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chang
Valued Contributor

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows

“Second, " 1980-2019 it has been up and down but on the whole level."  No.  1980 the NAV was $9.74.  Today it is $5.90”

You misquoted me quite absurdly. Take out 1998-2008.

What I said was: “The major erosion took place from 1998-2008. Otherwise during the period from 1980-2019 it has been up and down but on the whole level.“ The word ”otherwise” is there for a reason. 

First, I didn't say constantly eroding NAV, I said "NAV erodes by 1% per year over its entire life"

Sounds like constant erosion to me.

I guess we are completely failing to communicate here.

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RainGater
Participant ○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@bilperk wrote:

Second, " 1980-2019 it has been up and down but on the whole level."  No.  1980 the NAV was $9.74.  Today it is $5.90.


Whoa! Double Whoa!!

I didn't think that there was so much NAV erosion since 1980.

OTOH, if you add dividends all the way from 1980, TR is okay. PV stats are only available from 1985 but up over 7.8% - not bad!

M* chart is available from 1978 and it doesn't look that bad! Since we are talking about income, it has fallen from 1978, yes, but TR proves that it made over 8% from 1978.

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racqueteer
Participant ○○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows

So, trying to clarify for us folks in the cheap seats, it sounds like the nav has been dropping, ON AVERAGE, over the relevant time period, but all of that apparent erosion has been due to distributions?  TR was still positive?  And the 'erosion' was lumpy, with some GAINS as well; not a CONSISTENT, ongoing loss (kind of verbal nitpicking)?  Am I getting all that correctly?

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ctyankee
Participant ○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@RainGater wrote:

@bilperk wrote:

Second, " 1980-2019 it has been up and down but on the whole level."  No.  1980 the NAV was $9.74.  Today it is $5.90.


Whoa! Double Whoa!!

I didn't think that there was so much NAV erosion since 1980.

OTOH, if you add dividends all the way from 1980, TR is okay. PV stats are only available from 1985 but up over 7.8% - not bad!

M* chart is available from 1978 and it doesn't look that bad! Since we are talking about income, it has fallen from 1978, yes, but TR proves that it made over 8% from 1978.


TR is the way to view this, but I think that going back that far becomes dangerous, particularly when yields were so much higher.  

For example (using your link), $10,000 grew by 5 fold to $50,000 from 1985 to 1995 (10 years).  It took until 2016 (21 years) to grow another 5 fold to $250,000.    

ctyankee

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fffloyddd
Explorer ○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


arriba: how do you keep up to date on tom lee's thoughts?
@arriba wrote:

Thanks again Tom Lee for your astute, smack on 2019 stock market projections you made at EOY 2018/BOY 2019 that prompted me to load up again this year on stocks and largely forsake bonds other than my ballast bonds and a (previously cashed in) spec play on LT bonds.


 

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bilperk
Participant ○○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@chang wrote:

Second, " 1980-2019 it has been up and down but on the whole level."  No.  1980 the NAV was $9.74.  Today it is $5.90”

You misquoted me quite absurdly. Take out 1998-2008.

What I said was: “The major erosion took place from 1998-2008. Otherwise during the period from 1980-2019 it has been up and down but on the whole level.“ The word ”otherwise” is there for a reason. 

First, I didn't say constantly eroding NAV, I said "NAV erodes by 1% per year over its entire life"

Sounds like constant erosion to me.

I guess we are completely failing to communicate here.


Read what you wrote!  It hasn't been level "on the whole" from 1980- 2019, it has been from 9.74 to 5.90.  That isn't level.  The highest NAV in 1998 was 8.21.  That means it had dropped 18% in 19 years or about 1% per year.  @008 was a bad year, NAV down to 3.90.  By 2012 it was up in the 6's  It has fallen since then to the mid 5s and is now at 5.90.  Point is, yes it goes up and down with the fortunes of equities, but overall, it loses NAV, like all high yield funds.

"First, I didn't say constantly eroding NAV, I said "NAV erodes by 1% per year over its entire life"

Sounds like constant erosion to me."  Sounds like average erosion to me.    

Hint:  10-5.9 / 10= 41%  41 / 40 years = about 1% per year NAV erosion.  No reason to believe it won't continue over cycles.

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bilperk
Participant ○○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@RainGater wrote:

@bilperk wrote:

Second, " 1980-2019 it has been up and down but on the whole level."  No.  1980 the NAV was $9.74.  Today it is $5.90.


Whoa! Double Whoa!!

I didn't think that there was so much NAV erosion since 1980.

OTOH, if you add dividends all the way from 1980, TR is okay. PV stats are only available from 1985 but up over 7.8% - not bad!

M* chart is available from 1978 and it doesn't look that bad! Since we are talking about income, it has fallen from 1978, yes, but TR proves that it made over 8% from 1978.


Absolutely.  If you can keep your hands off the income you will get 7.8% since 1985.  Only 5% in the last 5 years however since rates have hit bottom.  But remember, you are taking some equity like risk.  I,m not suggesting it is a bad fund, just that the income has been falling since day one which is easy to see on PV, if you take the dividends rather than reinvest.

So if you take the dividends you lose 40% of your capital and your income drops from 1400 in 1979 to 387 in 2018.

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bilperk
Participant ○○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@racqueteer wrote:

So, trying to clarify for us folks in the cheap seats, it sounds like the nav has been dropping, ON AVERAGE, over the relevant time period, but all of that apparent erosion has been due to distributions?  TR was still positive?  And the 'erosion' was lumpy, with some GAINS as well; not a CONSISTENT, ongoing loss (kind of verbal nitpicking)?  Am I getting all that correctly?


Pretty much, but distributions don't lower NAVs in a bond fund.  It is selling bonds below the purchase price that causes erosion or defaults.  There is no real history of defaults with VWEHX because it holds higher junk.

Actually, all the distributions have caused the total return.  For example, 8% long term TR with 1% NAV erosion means an average of 9% distributions  since inception.

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archer
Participant ○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@bilperk wrote:

@racqueteer wrote:

So, trying to clarify for us folks in the cheap seats, it sounds like the nav has been dropping, ON AVERAGE, over the relevant time period, but all of that apparent erosion has been due to distributions?  TR was still positive?  And the 'erosion' was lumpy, with some GAINS as well; not a CONSISTENT, ongoing loss (kind of verbal nitpicking)?  Am I getting all that correctly?


Pretty much, but distributions don't lower NAVs in a bond fund.  It is selling bonds below the purchase price that causes erosion or defaults.  There is no real history of defaults with VWEHX because it holds higher junk.

Actually, all the distributions have caused the total return.  For example, 8% long term TR with 1% NAV erosion means an average of 9% distributions  since inception.


I don't understand this discussion well enough to argue one way of another, but It sounds like if you don't take the distributions, VWEHX had a decent TR since 1985, but in the past 5 years it has not done as well as earlier.

Why not when comparing to other funds, adjust for the amount of distribution taken? How does it stack up against other funds that average 4% distributions if you only take 4% from VWEHX? To me it looks like this fund provides good income and due to decreased NAV, reinvested distributions increase dollar amount overtime to help keep up with inflation. 

 

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chang
Valued Contributor

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows

Bill, read what I wrote, not what you wrote I wrote. Jeez...
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bilperk
Participant ○○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@archer wrote:

@bilperk wrote:

@racqueteer wrote:

So, trying to clarify for us folks in the cheap seats, it sounds like the nav has been dropping, ON AVERAGE, over the relevant time period, but all of that apparent erosion has been due to distributions?  TR was still positive?  And the 'erosion' was lumpy, with some GAINS as well; not a CONSISTENT, ongoing loss (kind of verbal nitpicking)?  Am I getting all that correctly?


Pretty much, but distributions don't lower NAVs in a bond fund.  It is selling bonds below the purchase price that causes erosion or defaults.  There is no real history of defaults with VWEHX because it holds higher junk.

Actually, all the distributions have caused the total return.  For example, 8% long term TR with 1% NAV erosion means an average of 9% distributions  since inception.


I don't understand this discussion well enough to argue one way of another, but It sounds like if you don't take the distributions, VWEHX had a decent TR since 1985, but in the past 5 years it has not done as well as earlier.

Why not when comparing to other funds, adjust for the amount of distribution taken? How does it stack up against other funds that average 4% distributions if you only take 4% from VWEHX? To me it looks like this fund provides good income and due to decreased NAV, reinvested distributions increase dollar amount overtime to help keep up with inflation. 

 


Archer,

Pat Morgan has produced charts in the past based on withdrawals and capital keeping up with inflation.  IIRC VWEHX didn't fair well against Wellesley.  In any event, we can't buy past performance and right now VWEHX only yields 4.47%.

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bilperk
Participant ○○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@chang wrote:
Bill, read what I wrote, not what you wrote I wrote. Jeez...

why are you quibbling over average nav erosion?  What you wrote was only partially accurate;  There was a higher degree of erosion between 1998 and 2008, but it didn't make up most of the erosion, because the fund gained a lot of that back in the subsequent years and it is still over 40% down from inception.  2008 was the one really bad year going from 6 something to 3 something.

And when the next bear comes we may well see 3s or 4s again.

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sthanga
Explorer ○○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows

Arriba,

Thank you for your comments.

SRT

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chang
Valued Contributor

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows

Bill I don’t care about inception. Forty years ago is too out of date. It’s flat the last five years. Good enough for me.
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RainGater
Participant ○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@chang wrote:
Bill I don’t care about inception. Forty years ago is too out of date. It’s flat the last five years. Good enough for me.

You are just fooling yourself by looking at the positive years only. We are blessed with one of the biggest bull markets of our lifetime and you want to use it as a reference point for the future?

What will happen to all these high yields when we get a meaningful pullback of at least 10+%, at some point in the not so distant future, is anyone's guess!

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bilperk
Participant ○○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@chang wrote:
Bill I don’t care about inception. Forty years ago is too out of date. It’s flat the last five years. Good enough for me.

Actually, if we go back to 5 full years from Jan 2014 through Dec 2018 the NAV went from 6.03 to 5.23  That is a 2.7% NAV drop per year.  So even though the market has a 10+% CAGR over the last five years and VWEHX is up 14% this year alone, it is still eroding.  What do you think will happen when the bear comes?

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chang
Valued Contributor

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows

Rain: then I’ll sell. Right now it has been and continues to be a very successful investment.

I own equity, too, which will tank during the next bear market.

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chang
Valued Contributor

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows

Bill: it will drop and I’ll sell it.
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bilperk
Participant ○○○

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows


@chang wrote:
Bill: it will drop and I’ll sell it.

Sell low!  I can't really add to that.

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chang
Valued Contributor

Re: PIMIX Income Fund Update: Taking a Patient Approach as Growth Slows

Once again Bill, you’re just trying to be dense. I will sell at the top and buy at the bottom. Does that clarify it for you?

Jeez. This is deja vu from the old Bill of the politics forum, posting a thousand times that Hillary won the popular vote. Nobody can not read someone’s post like you, I have to admire that skill.
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