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Explorer ○

Sempx, Pimix, Vcfax what now?

Based on past experience, equities and CEFs will likely recover over time. 

Can the same be said for the popular bond funds here, like Sempx, Vcfax, Pimix, etc.?

Nobody has a crystal ball, but I'd like to hear what the bond gurus have to say. 

It's a little late but is it time to cut losses and give up on these higher yielding bond funds, or is it likely they will recover eventually?

FD, DT, anyone? 

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Re: Sempx, Pimix, Vcfax what now?


@sandman100 wrote:

Based on past experience, equities and CEFs will likely recover over time. 

Can the same be said for the popular bond funds here, like Sempx, Vcfax, Pimix, etc.?

Nobody has a crystal ball, but I'd like to hear what the bond gurus have to say. 

It's a little late but is it time to cut losses and give up on these higher yielding bond funds, or is it likely they will recover eventually?

FD, DT, anyone? 


sandman, first I do not consider myself a "bond guru".  I am just an individual investor, following an investing strategy that fits my individual circumstances.  I am 72 years old, am focused on preservation of principal, with very modest total return to recoup my annual RMDs.  I don't have a pension or job to fall back on during periods like this, so I am a little more down to earth with regard to what I do with my portfolio, during market crashes like this one.

Secondly, I don't give recommendations to anyone about their investing decisions, and I don't claim to know what is the best investing strategy for each individual.  I try to help provide information about mutual funds, and I try to stimulate other posters to participate and offer their thoughts.  That is about the best I am comfortable doing.

Thirdly, regarding SEMPX, VCFAX, and PIMIX, I owned everyone of those funds when this market crash started a few weeks ago.  I still think they are good funds, but everyone who owns a fund, learns a lot about the fund during a market crash.  We all choose given funds, with some expectations, and then we must re-evaluate if our expectations were met or not, when we experience both the good and bad about the fund in a period like the coronavirus meltdown.  My investing strategy is to invest in a fund I consider "conservative" enough to satisfy my criteria for ownership, and I then attempt to hold that fund for at least a year in "relatively normal" market conditions.  When I get into market crash period, of the proportions of 2008 and now 2020, I revert to doing what I think is prudent with my overall portfolio objective of preserving principal with moderate total return expectations.  Over the course of the last month, I have slowly and deliberately tried to reduce risk, by raising cash and eliminating funds that I did not believe were meeting my performance expectations.  The first fund I eliminated was PIMIX, but I continued ownership of VCFAX and SEMMX.  However, VCFAX and SEMMX started deteriorating a couple of weeks ago more than I was "expecting", so I started reducing them to lower levels, but ultimately sold them when their unexpected poor performance exceeded my expectations.  That still left me with a few of my most conservative investments, which were still holding up pretty well, but unfortunately they also started a level of deterioration, that violated my expectations for them, and as of a little over a week ago, I sold all my remaining funds, and I am now totally in money market funds.  

According to Schwab, my YTD porfolio performance is a total 1.25% loss--not exactly a successful preservation of principal.  What I will do next is unclear, except I do intend to re-enter the market, and not stay in cash any longer than necessary.  I will be looking for smart "opportunities" to put that cash back to work, to recoup that `1.25% loss, as soon as possible.  

I am not a trader, and not that good at trading, so I do admire the market timing decision of FD a few weeks ago, and I doubt I will do as good of a job as FD, in re-entering the market with positions he sees as good opportunities.  I am not a B&H investor, and so I would have no expertise in relating to what a B&H investor should do going forward.  I do know that history suggests B&H investors do pretty well, if you can afford to stay the course, but that is not what I do and I am not comfortable with that investing approach. I am comfortable with my investing style, and what I have done so far, and hopefully I will feel good about what I do next, but others will have to decide what is best for themselves and their portfolios, going forward.

I hope to read a post from you in the near future, in which you have successfully survived this market mess, and you can tell us what you did to successfully get to that point with your portfolio! 

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Explorer ○○○

Re: Sempx, Pimix, Vcfax what now?

Compare the returns for various multisector, high yield bond funds in 2008 and 2009, and you will find your answer. Most higher yield bond funds that took a beating in 2008 rebounded sharply in 2009, and investors who remained invested came out fine.

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Re: Sempx, Pimix, Vcfax what now?

How in the heck are you only down 1.25% ?
What strange magic are you using?
Long term treasury bond funds?
I own TLT, EDV and ZROZ (apparently not enough) but still getting crushed over here. Portfolio is down over 17% and falling.

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Re: Sempx, Pimix, Vcfax what now?

      sandman 100 - my crystal ball broke long ago. I invest using facts only. Even those aren’t rock solid 100% future economic indicators because facts change. 
       
       Just a year ago there was no indication of a possible pending disaster or possible recession because unemployment and inflation were low, we were dealing with tariffs and impeachment plus the stock market was overvalued. No one thought that would go on forever but some thought the end might be ugly. Posting discussions were about perfect allocations, 4% rules, TR vs. income investing as panaceas for all markets.

        So look what happened. The facts changed suddenly and many abandoned their convictions. DT, FD did not. I did not. We have three different ways of investing. FD leaves the market, DT seems content and I have already started picking up more income by dumping losers and investing in worst losers. Go figure.

        Here are the current facts as I see them, the short form. A novel virus in the past usually starts to subside after three months as already seen in China and several other countries that were affected earlier then others. So the U.S. being late to the “crisis” probably has 3 months to go and hasn’t peaked yet. As far as recessions and dividend cuts thats unknown crystal ball stuff. I choose to cover that anyway with excess to needs capital gains and yield.

         So see how your portfolio faired and plan any changes for next time. When you start to implement any changes if any is up to you. FD has to get back in, DT looks like he likes where he is and I see China largely being back in business as the beginning of the end so I’am already garbage picking.

          * There are trillions of dollars on the sidelines now in low yielding accounts that won’t keep up with anyone’s personal inflation rate, a fact. The herd will return from crazy land some day. That’s an opinion of course.

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Re: Sempx, Pimix, Vcfax what now?


@puckfan101 wrote:

How in the heck are you only down 1.25% ?
What strange magic are you using?
Long term treasury bond funds?
I own TLT, EDV and ZROZ (apparently not enough) but still getting crushed over here. Portfolio is down over 17% and falling.


No magic here--I tried to provide a picture of what I did in my previous post.  It starts by being a boring old retired investor, devoted to trying to preserve principal in my portfolio, by selecting bond oefs that meet my "low risk" criteria for purchase (primarily multisector bond oefs, nontraditional bond oefs, short term Munis, and short term bonds).  I try to monitor market conditions, by having a large number of watchlists, in various categories of mutual fund oefs. It started becoming more clear to me about a months ago, that this market was becoming "strange" as I started seeing a variety of funds, in various categories. faltering in a manner I had not seen before.  In my approach to preservation to principal, I started relating to this market as something out of the ordinary, but I still wasn't sure what was going to happen next, but I started "reducing risk" by lowering investments in my more risky funds (some multisector and some nontraditional), raising cash in a cautious manner.  When deterioration in the market started becoming more obvious (peak to trough performance), I increased the rapidity of reducing some of my holdings (mainly multisector and nontraditional), and eliminating other holdings, so my portfolio was becoming more and more risk averse, as the seriousness of this market deterioration, became more obvious.  About 3 weeks ago, I was down to just a handful of my most conservative funds (short term bond oefs and a low risk nontraditional), that were holding up the best, but then those funds started deteriorating, and I made the decision to sell those remaining funds as my ultimate action to preserve principal.  With all that movement in my portfolio, I still took a peak to trough hit, although I ended up selling all of my funds before I had significant impact on my YTD totals.  I still lost 1.25% on my YTD performance, so I was not totally successful in my preservation of asset goal.  If I would have sold everything about a month ago, that would have been a remarkable trading move, but I am not a good trader, and it takes more time for me to be more convinced to take a sell action.  I am not a buy and holder, and when I see a certain level of overall portfolio deterioration, I cut my losses and go into money markets.  I have been spoiled since 2008, with a relatively stable bond market, and just a few minor corrections.  This market felt different, started resembling 2008 market deterioration, and I just cut my losses, so I could have less to recoup, when this market storm cleared and starting looking more positive again.  My investing strategy will stink in hot bond markets like 2019, but it will look much better in downmarkets like 2020. 

Explorer ○

Re: Sempx, Pimix, Vcfax what now?

DT, 

I realize you are just providing info about funds and not making recommendations. Like it or not, however, you and FD are influencers and many, like myself choose bond funds based on your postings. It's no coincidence that I own the funds mentioned in the title. 

These funds were great when things were going good and were even pretty good at the beginning of the crash, now they've taken a big hit and I'm stuck with the loss unless I hold on and hope for the prices to go back up.

As Dawgie says, higher yielding bond funds went down in the 2008 recession and eventually snapped back. However, given the present rate environment is it even possible for these funds to snap back? 

 

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Re: Sempx, Pimix, Vcfax what now?

I owned a lot of PIMIX and took about a 6% hit before deciding to get out.  I loved that fund like a brother and it broke my heart to sell. I could not believe the speed at which it declined. I believe it came into being in 2007,  had a loss in 08, then soared like an eagle before crashing in flames.  It was 100% of my taxable portfolio, taking the place of my CD's, at around the same interest rate, before they crashed in 09. I will own it again, but at a much reduced amount.  I never did spend all the interest it kicked off, so now I know to be less piggy.  Once things calm down I plan on having only 50% as much in PIMIX, with the other 50% spread between mostly gov't. bond OEF's that have held up better with far less volatility.  A short list includes Vanguard VFIJX, VSBSX, VUSFX, VBTLX, and Dbl Line DBLTX, (not gov't but has held up well).  Less income all, but a barbell of hi and lo yielders with a damper on risk (hopefully). I don't know what's in store for bond OEF's in the future, but will first wait for the fog to clear. Phil.  

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Re: Sempx, Pimix, Vcfax what now?


@sandman100 wrote:

DT, 

I realize you are just providing info about funds and not making recommendations. Like it or not, however, you and FD are influencers and many, like myself choose bond funds based on your postings. It's no coincidence that I own the funds mentioned in the title. 

These funds were great when things were going good and were even pretty good at the beginning of the crash, now they've taken a big hit and I'm stuck with the loss unless I hold on and hope for the prices to go back up.

As Dawgie says, higher yielding bond funds went down in the 2008 recession and eventually snapped back. However, given the present rate environment is it even possible for these funds to snap back? 

 


Well, Dawgie has his opinion, and he may be right.  I don't think we yet know the full impact of this bear market, likely recession, on any business venture, including bond oefs.  I am anticipating this market collapse to get worse, and last longer, and I have not attempted to start thinking about where I will put my money, when the coronavirus threat starts subsiding.  You probably need to seek some professional financial advice to better answer your questions.

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Re: Sempx, Pimix, Vcfax what now?

I'm not nearly as savvy an investor as you but started buying ETF long term treasuries about 1 year ago.
They have done extremely well this year and like you, I began scaling down equities in late January and again 2 days after the Corona scare really started to rear it's ugly head on the market in early march.
Unfortunately I held onto my losing investments (hate selling at a loss) and they have gotten crushed over the past 2 weeks.
Thankfully the treasury funds have been a good hedge. Up over 18% on all 3 of them YTD. So that helped.

Still sitting on a rather large amount of PONAX with a 11.95 avg. Yeah, I know...yecchhhhh.
My question is, with retirement about 10 years away, is it wise to sell off or should I ride this out?
Hate seeing this deterioration on NAV although during the 08 recovery, PONAX bounced back quite nicely.

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Re: Sempx, Pimix, Vcfax what now?

Question: How do you guys quote previous posts?
My quoter appears to be broken. LOL

 

Thanks in advance

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Re: Sempx, Pimix, Vcfax what now?

I'm trying to think about how to respond to this thread.  Over the years I came to the conclusion that most of what I need to do is analyze funds but investments are not an accurate science because it's emotional.  What is a black swan? it's similar to a fire in a movie theater when everybody is rushing to the exit at once.  But, I don't wait for the fire if I just smell something funny I sell.

Basically, we are adults here and need to take responsibility for what we do.  A very important point is to know who you are and tailor your portfolio that way. But you also need to start from the basics and expand.  The basics are (Bogle way)  2 funds SP500 + US Tot bond index + B&H.  It is that simple.  Don't start with 10 funds, you must know what you own and why and think about max risk/volatility.  Question your self at every new move.  Did you add PIMIX? why? which funds are you going to sell first, at what %? why did you buy your next fund?. I have been saying it for years, more funds, more decisions, more trades, more complications, when it's time to switch which one? what % of your portfolio are you going to sell and what % loss? You had to make this plan years ago. Are you going to do anything when your portfolio goes down 10-20-30%? You read an article that diversification is better? Is it? why Bogle didn't believe in it? why Buffett says only own the SP500? Make a plan and write it (I bet you never did it), follow it (I bet you didn't) and it must meet your goals, temperament, and style.   Investing can be very basic and simple but many just complicate things.

As an accumulator, I understand the Bogle way + B&H for most but at retirement, it gets more complicated with more options.

One of my goals is never to lose more than 3% from any last top but there is a lot more behind the scene. Why do I need to wait for 3%? when my bond fund loses 0.5-1% I immediately question it. How is the category doing? can I find another category/fund. Every time I look at the whole portfolio when I need to trade. (Same in IT, when you make a change in one program it may affect other parts of the system).  Many times I just question the whole thing. Suppose you don't have anything and you won one million in the lottery after taxes.  How would you invest next Monday?  This is where you need to be now.

If most categories don't do well, it's a red flag.  How can it be that all stocks are going down, all bonds don't behave rationally at the same time? even treasuries kept losing when rates are going down.  The first thing I do is sell.  It is so rare.  If you can't see it then you can't take extra risk.  

I'm smart enough to know there are many things I don't know and why I created a system that works for me regardless of anybody else's opinion. I posted about it many times...the price never lies...this means charts+trend are always right.  The question is how quick you want to do something and I'm pretty quick.  

Others that use ETF/CEFs have limit order at a certain loss. Dick (the bond guy) does it. 

Another idea, if you care you can find several people with short term ideas.  Example: AGC: this article...Sitting still and doing nothing can be the hardest thing in the world but is likely the best course of action. Resist selling and even buying much of anything at this point. We need to see some stabilization before really buying anything further: 1) we need volatility (VIX) to peak and start to subside. 2) Oil prices need to stabilize. 3) We need to see new cases of COVID19 trend similar to China or South Korea with the second derivative trail off."

So, what now? for most, it's too late.  Stocks + most bonds lost already too much.  You are too late to sell and too early to buy in a bear market.  Sure, things can get ugly but how long and how much I don't know. But, investing for most should not be all or none and be part of your written plan.

warning: the above is just my opinion and not a recommendation

How do you like my new signature?  :-)

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Re: Sempx, Pimix, Vcfax what now?

Partial quote from FD:

"Basically, we are adults here and need to take responsibility for what we do.  A very important point is to know who you are and tailor your portfolio that way. But you also need to start from the basics and expand.  The basics are (Bogle way)  2 funds SP500 + US Tot bond index + B&H.  It is that simple.  Don't start with 10 funds, you must know what you own and why and think about max risk/volatility...."

Back in 2015 the Morningstar Default Portfolio outperformed 5000 active portfolios:

40% VTSMX (all US stocks)

20% VGTSX (International stocks)

40% VBMFX

I intend to modify this slightly by reducing bonds and adding VIG once the market gets close to revisiting the 2009 low. Yes, that's 80% down from the top. May not go that low, but patience is a virtue now more than ever. 

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Explorer ○

Re: Sempx, Pimix, Vcfax what now?

FD, 

Actually I do have a plan. Though, I do tend to revise it a bit as I go. 

1. Maintain an asset allocation of 40-50% stocks.

2. Have enough yield to meet my needs so I don't have to sell stocks in a downturn.

3. Stay the course, mostly,  in a downturn. 

4. Use balanced funds at the core of my portfolio (60%) so I don't have to worry about rebalancing that portion. 

5. Have a few small positions of some good stock funds (5%) to try to juice returns a little.

6. Use CEFs and Preferred Stocks (15% together) and higher yielding fairly safe bond funds (15%)  to bring up the yield enough to accomplish #2.

Not being someone who can just totally sit and watch I have done a few small tweaks along the way. 

1. I exchanged 5% of my port from Wellington to Wellesley on 2/18 and another 5% on 3/4. 

2. To try to get more yield I exchanged most of my VPCCX to PCN around 3/4. I sold all of my JMUTX and some Pimix on 3/17 and bought some UTG and some PKO. 

3. I used some of the money left from the Pimix sale to double down on my preferred stock NYMTN the day after it dropped around 60%, making a nice recovery (Thanks Belliavsky for posting the article that gave me confidence to do that. ) 

Unfortunately, I was taken by surprise by the sudden drop in the bond funds. Up to that point the drops in Sempx and Vcfax were rather small.

I expect the stocks and CEFs to eventually recover (I hope). However, as I said, I wonder if the 0% interest rates creates too much of an obstacle, for my bond oefs to make a come back. I'm thinking to use them, instead, to buy some dividend stocks like MMM or CVX.

One last thing I want to add. Whether or not it's your intention, the posts by you and DT strongly influence the higher yielding OEF bond, buys and sells, the thousands of readers of this forum make. Other than saying you were going to cash, I'm not sure either of you posted when you saw some issues with the funds that you frequently 'opinionate' about. Did I miss it? It's not your responsibility and we are adults who must do our due diligence but we do rely heavily on your insights.      

 

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Re: Sempx, Pimix, Vcfax what now?

sandman:"One last thing I want to add. Whether or not it's your intention, the posts by you and DT strongly influence the higher yielding OEF bond, buys and sells, the thousands of readers of this forum make. Other than saying you were going to cash, I'm not sure either of you posted when you saw some issues with the funds that you frequently 'opinionate' about. Did I miss it? It's not your responsibility and we are adults who must do our due diligence but we do rely heavily on your insights."  

sandman, I start threads as group discussion threads, using the input of other posters to talk about their fund selections and their experiences.  I provide information as part of that discussion--information that comes from M*, Schwab, and fund company websites and prospectus information.  Those threads are to help individuals like you, to have as much information as possible, in your due diligence activities.  I do not personally try to "influence" you or any other investor, to make any specific buy or sell decision.   I will offer thoughts about funds brought up for discussion, and I encourage others to offer thoughts about funds brought up for discussion, but it is your personal responsibility to sift through those discussions to form your own personal decisions.

When it gets into these market crash periods, that occur every 10 to 15 years, those present tough conditions, that forces each investor to assess their circumstances, regarding buy/sell/hold decisions.  My threads are not intended to make quick trade decisions, based on very short term performance patterns.  I repeatedly have stated that these threads are not designed to apply to short term trade decisions.   I have repeatedly stated that I am NOT a very good trader, and I am NOT a good model for anyone who seeks to make rapid trade decisions.  So you are right in that I did not provide you, or anyone else, information about what I personally am doing when I do decide to make rapid trade decisions, that I have self proclaimed that I am not good at doing, especially during highly rare market crash periods.  Traders have their own unique criteria for buying/selling/holding funds they use as trade vehicles---that is not me, not my skill, and not the purpose of my threads.

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Re: Sempx, Pimix, Vcfax what now?

DT, 

Although trading is not your skill you do provide analysis of funds at a deeper level than most here are capable of. I read your posts very carefully. You told us when and why you were dumping PIMIX some months ago, unrelated to this crisis. (I decided to keep it.) Your posts led me to buy into Sempx and Vcfax. I wish you would have told us when you decided to sell them. (If you did, I didn't see it, and I apologize.) 

I  have to go back and read Garys post where he speaks of Liquidity and Deleveraging. Apparently that's what's happening to Sempx. People are selling to raise cash to buy stocks, the fund has to sell assets to meet redemptions, hence the big drop in price. (Does Sempx use leveraging?)

I'm strategizing what to do going forward. I just signed up for a subscription to Barrons. Goldman Sachs is predicting a big snap back in equities in the latter part of the year. I'll probably sell Sempx on Monday to salvage what's left to use to buy stocks. 

By the way for anyone who's interesed, Barrons offers trial subscriptions for $1, on their website. The articles are very informative. 

 

 

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Re: Sempx, Pimix, Vcfax what now?

sandman:"Although trading is not your skill you do provide analysis of funds at a deeper level than most here are capable of. I read your posts very carefully. You told us when and why you were dumping PIMIX some months ago, unrelated to this crisis. (I decided to keep it.) Your posts led me to buy into Sempx and Vcfax. I wish you would have told us when you decided to sell them. (If you did, I didn't see it, and I apologize.) "

sandman, now I am getting very irritated!  You start a thread and repeatedly insinuate I have somehow failed in a responsibility to keep you informed of my personal market crash trade decisions--that is none of your business and covers a trading action that has never been part of any of my threads.  My discussions about PIMIX in my threads, were part of a longer term pattern of fund changes in PIMIX, that led me to believe that posters should be aware, that this fund was different than what it built its history on--things like rapidly rising and huge AUMs, its changing asset holdings, its changes in special dividends, etc.  In a market crash, you have a different set of conditions, that is a part of market crash management--a topic I have never included in any of my threads BECAUSE it is not relevant to the thread topic, and involves a trading skill set that I am not good at.  You may "wish" I would have incorporated market crash trading decisions in my threads, but I view your statements as an unreasonable expectation by you.

I have nothing else to contribute to this thread, and I do not intend to make any additional comments on this thread

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Explorer ○

Re: Sempx, Pimix, Vcfax what now?

DT,

I have the greatest respect for you. I'm always happy to see your posts. You provide very valuable information. 

I actually started this post to try to get some guidance on what to do with these bond funds. Not to throw blame. Somehow over the weekend it finally dawned on me that the problem is liquidity and 0% interest rates. 

I hope you realize how much sway you and FD have on this forum. Many readers make their bond buying decisions on what's posted by you two. I'd never even know about multi-sector and non-traditional bond funds, and the specific funds, except for reading this forum. If either of you suspected early on, that those funds which you frequently post about were having liquidity issues, it would have been great if you shared it here. Is it your responsibility to do so, no. Would it have been useful to the myriads of followers, yes. Maybe you had no idea, I don't know.  

Peace and stay safe. 

 

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Re: Sempx, Pimix, Vcfax what now?

please let it go, sandman.  you've had your say, move on.

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Re: Sempx, Pimix, Vcfax what now?

For the avoidance of doubt on this thread or any other thread anybody's comments are solely opinionated food for thought and nothing more.  Readers are required to take full responsibility of their actions.  In my opinion any reader who buys something because someone else mentioned it and wants to implicitly or explicitly blame the source should cease reading the forum and seek professional help.  

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