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SEMMX is falling off a cliff...

Holy smokes!

SEMMX is down -5.36% to $9.36, lost 53 cents today!

Oh my goodness! So much for all the SD, Sharpe, Sortino, and all the nonsense that it doesn't make any sense as far as SEMMX is concerned. I am betting all the other bond OEF funds would have lost drastically today!

 
 
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Re: SEMMX is falling off a cliff...

Well, I have mentioned the risks of IOs. While they rise when rates rise, they crash when rates fall.

YBB
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Re: SEMMX is falling off a cliff...


@yogibearbull wrote:

Well, I have mentioned the risks of IOs. While they rise when rates rise, they crash when rates fall.


Well, I have never heard anyone mention that IOs can drop like a rock or like an energy stock. ;)

All the risk factors that we use to determine whether funds are volatile or not is out with the window, I guess!  Maybe, there has to be a disclaimer that the risk factors only work in normal market conditions, which defeats the purpose of it. 

Anyways, it's time to move to stocks as they provide a much better risk/reward scenario after the pummeling they took this past couple of weeks!

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Re: SEMMX is falling off a cliff...

It is the credit risk with that fund. Most all bond funds have lost recently with the market falling so low. Now, even drops in yield do not translate, yet when yield rises, it does?

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Re: SEMMX is falling off a cliff...


@RainGater wrote:

@yogibearbull wrote:

Well, I have mentioned the risks of IOs. While they rise when rates rise, they crash when rates fall.


Well, I have never heard anyone mention that IOs can drop like a rock or like an energy stock. ;)

All the risk factors that we use to determine whether funds are volatile or not is out with the window, I guess!  Maybe, there has to be a disclaimer that the risk factors only work in normal market conditions, which defeats the purpose of it. 

Anyways, it's time to move to stocks as they provide a much better risk/reward scenario after the pummeling they took this past couple of weeks!


Search - I have been warning about IOs for months.

Basically, MBS pools can be securitized into IOs and POs. Some posters who loved funds using securitized strategies are now in cash.

POs act like MBS pool but IOs act as inverse. If a mortgage heavy bond fund is doing well when rates rise, it is using IOs, plain and simple. But IOs collapse when rates fall [even to 0 when re-fi accelerate].

I think that fancy footwork with derivatives is catching up with bond funds.

YBB
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Re: SEMMX is falling off a cliff...


@yogibearbull wrote:

Search - I have been warning about IOs for months.


I have seen numerous threads where people were clamoring to the idea of SEMMX is almost a cash sub - FD used to tout it in almost all the bond related threads. Lots and lots of people loved SEMMX and no one in any of those threads mentioned that IOs are really going to hurt SEMMX. Anyways, it doesn't matter as I made the choice of buying it and not understanding enough about the risks of these MBS related bond funds but didn't expect it to drop almost 10% in a week.

Oh well, lesson learned and I should have stuck with my stocks side of the portfolio as I know how to read the technicals and make decision wisely. In bond land, I followed the risk factors (SD, Sharpe, etc.) and fooled myself into thinking that I am providing buffer to the stocks, which is not even remotely the case now!

Anyways, good news is that stocks are at attractive levels and is letting me get at bargain prices... There is a silver lining after all if you look at it as a glass half full scenario. ;)

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Re: SEMMX is falling off a cliff...


@RainGater wrote:

@yogibearbull wrote:

Search - I have been warning about IOs for months.


I have seen numerous threads where people were clamoring to the idea of SEMMX is almost a cash sub - FD used to tout it in almost all the bond related threads. Lots and lots of people loved SEMMX and no one in any of those threads mentioned that IOs are really going to hurt SEMMX. Anyways, it doesn't matter as I made the choice of buying it and not understanding enough about the risks of these MBS related bond funds but didn't expect it to drop almost 10% in a week.

Oh well, lesson learned and I should have stuck with my stocks side of the portfolio as I know how to read the technicals and make decision wisely. In bond land, I followed the risk factors (SD, Sharpe, etc.) and fooled myself into thinking that I am providing buffer to the stocks, which is not even remotely the case now!

Anyways, good news is that stocks are at attractive levels and is letting me get at bargain prices... There is a silver lining after all if you look at it as a glass half full scenario. ;)


In "normal" markets you can expect normal results.  We are in a serious bad market, 2008 all over again, most bonds have been doing bad, even regular munis.  Even MINT lost -1.35.   Remember the following: past performance isn't a guarantee of future returns

I also told you I sold everything and why.

I also told you specifically to sell bank loans, did you? 

Stocks? not yet for me. Futures are showing close to -2% for the SP500 but the night is young, every day is another story and tomorrow is Quadruple witching

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Re: SEMMX is falling off a cliff...


@RainGater wrote:

Anyways, good news is that stocks are at attractive levels and is letting me get at bargain prices... There is a silver lining after all if you look at it as a glass half full scenario. ;)


These are bargain prices compared to a few weeks ago.  But are stocks "cheap" based on future earnings estimates?  We don't have a clue yet what the impact will be. 

These next few months could prove even more challenging for stocks if we are forced to "shelter in place" until Memorial Day.  Buying slowly and buying scared.  

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