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Frequent Contributor

Re: What you buying now


@chang wrote:

@bilperk wrote:

I am currently buying   BIV and BND and VMBS, 


Why BND? Every time I compare BIV to BND (or VBILX to VBTLX) the I-T fund looks better. Not a big difference, just slightly better.


@chang 

Better diversification with both.  For example BIV holds no mortgage back securities, and 96% of their portfolio maturity is 5-10 years.  BND has a much bigger range of maturities, and 37% less Baa compared to BIV.  This is likely the difference in returns.  BIV holds a lot more finance and industrial as well.  I do hold more BIV. 

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Re: What you buying now


@Intruder wrote:

@chang wrote:

@bilperk wrote:

I am currently buying   BIV and BND and VMBS, 


Why BND? Every time I compare BIV to BND (or VBILX to VBTLX) the I-T fund looks better. Not a big difference, just slightly better.


Bonds will underperform because the fed will keep rates lower for foreseeable future which will result in bond yields lower than the rate of inflation. Dividend stocks will provide higher yields at cap gains tax rates with equity kickers over the long term. Only reason to buy bonds is if retiree doesn’t mind living on lower income In retirement.


If rates go lower, bond prices go up.  Inflation may also decline as workers stop spending as much and start saving more because of uncertainty.   I'm not looking to marry these funds just a place right now that is better than cash.  Either of us could be right or wrong, that is what opinions are about.

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Re: What you buying now


@Intruder wrote:
Bonds will underperform because the fed will keep rates lower for foreseeable future which will result in bond yields lower than the rate of inflation. Dividend stocks will provide higher yields at cap gains tax rates with equity kickers over the long term. Only reason to buy bonds is if retiree doesn’t mind living on lower income In retirement.

I’m just not comfortable with my entire life’s savings in 100% equity. DVY got slaughtered in the crash; I’m guessing the aggravated damage was due to investors expecting (and receiving) dividend cuts.

Can we be sure the major dividend cuts are over now?

Maybe it’s an opportunity now ... and I am a buyer right now ... but not going to 100% equity.

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Re: What you buying now


@bilperk wrote:

@Intruder wrote:

@chang wrote:

@bilperk wrote:

I am currently buying   BIV and BND and VMBS, 


Why BND? Every time I compare BIV to BND (or VBILX to VBTLX) the I-T fund looks better. Not a big difference, just slightly better.


Bonds will underperform because the fed will keep rates lower for foreseeable future which will result in bond yields lower than the rate of inflation. Dividend stocks will provide higher yields at cap gains tax rates with equity kickers over the long term. Only reason to buy bonds is if retiree doesn’t mind living on lower income In retirement.


If rates go lower, bond prices go up.  Inflation may also decline as workers stop spending as much and start saving more because of uncertainty.   I'm not looking to marry these funds just a place right now that is better than cash.  Either of us could be right or wrong, that is what opinions are about.


Rates aren’t going below current fed rate of 0. Inflation will have no impact on rates. Just how much better than cash do you think bond yields will be when treasury issues $3.5T in new bonds next month that will mostly be bought by the fed?

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Re: What you buying now

Oh come on Chang, no guts, no glory! (Just kidding with you!)

I’m at about 85% equity, if the market corrects again I’ll be over 90% as I have some “low ball” orders for MMM, USB, VZ, D, T WFC, CSCO. I’ve sold much of my bond holdings, only hold Muni funds at about 6-7%, rest is cash- ~8%. I added to my positions in USB, VZ, T, WFC, PFE, MMM, CVS, DUK, KO, UN, and UPS back when things were selling off, some are higher now, others still “treading water” (or underwater). 

I too am not very excited by bonds here, yields are real low. So my “safety” right now is MM acts., at least temporarily. 

Win
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Re: What you buying now


@Intruder wrote:

[...] Only reason to buy bonds is if retiree doesn’t mind living on lower income In retirement.

 

Obviously not true, @Intruder, since not every retiree lives off his investment income. I, for example, and many others have diverse income streams that fully cover their living expenses. Currently, my portfolio is almost 100% in bond funds. I consider it my first priority to protect the value of my investment portfolio in this pandemic induced recession/depression.

 The United States economy is in a “downturn without modern precedent,” Fed Chair Powell said, a few hours after government data showed that another 2.4 million people filed new unemployment claims last week. Hence, I am in no hurry to buy equity funds until I have a better sense of what the "new normal" will look like.

Good luck,

Fred

 

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Re: What you buying now


@Win1177 wrote:

Oh come on Chang, no guts, no glory! (Just kidding with you!)


Actually I am a buyer right now. Next week I will almost certainly add some US and foreign LV via Global Wellington (VGWAX), and probably some mid-caps via VIMAX.

And if my 401k rollover check ever arrives I will put that back to work, too.

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Re: What you buying now

Dang it bil……..wish harder!

Buying/bought BAGIX, BIV, SCHZ, SWAGX, SWBSX, SWNTX. Thought about VMBS but the other funds own agency MBS.


@bilperk wrote:

I believe we are in for another downturn in the next 90 days perhaps driven by the China/Hong kong response, or spikes causing re-shutdowns.  I am currently buying   BIV and BND and VMBS, with the expectation of rates being lowered and investors gravitating to bonds if the downturn materializes. 


 

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Re: What you buying now


@fred495 wrote:

@Intruder wrote:

[...] Only reason to buy bonds is if retiree doesn’t mind living on lower income In retirement.

 

Obviously not true, @Intruder, since not every retiree lives off his investment income. I, for example, and many others have diverse income streams that fully cover their living expenses. Currently, my portfolio is almost 100% in bond funds. I consider it my first priority to protect the value of my investment portfolio in this pandemic induced recession/depression.

 The United States economy is in a “downturn without modern precedent,” Fed Chair Powell said, a few hours after government data showed that another 2.4 million people filed new unemployment claims last week. Hence, I am in no hurry to buy equity funds until I have a better sense of what the "new normal" will look like.

Good luck,

Fred

 


I am in the same camp as Fred.  I am a retiree, focused on preservation of principal.  Yield is not what I am focused on, but rather total return, that will allow my principal to be preserved, without major risk if this market starts another downturn.  I had a very small loss with the March crash, and I am now back close to my YTD level, without taking major risk investments.  I now have 7 bond oefs that have a positive momentum over the past month, and a positive YTD, or very close to it, and last week I added a conservative Intermediate Core and Intermediate Core Plus fund.  That said, I have all funds on a short leash, and I will sell funds that start an unexpected decline, but so far that has not occurred with the 7 funds I hold.  I have been doing a lot of trading since the crash, and it is my plan to replace low risk holdings, with higher risk holdings, as I become more confident that higher risk/higher return funds, have staying power.  I am not recommending this to anyone else, but it does fit my personal life situation, and my desire to keep risk low within my personal risk parameters.

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Re: What you buying now


@@fred495 wrote:

@Intruder wrote:

[...] Only reason to buy bonds is if retiree doesn’t mind living on lower income In retirement.

 

Obviously not true, @Intruder, since not every retiree lives off his investment income. I, for example, and many others have diverse income streams that fully cover their living expenses. Currently, my portfolio is almost 100% in bond funds. I consider it my first priority to protect the value of my investment portfolio in this pandemic induced recession/depression.

 The United States economy is in a “downturn without modern precedent,” Fed Chair Powell said, a few hours after government data showed that another 2.4 million people filed new unemployment claims last week. Hence, I am in no hurry to buy equity funds until I have a better sense of what the "new normal" will look like.

Good luck,

Fred

 


Investors can have diverse investment streams without owning bonds that more than cover their living expenses. In addition to investment income I receive SS and RMDs from retirement plans which exceed my expenses and taxes by 50%. I also have a Roth IRA from which I could draw a Non taxable 30K RMD if needed. 

We already know what the new normal for equities will look like .It will include tech cos and other sectors that will be needed to rebuild the economy such as FAANGs, pharma, HD, LOW, WMT,  VZ, T, QQQ and other sectors such as big oil which will expand the post covid 19 WFH business sector. Fixed income yields will remain at or below the rate of inflation because the fed will keep the interest rate below 2%.

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Re: What you buying now


@Intruder wrote:

Fixed income yields will remain at or below the rate of inflation because the fed will keep the interest rate below 2%.


If so, and assuming one does want a bond component in their portfolio, wouldn’t it make sense to go long IG and own something like BLV / VWESX?

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Re: What you buying now


@chang wrote:

@Intruder wrote:

Fixed income yields will remain at or below the rate of inflation because the fed will keep the interest rate below 2%.


If so, and assuming one does want a bond component in their portfolio, wouldn’t it make sense to go long IG and own something like BLV / VWESX?



@chang wrote:

@Intruder wrote:

Fixed income yields will remain at or below the rate of inflation because the fed will keep the interest rate below 2%.


If so, and assuming one does want a bond component in their portfolio, wouldn’t it make sense to go long IG and own something like BLV / VWESX?


Long term bonds Are more stable. But the question I have is whether the Price of the Fund will decline when the value of the LT bonds It holds decline due to an an increase in future interest rates.

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Re: What you buying now

Holdings are not static in a fund. Hopefully PMs have holdings due in the short term too.


@Intruder wrote:

@chang wrote:

@Intruder wrote:

Fixed income yields will remain at or below the rate of inflation because the fed will keep the interest rate below 2%.


If so, and assuming one does want a bond component in their portfolio, wouldn’t it make sense to go long IG and own something like BLV / VWESX?



@chang wrote:

@Intruder wrote:

Fixed income yields will remain at or below the rate of inflation because the fed will keep the interest rate below 2%.


If so, and assuming one does want a bond component in their portfolio, wouldn’t it make sense to go long IG and own something like BLV / VWESX?


Long term bonds Are more stable. But the question I have is whether the Price of the Fund will decline when the value of the LT bonds It holds decline due to an an increase in future interest rates.


 

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Re: What you buying now


@Intruder wrote:

We already know what the new normal for equities will look like .It will include tech cos and other sectors that will be needed to rebuild the economy such as FAANGs, pharma, HD, LOW, WMT,  VZ, T, QQQ and other sectors such as big oil which will expand the post covid 19 WFH business sector. Fixed income yields will remain at or below the rate of inflation because the fed will keep the interest rate below 2%.

 

Sorry, @Intruder, but I don't have your knowledge nor your certainty of what the "new normal for equities will look like". The same goes for your prediction that "the fed will keep the interest rate below 2%".

Your forecast may turn out to be perfectly correct, but I prefer to take a wait and see attitude at this time and stay invested in relatively conservative short and intermediate bond funds that survived the March downturn with minimal or no losses. Anything else would be too much of a gamble, an unnecessary risk I don't have to take at this stage of my life when preservation of principal is now my primary objective. In other words, I usually make my investment decisions based on my comfort level and how well I will sleep at night.

Good luck,

Fred

 

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Re: What you buying now


@fred495 wrote:

@Intruder wrote:

We already know what the new normal for equities will look like .It will include tech cos and other sectors that will be needed to rebuild the economy such as FAANGs, pharma, HD, LOW, WMT,  VZ, T, QQQ and other sectors such as big oil which will expand the post covid 19 WFH business sector. Fixed income yields will remain at or below the rate of inflation because the fed will keep the interest rate below 2%.

 

Sorry, @Intruder, but I don't have your knowledge nor your certainty of what the "new normal for equities will look like". The same goes for your prediction that "the fed will keep the interest rate below 2%".

You forecast may turn out to be perfectly correct, but I prefer to take a wait and see attitude at this time and stay invested in relatively conservative short and intermediate bond funds that survived the March downturn with minimal or no losses. Anything else would be too much of a gamble, an unnecessary risk I don't have to take at this stage of my life when preservation of principal is now my primary objective. In other words, I usually make my investment decisions based on my comfort level and how well I will sleep at night.

Good luck,

Fred

 


Fed will keep rates below 2% for a long time as it did after the financial crash of 2008 when the rate was lowered to 0 in December 2008 where it remained for 7 years before the fed started raising it to 2.5% in December 2018 .Fed reduced rates 3 times in 2019 and in the first Qtr of this year reduced It to O again because of the covid 19 shut down of the economy where it will remain for a Long time. Given the global recession and negative interest rates imposed by other central banks there will be no reason for fed to raise its rate to even 1% while the other central bank rates are below 0 or 0.25%. Raising interest rates will slow down economic growth which extends the recession. Fed won’t consider raising rate above 0 until GDP growth is over 2% for at least 12 months with unemployment below 4%.  

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Re: What you buying now

If rates go lower, bond prices go up.
------------------------

Why not go with Long Term Treasury or Zero Bonds?

TLT,
ZEROZ (from Pimco)

@bill 

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Re: What you buying now

I have the evil eye for my income side on Northwestern Corp. (NWE). A small ele. ulit. with a 4% yield, 68% payout on dividend. The mid range is $ 62 at closing price $57.84 fri. Still time to buy it and get June dividend.  This ( IMO) should go with  present: AEP, D, DUK, and SO.  Mix in CNP, KMI, and OKE and they should carry heavy load on income side. NWE looks to have a good history of raising their dividends.

Have made up my mind ( maybe ? ) I am going to stop at 50 stock holdings! :)

Copie

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Re: What you buying now

Put 4 slabs of baby back ribs on smoker after siting in refri. over night with rub and seasonings.

NWE was my stock tip and ribs for my food tip! can not beat that for free ! :)

Have a great holiday!

Copie

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Re: What you buying now

Hi @Statsguy ,

I added to existing positions through the period starting a week before the bottom and pretty much stopped buying the week after.  I mostly bought positions that I could improve the cost basis of.  Then I started selling those positions back to their allocated levels when my technical indicators began to signal a short-term top.

I did add some new names also, CHE and ADM come to mind.

Of those trades, I think ABBV (yield 5.12%) still may have some value for those who are looking to open a new position. First of all, it is a Dividend Aristocrat that has increased it's dividend for more than 25 years.  It is a "defensive" stock, and the company has a strong balance sheet.

For those who do not have the advantage of a Fidelity account, I will post some cursory information available to all Fidelity customers.  There are many more resources there to dig deeper if you want.

Price History

abbv 4.jpg

Current price is roughly in the middle on the 5-year chart, but P/E for the stock is 16 which is very cheap for a Biotech.

abbv 2.jpg

Fundamental Analysis is very strong

abbv.jpg

Thompson Reuters Starmine is an accuracy-weighted quantitative-summary of analyst opinion.

abbv 3.jpg

If I remember correctly, my last ABBV purchase the week prior to the market bottom came with a 6.3% yield. The current yield is 5.12% which is still really good for a dividend aristocrat. 

I routinely do cursory analysis of all my holdings like this one which is why it is on my mind. I will be selling this position back to the target allocation at some point.

While we don't communicate much, I have followed your posts for decades Stats. I am suggesting this because I know that you will do your own investigation if it looks interesting.

Thank you,

Holiday

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