price question

[lawman]

When watching the dow jones or S & P 500 indices during the day I can be reasonably assured that my equity funds or ETF's fund price's will close up if the indice's close are up and down if the indice's close are down...
If the 10 year treasury indices close up can I expect my investment grade bond funds to close up or down?

 

[OldShooter]

When watching the dow jones or S & P 500 indices during the day I can be reasonably assured that my equity funds or ETF's fund price's will close up if the indice's close are up and down if the indice's close are down...

Not necessarily.

... If the 10 year treasury indices close up can I expect my investment grade bond funds to close up or down?

Again, not necessarily.

Funds don't really "close." They simply report net asset value; their holdings "marked to market."

But your "equity funds" will track the S&P only if they are S&P index funds. If you are holding sector funds (bad idea IMO) they may well behave differently. Recent poster child here is ARKK, which was a rocket ship and is now crashing. It's an "equity fund" but with little correlation to the S&P.

Same-o with your "investment grade bond fund." If they are holding only the 10 year treasuries, then they should track. If not, then they may not.

 

[njhowie]

If the 10 year treasury indices close up can I expect my investment grade bond funds to close up or down?

No, not necessarily.

First and foremost, remember, you're looking at the 10-year treasury, so likely the closest funds to be moving in a similar fashion are going to be those intermediate term bond funds with duration around the 10-year mark.

However, it's important to understand how bond funds are priced and that the pricing may not be indicative of how the 10-year treasury is moving. This is going to be the case with all bond funds.

Obviously, the bond fund price at end of the day is going to be the NAV of the portfolio at that time - which is the total of the "value" of all the individual bonds which the fund holds. Now, what is the "value" of each bond? What it is not, is the price of the last trade as is the case with equities. In the world of bonds, that "value" is going to be the mark to market. It's a method used to determine the theoretical value at a point in time. That mark to market can move in any direction, regardless of what the 10-year treasury does on a particular day.

So, if we stop the discussion there, that is basically why you should not automatically expect the NAV of your bond fund to go up or down simply by how the 10-year treasury moves on a particular day.

 

[lawman]

No, not necessarily.


So, if we stop the discussion there, that is basically why you should not automatically expect the NAV of your bond fund to go up or down simply by how the 10-year treasury moves on a particular day.

Thanks!

 

[Out-to-Lunch]

I do not think so. You could be relatively sure that an intermediate Treasury mutual fund would act that way. However, corporates and govvies behave differently to some circumstances.

 

[lawman]

The reason I ask is because I have an investment grade bond fund I am considering selling. I want to use the proceeds to buy another fund and I would like to be able to sell on an up day and buy on a down day..Any suggestions?

 

[njhowie]

The reason I ask is because I have an investment grade bond fund I am considering selling. I want to use the proceeds to buy another fund and I would like to be able to sell on an up day and buy on a down day..Any suggestions?

Are your holdings in the fund so large that one day's difference in the fund price can make a big impact on how much you receive when selling or have to pay when buying?

If so, what you might do is to use Yahoo Finance to plot the 10-year against your bond fund(s) and see if there is a correlation.

For example:

https://finance.yahoo.com/quote/%5ETNX/chart?p=%5ETNX#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-

 

[lawman]

Are your holdings in the fund so large that one day's difference in the fund price can make a big impact on how much you receive when selling or have to pay when buying?

If so, what you might do is to use Yahoo Finance to plot the 10-year against your bond fund(s) and see if there is a correlation.

For example:

https://finance.yahoo.com/quote/%5ETNX/chart?p=%5ETNX#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-

Interesting..My fund is VFIDX. I see no correlation..thanks...

 

[OldShooter]

... I would like to be able to sell on an up day and buy on a down day. ...

Me, too. If you figure it out, please let me know. But don't tell anyone else.

 

[marko]

I would like to be able to sell on an up day and buy on a down day

That's not how I do it.

 

[Jerry1]

That's not how I do it.

You and me both brother.

 

[lawman]

Me, too. If you figure it out, please let me know. But don't tell anyone else.

okay maybe no one else will see this but if the S & P 500 is up 500 points 30 minutes before the market closes your mutual funds that track the S & P 500 will probably close up. Likewise if market is down 500 points 30 minutes before closing they will probably close down..Let's keep this just between you and me..

 

[ERD50]

okay maybe no one else will see this but if the S & P 500 is up 500 points 30 minutes before the market closes your ETF's that track the S & P 500 will probably close up. Likewise if market is down 500 points 30 minutes before closing they will probably close down..Let's keep this just between you and me..

And tomorrow if it is up again, you bought on a down day.

-ERD50

 

[lawman]

And tomorrow if it is up again, you bought on a down day.

-ERD50

?

 

[njhowie]

okay maybe no one else will see this but if the S & P 500 is up 500 points 30 minutes before the market closes your ETF's that track the S & P 500 will probably close up. Likewise if market is down 500 points 30 minutes before closing they will probably close down..Let's keep this just between you and me..

ETFs price in real time, not end of day. There is no advantage to be gained if you're thinking of using this as a strategy in regard to your original post.

 

[lawman]

ETFs price in real time, not end of day. There is no advantage to be gained if you're thinking of using this as a strategy in regard to your original post.

My mistake..I should have said mutual funds which is what I own..

 

[OldShooter]

okay maybe no one else will see this but if the S & P 500 is up 500 points 30 minutes before the market closes your mutual funds that track the S & P 500 will probably close up. Likewise if market is down 500 points 30 minutes before closing they will probably close down..Let's keep this just between you and me..

Thanks. Getting back towards reality here ...

The academics have found that there is a very small momentum effect in stock prices. IOW a price move today is slightly more likely to be in the same direction as a price move yesterday than to be in the opposite direction.. This effect is not strong enough to support a trading strategy unless possibly the trades are tiny and trading costs are near zero.* But, it does mean that if you get your 500 point move and successfully sell your fund, prices are likely to be a tad higher on the next day. So ... sell low, buy high. @marko's result IOW.

*Buyers of so-called "momentum" funds have found this to be true over the years.

 

[ERD50]

?

Oooops, I got that backwards, sorry!!!

I meant to say, if you buy when the market has dropped, and it drops more the next day, did you then buy on an "up" day?

It's all relative, and in the long run this kind of market timing doesn't seem to get you anywhere.

-ERD50

 

[OldShooter]

... I meant to say, if you buy when the market has dropped, and it drops more the next day, did you then buy on an "up" day? ...

If you want to exploit the tiny momentum effect, that is probably a better strategy than wanting an "up" day in the market.

... It's all relative, and in the long run this kind of market timing doesn't seem to get you anywhere. ...

Agreed.

 

[daylatedollarshort]

I try to spread it out and get an average. Like I dumped our bond funds this year but I moved $x dollars each day over a couple of months.

 

[lawman]

I try to spread it out and get an average. Like I dumped our bond funds this year but I moved $x dollars each day over a couple of months.

What did you do move into?
Would you still have dumped the bond funds if you were planning not to sell in the next 7 years?

 

[ZachTB]

@lawman, it seems like there's a lot to unpack here.

1. If you want to know where VFIDX closes on a given day, you can just Google the ticker symbol. Google will bring up a chart, right there on the results page, and you can select your preferred time frame (5 days, 1 month, 6 months, etc.).

2. My 2 cents, based on all the reading I've done, is to devise a strategy and then adhere to it. If you try to outguess the market, you're guaranteed to generate lots of fees (and a headache at tax time), and certainly NOT guaranteed to make a profit.

In other words--suppose you think that the yield on bonds is low and that the Fed is planning to raise interest rates in the future, which leads you to believe that bonds aren't worth holding for the foreseeable future.

If that's the case, then exit your bond funds for the strategic reason that you don't think they're worthwhile. Don't worry about whether you're better off selling today or tomorrow; that'll just cause you you a bunch of angst.

It won't make much difference anyway because bonds seldom move sharply. Over the past month, 1 share of VFIDX has traded at $9.69 [peak] and $9.42 [trough]. That's not a huge movement; 2.5% peak-to-trough if my calculation is correct. A lot more stable than VFIAX, which has varied by almost 8% over the past month.

3. You could try @daylatedollarshort's approach, which is like dollar-cost averaging (but you're selling instead of buying). This could help relieve the anxiety. But remember that it's an emotion-management technique, rather than a rational fact-based approach.

 

[lawman]

I don't try to time the market..I've had VFIDX for about 15 - 20 years without selling a share. I am considering harvesting some losses for tax purposes this year. Another thing I do not completely understand is how I could be showing a loss even though I have made money with it..At times I have used dividends to reinvest and at times I have taken dividends in cash but nevertheless I am showing a loss on the fund..I don't believe share price is lower now than it was years ago..

 

[pb4uski]

okay maybe no one else will see this but if the S & P 500 is up 500 points 30 minutes before the market closes your mutual funds that track the S & P 500 will probably close up. Likewise if market is down 500 points 30 minutes before closing they will probably close down..Let's keep this just between you and me..[emoji23]

But, mutual funds will price all orders submitted before 4pm that day at the NAV for that days close.

Theoretically, an ETF has what is known about that days price movements included in the market price.

I'm not sure what your point is other than you seem to think that you are the smartest guy in the room and there is some arbitrage play that you see and the rest of us are oblivious to. I can guarantee you that is not the case.

 

[ZachTB]

I am considering harvesting some losses for tax purposes this year. Another thing I do not completely understand is how I could be showing a loss even though I have made money with it...

Ah, then that's a better question for a tax expert (which definitely does not include me! )

Seriously, I'd point you to two sources. 1) Investopedia, for a solid explanation of tax-loss harvesting: https://www.investopedia.com/terms/t/taxgainlossharvesting.asp Investopedia is generally a good resource.
2) A long-term chart of the performance of VFIDX. I use Google: https://www.google.com/search?q=vfi...512l5j69i60.1438j0j7&sourceid=chrome&ie=UTF-8

Take note of the following quote from the Investopedia page: "Short-term losses can only be used to offset short-term capital gains tax. Long-term losses can only be used to offset long-term capital gains tax."

So if you're trying to offset a long-term capital gain, then you could use this strategy. If you don't have a long-term capital gain, then it seems to me that this question might be a moot point.

Based on what you've shared here, it's unclear whether you could claim a loss for tax purposes. Google's chart for VFIDX goes back to Feb. 16, 2001, at which time a share was $9.57--slightly above where it traded on Friday. Throughout 2007, the share price varied from $9.48 to $9.85. Except for 2008-2009, it seems that the share price for VFIDX has mostly remained in that $9.40-$10.00 band. As of market close on Friday, VFIDX is at $9.44.

So it really seems that it matters most when you bought shares. If you bought them all at once on, say, Nov. 30, 2007, when the share price was $9.85, then it would seem to me that you could claim a loss. If you bought them consistently over time, say on the first of every month, then I have no earthly idea.

I'm definitely not an accountant and on tax matters, self-education only goes so far. I think the best advice I can give you is to ask your CPA, if you have one. If you don't, you might consider compiling a bunch of your tax-related questions and making an appointment with a well-regarded one near you.

It's wise to ask this question before making any trades. But for this purpose, you need better information than you're likely to find on a message board, even one with as many smart & experienced people as this one.