*Investors Blog*

[BrainThicknessVariation]

and when they revise down almost a million jobs the quants don't care. Regression analysis tells them revisions don't matter.

This is because we are now back to "bad news is good news" that first started during the Subprime Crisis. Bad news at this point is great because the chances of a September rate cate (as seen over at the CME FedWatch tool) jumps. Market bulls would love nothing more than a FF rate cut.

 

[alarmguy]

New home sales up 10.6% in July, home prices rise

 

[supton]

Trying to decide if I want to trade my VSGIX for FXAIX that is in my 401k. Takes too long in Fidelity to find but it appears I bought it in Feb 2021 and so it has managed to lose money. Oops. Timing fail. At the time I realized that my portfolio had a stable money market fund and I thought, it'd be nice if all my money was working for me, since it's 25 years to retirement. Not sure why I was thinking small cap at the time but whatever. Probably should have shoved into my target fund instead.

Probably best to wait until it recovers, then think about it. No sense selling at a loss. But seeing the red in my account bothers me.

 

[Dave Hess]

Trying to decide if I want to trade my VSGIX for FXAIX that is in my 401k. Takes too long in Fidelity to find but it appears I bought it in Feb 2021 and so it has managed to lose money. Oops. Timing fail. At the time I realized that my portfolio had a stable money market fund and I thought, it'd be nice if all my money was working for me, since it's 25 years to retirement. Not sure why I was thinking small cap at the time but whatever. Probably should have shoved into my target fund instead.

Probably best to wait until it recovers, then think about it. No sense selling at a loss. But seeing the red in my account bothers me.

View attachment 236747

Don’t worry about the red, it’s just lagging for now.

What percentage of your 401K is VSGIX ?

 

[supton]

Don’t worry about the red, it’s just lagging for now.

What percentage of your 401K is VSGIX ?

Yeah I know--bugs me all the same. Is what it is I know.

10% of my 401k is in VSGIX. 27% is in a 2040 target date fund and the rest in JLGMX. It's a bit odd to have a target date fund and a growth fund and this small cap fund, but the portfolio was started for me years ago along these lines (albeit with a stable money market fund instead of this VSGIX). In a few years I'll probably add bonds to the mix, but still in accumulation phase I figure. IIRC what I've read is that large cap is really being bolstered by a few very large companies, and that historically small cap did better--I think that's why I traded into in the first place.

 

[ArrestMeRedZ]

I'm a little confused about the value of a target date fund (TDF). They seem to perform very poorly when compared to a decent growth mutual fund, Berkshire, or even an S&P 500 ETF. If the market goes south and you are forced to sell some you sell at the ratio of the TDF, say 60% stocks and 40% bonds, therefore, you are still selling mostly stocks. Sequence of return losses are reduced by 40% but are still there.
If you hold 60% stocks/stock funds (as a mutual fund, S&P ETF, Berkshire, etc) and 40% bonds/bond funds you can sell only bonds in a down stock market and avoid sequence of return losses.
It seems like TDFs are a salesman's trick to earn more fees on a marginal product that can't avoid the risk it was designed to minimize. I am open to being convinced otherwise.

 

[JeffKeryk]

New home sales up 10.6% in July, home prices rise

Yep. And with the soft landing, interest rates are coming down. A friend just saved 3/4 percent and will probably refi again later this year.
More people will be in the market, especially on the low end. Inventory sucks around here, but that's nothing new.
This economy is bulletproof.

 

[supton]

I'm a little confused about the value of a target date fund (TDF). They seem to perform very poorly when compared to a decent growth mutual fund, Berkshire, or even an S&P 500 ETF. If the market goes south and you are forced to sell some you sell at the ratio of the TDF, say 60% stocks and 40% bonds, therefore, you are still selling mostly stocks. Sequence of return losses are reduced by 40% but are still there.
If you hold 60% stocks/stock funds (as a mutual fund, S&P ETF, Berkshire, etc) and 40% bonds/bond funds you can sell only bonds in a down stock market and avoid sequence of return losses.
It seems like TDFs are a salesman's trick to earn more fees on a marginal product that can't avoid the risk it was designed to minimize. I am open to being convinced otherwise.

Less risk but still growth. Every investor is an individual with differing levels of risk tolerance.

Looking at the funds available in my 401k, I'm not sure how it's arranged but their growth is strongest:

The retirement target index funds are halfway down the list.

Supposedly the S&P 500 year to year growth, if looking over something like 50 years, is around 9% growth. These target funds are in that area, lower than the "best" growth funds but still decent. Great for an "investor" who wants to set and forget. It'll automatically diversify for them--by the time one is selling, they have largely shifted to bonds (assuming one is not cashing out ahead of time).

That's my take on it anyhow.

 

[JHZR2]

I'm a little confused about the value of a target date fund (TDF). They seem to perform very poorly when compared to a decent growth mutual fund, Berkshire, or even an S&P 500 ETF. If the market goes south and you are forced to sell some you sell at the ratio of the TDF, say 60% stocks and 40% bonds, therefore, you are still selling mostly stocks. Sequence of return losses are reduced by 40% but are still there.
If you hold 60% stocks/stock funds (as a mutual fund, S&P ETF, Berkshire, etc) and 40% bonds/bond funds you can sell only bonds in a down stock market and avoid sequence of return losses.
It seems like TDFs are a salesman's trick to earn more fees on a marginal product that can't avoid the risk it was designed to minimize. I am open to being convinced otherwise.

I thought they were just a blend of a few other products at a ratio aligned to recommendations, and intended to set and forget.

In theory then there is no reason to ever sell anything. I guess it naturally rebalances, but that would happen due to appreciation/depreciation, which should be a good thing.

I guess when it is time to redeem you may face an issue of selling the wrong things at the wrong time, but that’s the case with any product. And notionally by the time you’re going to sell it you would be already split out/more cash/etc. not sure it works that way in practical terms.

I think the point is to force people who don’t want to know anything about this stuff to have one ticker and more risk.

 

[BrainThicknessVariation]

Yep. And with the soft landing, interest rates are coming down. A friend just saved 3/4 percent and will probably refi again later this year.
More people will be in the market, especially on the low end. Inventory sucks around here, but that's nothing new.
This economy is bulletproof.

31% of the jobs "added" in the last year just disappeared overnight.

Saying it repeatedly won't make it come true.

 

[JeffKeryk]

31% of the jobs "added" in the last year just disappeared overnight.

Saying it repeatedly won't make it come true.

You miss the point. The soft landing is allowing for the Fed to lower the Prime Rate instead of using it to hard press the economy like Paul Volker did.

You have an agenda and echo its talking points. That does not show an understanding of the economy.

 

[Dave Hess]

Yep. And with the soft landing, interest rates are coming down. A friend just saved 3/4 percent and will probably refi again later this year.
More people will be in the market, especially on the low end. Inventory sucks around here, but that's nothing new.
This economy is bulletproof.

I respectfully disagree about the soft landing and the economy is bulletproof.
How would things be if trillions and trillions of cash NOT pumped into economy ?

I have to admit I’m doing very well….. the average American is not doing so well and barely making it with everything that’s going on. Look at all the debt and defaults. Three generations of families living under one roof.

There’s a few folks that I talk to by PM and know how I feel about this puppet show…..
They know who they are.

I just hit an all time high today in my Vanguard account and Fidelity 401K.
Thanks Joe, Janet and Jerome, keep up the great job.

 

[Pablo]

You miss the point. The soft landing is allowing for the Fed to lower the Prime Rate instead of using it to hard press the economy like Paul Volker did.

You have an agenda and echo its talking points. That does not show an understanding of the economy.

You miss the point as well. But ok

Also you really can’t undo 12 months of bragging

 

[BrainThicknessVariation]

You have an agenda and echo its talking points. That does not show an understanding of the economy.

Re: "agenda" - They say "every accusation is an admission"

When I see a million jobs disappear overnight, “soft landing” is the last thing that comes to mind. Sorry you don’t like the data, that’s not my problem.

You miss the point. The soft landing is allowing for the Fed to lower the Prime Rate instead of using it to hard press the economy like Paul Volker did.

I don't even know what this means.

What I think you mean is, the Fed needs to choke off inflation while being cognizant of the deteriorating employment situation. If that's the case, then we are in agreement. So-called "stagflation".

 

[BrainThicknessVariation]

There’s a few folks that I talk to by PM and know how I feel about this puppet show…..
They know who they are.

Lol is it forbidden to talk about the economy in a negative light on BITOG? Sheesh people are so sensitive. Not much of an "Investors Blog" if markets are only allowed to go in one direction.

 

[supton]

Lol is it forbidden to talk about the economy in a negative light on BITOG? Sheesh people are so sensitive. Not much of an "Investors Blog" if markets are only allowed to go in one direction.

No, but politics is verboten. Since politics drives policy, if one discusses what drove a policy (or reporting of policies and/or results), it can get political rather fast if one isn't careful.

 

[Astro14]

Lol is it forbidden to talk about the economy in a negative light on BITOG? Sheesh people are so sensitive. Not much of an "Investors Blog" if markets are only allowed to go in one direction.

He was referring to political discussion.

You are free to talk about the economy.

 

[supton]

I just hit an all time high today in my Vanguard account and Fidelity 401K.

Nice. I think I'm still down a hair, a couple months ago it was better.

But when I look at cost basis, I'm only at 1.3x what I've put in. But I've really only been at it for 11 years and I've been ramping up my contribution amount that time, so it's not too surprising... but it's still sobering. I need to wait another decade and then it'll look good, time in market and all.

 

[PWMDMD]

When I see a million jobs disappear overnight,

Millions of jobs did not disappear over night. These aren’t real people losing jobs - they simply never existed. Even with the 800K jobs not existing, job growth was still robust, just not as robust as thought, and so little has changed based on the revised jobs report.This is part of the reason why the market did not freakout. It was already factored in and it doesn’t change the outlook all that much.

 

[BrainThicknessVariation]

Millions of jobs did not disappear over night. These aren’t real people losing jobs - they simply never existed. Even with the 800K jobs not existing, job growth was still robust, just not as robust as thought, and so little has changed based on the revised jobs report.This is part of the reason why the market did not freakout. It was already factored in and it doesn’t change the outlook all that much.

Correct, 818k jobs we thought existed, disappeared. You can spin it any way you want. If the number was 10 million, would it be no big deal too because they "simply never existed"? Ya, sounds pretty ridiculous doesn't it.

Re: "freaking out" - this is good news for the market, hence what you perceived as not a big deal. We are in the "bad news is good news" stage. We are now moving to there likely being 25bp cuts in the next successive 4 meetings, for a grand total of 100 bps. That's bullish for the market...