them, so I'm not disappointed. I get the impression that they thought I might not be aware that my bond holdings were transitioning into cash. I'm sure they run into oblivious customers like that.
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Old 09-19-2021, 08:34 AM   #394
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On the other thread, someone suggested waiting until November 1 to make any contributions as contributions right now will get the current 3.54% rate for the first 6 months and then the new rate (whatever that might be) would apply after.

I had a monthly auto purchase schedule set up from a few months ago, and just moved my October purchase in to November. Won't make a big difference, but it seemed like the right thing to do being so close to the reset date, and the high likelihood is that the new rate will be higher than the current 3.54%. If making a one-time bulk purchase the difference would be larger, so I'd agree that it's best to wait for the CPI to be announced in October before making new purchases. If that points to a higher I Bond rate on reset then hold off until November, if not, then purchase before end of October.
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Old 09-24-2021, 02:00 AM   #395
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The municipal bond market is 'overvalued' : Black Rock Municipal Bonds Group Head

Peter Hayes, Black Rock's Municpal Bonds Group Head, discusses the state of municpal bonds and the recent FOMC meeting.

https://finance.yahoo.com/video/muni...213848929.html

The title is a bit misleading in my view - he didn't say this until the very last words in the interview (literally, last words of the last sentence), as far as at this moment it may be overvalued and to look for a better entry point...ie. timing the market. All through the interview he was discussing how good munis have been historically, and even now.
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Old 09-24-2021, 10:21 AM   #396
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The municipal bond market is 'overvalued' : Black Rock Municipal Bonds Group Head

Peter Hayes, Black Rock's Municpal Bonds Group Head, discusses the state of municpal bonds and the recent FOMC meeting.

https://finance.yahoo.com/video/muni...213848929.html

The title is a bit misleading in my view - he didn't say this until the very last words in the interview (literally, last words of the last sentence), as far as at this moment it may be overvalued and to look for a better entry point...ie. timing the market. All through the interview he was discussing how good munis have been historically, and even now.
Yeah that headline is clickbait. And more than a bit misleading. Hayes said, "a little overvalued." Show me an investment market that isn't overvalued, and more than "a little."
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Old 09-24-2021, 05:48 PM   #397
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Well, I didn't get a free lunch, or even a sit-down, just a phone call. They have no silver bullets. She knows my goals -- I'm 67 and retired, how complex can it be. I explained that the muni milk cow I've been milking has dried up, and cash investing opportunities are limited, especially in fixed income. Yes, that's hard to argue with.

I raised the subject of structured CDs and kinda drew a blank. She recovered fairly quickly but didn't have a lot to contribute on the subject.

I took a second look at the Goldman Sachs Momentum Buider Focus ER-based structured CD offering. To my surprise, the SEC tracks this obscure index. https://www.sec.gov/Archives/edgar/d...qd0g000002.jpg It's a pretty flat line, although if you wade through the 92-page prospectus, that's not surprising.

According to the SEC, which extrapolates a lot of data in this computation, the index would have gained maybe 20% over the 5 years ending in January 2021. The index prospectus reports a 5% volatility cap and something like a 0.65% management fee, so again, that makes sense.

A 200% participation rate would double that return, of course. It's starting to look pretty good.

While the CD bases its return on this index. I doubt that GS is basing its investments on that. I'm guessing strip mines and slum rentals.

I've owned GS bonds before and was surprised that their ratings and NAV premiums were relatively low. I did OK with them. Seriously, banks make the economy turn, and I don't really think GS is in the slumlord business. (Although the local newspaper reports that large investment pools have been buying up rental units in inner-city Milwaukee. I'd hate to live in one of those.)

I'm going to consult with my distaff partner on the GS CD, just because it's something out of the ordinary. She should know the implications, particularly the big early-withdrawal penalty she'd pay if she tried to redeem these vehicles. After that, we'll probably take the plunge.

So did you decide to pick up any of them? Note that the two 200% ones will be issued on Monday 9/27 while the others are on Thursday 9/30.

As I mentioned earlier, I put my orders in for the two 200% from GS and JPM, and I also added the Citi one which uses the Fidelity index. I picked up some of the Citi/Fidelity CDs a few months ago and they appear to be performing well thus far.
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Old 09-24-2021, 06:22 PM   #398
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So did you decide to pick up any of them? Note that the two 200% ones will be issued on Monday 9/27 while the others are on Thursday 9/30.

As I mentioned earlier, I put my orders in for the two 200% from GS and JPM, and I also added the Citi one which uses the Fidelity index. I picked up some of the Citi/Fidelity CDs a few months ago and they appear to be performing well thus far.
Yes, I put in an order for the GS CD w/200% participation rate. I preferred that one because I could get at least an idea of what was in the proprietary index.
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