How do you feel now? (4 Months later)

[bigcmagor]

Don't get too excited. The largest of that income stream, CML, is 75% return of capital (principal) and not income. About 72% of the second largest incoem stream, distributions from GEO, are return of capital.

TNSTAAFL.

Pb4uski on high yield evaluation = Hobo on Ham sandwich

 

[ESRwannabe]

I'm surprised I get so much flak for choosing a dividends only withdrawal strategy using etfs VYM, VYMI, and VT. What I choose to do is peanuts compared to trying to market time.

In the 2008 recession I tried to market time and got out of the market and I learned from that. You never get out of the market. Always stay long because the turn around will happen too quickly and you will be second guessing the rally the whole time and miss it.

I lost a lot of money market timing in 2008. This time I stayed fully invested (while tax loss harvesting as much as possible) and caught the whole rally back up.

I'm significantly better off this time in terms of number of shares. Portfolio value is almost back to all time highs and I have significant capital loss for taxes.

I increased my share count by 23%.... I'm ecstatic!

 

[pb4uski]

Pb4uski on high yield evaluation = Hobo on Ham sandwich

I only knew about CML's distributions being principally return of capital because it had come up with the same poster on another thread... the where to park brokerage cash thread.

 

[BeachOrCity]

...late to the thread.

Fundamentally we have gone from charging about 4-5% of our life style on credit cards in 2019 to charging close to 50% of our lifestyle on credit cards in 2020 (since March).

By we, I mean collectively the share of gdp being financed by stimulus or increased “balance sheet”. (In 2019 the deficit was about 4-5% of gdp. Of the 10 trillion in gdp over 6 months more than 1/2 is balance sheet or stimulus).

It’s looking like this will continue until atleast some time next year.

All I know is when it comes time to pay it off it usually means no “extras” for a few years while we pay it down. Or if we elect not to pay it down we will pay interest on it indefinitely. There is no free lunch. The question is what and who will pay for the 2020 free lunch we have had stimulus wise and balance sheet wise??

In all seriousness I think the way out of it may be inflation The fed will keep st rates low even with inflation and the US debt will largely move to short term debt as long term gets expensive. The debt won’t get paid down per se. It will just become less of an issue as a % of gdp.

Maybe tips, gold, and real estate are the best hedges against this

 

[Markola]

...late to the thread.

Fundamentally we have gone from charging about 4-5% of our life style on credit cards in 2019 to charging close to 50% of our lifestyle on credit cards in 2020 (since March).

By we, I mean collectively the share of gdp being financed by stimulus or increased “balance sheet”. (In 2019 the deficit was about 4-5% of gdp. Of the 10 trillion in gdp over 6 months more than 1/2 is balance sheet or stimulus).

It’s looking like this will continue until atleast some time next year.

All I know is when it comes time to pay it off it usually means no “extras” for a few years while we pay it down. Or if we elect not to pay it down we will pay interest on it indefinitely. There is no free lunch. The question is what and who will pay for the 2020 free lunch we have had stimulus wise and balance sheet wise??

In all seriousness I think the way out of it may be inflation The fed will keep st rates low even with inflation and the US debt will largely move to short term debt as long term gets expensive. The debt won’t get paid down per se. It will just become less of an issue as a % of gdp.

Maybe tips, gold, and real estate are the best hedges against this

I always seem to misfire when I try to invest based on my interpretation of world events. You make the case for inflation and how to invest but there’s also a pretty good case for deflation.

 

[BeachOrCity]

I always seem to misfire when I try to invest based on my interpretation of world events. You make the case for inflation and how to invest but there’s also a pretty good case for deflation.

I agree with this, hence why lots of question marks. My point is that all this "balance sheet" and stimulus has to have some repercussion. We could always end up like Japan w/ 200% debt to GDP and a zombie economy propped up by government spending (and ownership) of the commercial sector.

 

[EvrClrx311]

Sold about half in early Feb, bought back in in early March, sold everything in mid April... have watched the markets tick upward and then mostly sideways. Things would have to rise 22% for my overall situation to be worse than it was in February.

I don't like being out of the market, but I feel a lot safer, for now. After election I will start to reinvest some at a time depending on where the market is at (if it's where it is now or much higher, I'll invest less, if it's lower than it is now I'll feel a lot more inclined to put a larger amount back in)

My overall feeling about this year is that I timed the market against my good judgement... I got mostly lucky with my timing. I won't do this again... and I'm slightly nervous about being on the sideline, however I don't think there is a lot of upside that I could miss out on in the next 18 months. (famous last words?)

 

[Moemg]

I took a bunch off the table very early in the pandemic . Some I put back . The rest is just sitting in a money market . There may be a lot of financial pain ahead so I wanted several years of safe money .

 

[texastech97]

I was down multiple six figures, but took no action. Now I am up for the year. If I had tried to do anything I think I would have been wrong so I am currently rather pleased (and surprised).

I was also down multiple six figures but bought more on the way down. I have recovered everything and gained an extra six figure. Surprised how fast things have moved. The great recession was my first experience with being down six figure, staying the course, and seeing opportunities. This time I was able to take advantage of the opportunities.

 

[Lawrencewendall]

I only knew about CML's distributions being principally return of capital because it had come up with the same poster on another thread... the where to park brokerage cash thread.

Do you mean CLM?

 

[pb4uski]

Yes.

 

[RenoJay]

Feeling good. Up year to date.

 

[Golden sunsets]

Big day today. Just a few points until the S&P hits a new high. But Soros is out. Not sure what the rise is all about. Vaccine perhaps.

 

[W2R]

Big day today. Just a few points until the S&P hits a new high. But Soros is out. Not sure what the rise is all about. Vaccine perhaps.

Wonderful! Between this big day in the stock market (lifting my portfolio to yet another all time high), and getting my SS deposit (lifting my bank account back up too), I am pretty happy about financial things today.

There are many things in the news which people could say caused this, depending on one's point of view in this election season, and I honestly do not have a clue about the cause. But anyway it sure put a BIG smile on my face.

Time to go study the Blow That Dough thread.

 

[targatom2019]

yep, up another another new high today from a negative 850K before March low. Can't imagine what will happen when we have a vaccine.

 

[GravitySucks]

Nobody knows why.

 

[Koolau]

Didn't sell anything. Due to Mr. Market and PMs plus a couple of high flying health stocks, port is up for the year. YMMV

 

[Badger]

There are many things in the news which people could say caused this, depending on one's point of view in this election season, and I honestly do not have a clue about the cause. But anyway it sure put a BIG smile on my face.

Time to go study the Blow That Dough thread.

+1 I don't know the reason the stock market fluctuates and I don't think anyone else does either. Those that make the claim are using are using a Magic 8 Ball.


Cheers!

 

[eytonxav]

I sold some and bought some, but might have been slightly better off doing nothing. Now I am worried about November

 

[music-and-ski]

I’m thrilled that my growth investments, as a whole, have come back to near January values. But, if I thought they were overvalued in January, I surely think that they are overvalued even more now! I’m too young to invest heavily in non-growth investments, but it would be nice to reduce my exposure somehow and realize some profits.

 

[music-and-ski]

...late to the thread.

In all seriousness I think the way out of it may be inflation The fed will keep st rates low even with inflation and the US debt will largely move to short term debt as long term gets expensive. The debt won’t get paid down per se. It will just become less of an issue as a % of gdp.

Maybe tips, gold, and real estate are the best hedges against this

If inflation goes up so will interest rates. If interest rates go up new buyers will not be able to get a mortgage to buy real estate at current values. So, as interest rates go up, real estate values will go down. Real estate is like bonds, when rates go up, values go down. Bonds pay a fixed coupon, so the underlying value is what fluctuates with interest rates. Real estate “pays” a fixed value in terms of rental income (or forgone rental income, in the case of owner-occupied houses), so the underlying value is what will fluctuate with interest rates.

I mean, it’s still true that “they aren’t making any more land, you know”. So, in the very long term, real estate is always a good investment. But, if you think interest rates and inflation are going to start going UP, you might think about getting out of bonds and real estate.

 

[Toocold]

If inflation goes up so will interest rates. If interest rates go up new buyers will not be able to get a mortgage to buy real estate at current values. So, as interest rates go up, real estate values will go down. Real estate is like bonds, when rates go up, values go down. Bonds pay a fixed coupon, so the underlying value is what fluctuates with interest rates. Real estate “pays” a fixed value in terms of rental income (or forgone rental income, in the case of owner-occupied houses), so the underlying value is what will fluctuate with interest rates.

I mean, it’s still true that “they aren’t making any more land, you know”. So, in the very long term, real estate is always a good investment. But, if you think interest rates and inflation are going to start going UP, you might think about getting out of bonds and real estate.

Real estate is slightly different than bonds for 2 reasons: 1) housing is a combo of a must have consumable (in some shape or form) and financial instrument, 2) rent typically will reflect inflation (so it's an inflation adjusted bond in a way). That's why historically, rent and housing kept up with inflation in parts of the country that are growing.

Now the substitute for existing housing is new housing, which has a tendency to go up based on labor, material, land, and regulations. At min labor and materials will go up from inflation. Land is fixed. Regulations usually become more onerous for building.

 

[calmloki]

Last night the gal was trying to get me to listen to a podcast. Her synopsis was that bankruptcies were increasing at an alarming rate, so a big percentage of tenants wouldn't be paying their rent. Also, since the economy was tanking, people would be moving down in housing class, so lower priced housing would be filled to capacity, thus causing rent prices to go up.
I was trying to go to sleep, but the take away seemed to be that vacancies would be down, rents would be up, but nobody would be paying. Okee dokee. I think all financial moves are based on the good fortune of paparazzi catching starlet wardrobe malfunctions or exits from limousines.

 

[OldShooter]

I’m thrilled that my growth investments, as a whole, have come back to near January values. But, if I thought they were overvalued in January, I surely think that they are overvalued even more now! I’m too young to invest heavily in non-growth investments, but it would be nice to reduce my exposure somehow and realize some profits.

Your thesis is that growth stocks will grow relative to the total market. You also observe that they seem overpriced. Of course. That is almost the definition of a growth stock.

Just for grins, I ran Portfoliovisualizer with a 100% Vanguard Growth Fund (VWUSX) portfolio and a 100% VG Total US Market portfolio (VTSAX). Over 20 years the total market fund crisply outperformed the growth fund, also with less volatility. Different funds and different time periods will produce different results, of course, but it would seem that your heavy exposure to growth may be unnecessary, maybe even unwise.

Jeremy Siegel's "Stocks for the Long Run" is a pretty good read. In it he talks about "the growth trap." I have only the original edition and the book has been revised several times, but I assume the message is substantially the same.

 

[music-and-ski]

Real estate is slightly different than bonds for 2 reasons: 1) housing is a combo of a must have consumable (in some shape or form) and financial instrument, 2) rent typically will reflect inflation (so it's an inflation adjusted bond in a way). That's why historically, rent and housing kept up with inflation in parts of the country that are growing.

Now the substitute for existing housing is new housing, which has a tendency to go up based on labor, material, land, and regulations. At min labor and materials will go up from inflation. Land is fixed. Regulations usually become more onerous for building.

Since the pandemic has made white-collar people realize they can live anywhere, the best real-estate to buy, IMHO, will be houses in very nice places. That is, houses in cities with price driven by good access to labor markets (lots of jobs within a reasonable commute) might go down, while houses in vacation hot-spots (mountain communities, seaside communities, etc.) might retain their value or go up.

I agree that housing and bonds are different. But, the huge rise in home values in a lot of places is driven by affordability. As interest rates fell, people could afford more and more housing, driving the competitive market for housing, and encouraging more consumption. This also drove the construction industry as well, to provide more, and better, housing, because people could afford it, due to the low interest rates. If interest rates went back to 8%, no young buyer could afford my house, unless the price dropped!

That's what scares me about my city house. Its value is largely driven by walkability to downtown, and the professionals who work downtown have all escaped to their lake homes and really have no desire to return to their downtown offices. The thought is that some of these vacant offices will have to convert to residential, which will further flood the market for housing in my neighborood. Meanwhile, if inflation (to reduce the Covid debt) drives interest rates up, no-one will be able to afford my house anyway.

I should join the club and escape to a mountain home, even though I'm not retired yet. Maybe I could rent in the city. At least then I won't get double-whammied by both white-collar flight and rising interest rates. I can't talk my DW into it, though.