*Investors Blog*

[Pablo]

As this market goes along I'm getting worried. People think down days are just dips on the way up. From long experience, I know it isn't always so.

So I'm holding to my asset allocation plan quite rigidly - 30% cash and bonds, 25% Canadian equity, 25% US equity, 20% International equity. That means I keep selling the stuff that has gone up and investing in the stuff that's falling behind.

We live very comfortably on our pensions, so our investments aren't critical. If they were, at my age, I'd be cutting back on the equities and buying more fixed income - which has gone nowhere lately. After taxes and inflation, I doubt fixed income even breaks even. But safe, yes. So I have the luxury of being seriously over-invested in equities - for someone my age that is.

Similar but different to much different. Your concerns are quite valid, I've been thinking this way since before retiring, but not necessarily forming my portfolios around these concerns.

Same worries actually.

We would be just fine if every cent we hold is in a money market account. Inflation or not! (stupid, but yes)

I'm (mine not wife's) probably closer to 50% cash equivalents (I count all my ST gov funds as cash, but earn more than MM). All the bond stuff is probably 10%. 40% is all over the map, stocks, PMs, BDC's, REITs. Preferreds, stock funds, weird stock hybrid option funds, inverse funds, etc - all I will say about these, show weakness and I'm out. I mean why not? I can afford this risk, I can afford to lose 8-10% in each, no problem at all. But obviously don't want to, especially more than that.

Statistically speaking, on average, if something goes down 8% or more, it's NOT coming back rapidly. Of course there are exceptions and if you wait, maybe you can break even but at the huge opportunity cost down the drain. Market studies going back years, research performed by IBD shows this to be true.

 

[Al]

All my money is making 3.75 ish percent. And only 80K or so in SLV, SLX, REMX, GLTR, FSELX, COPX, CENX.
Oddly every one of those is down today. Never seen that.

I am so far up on thein the last couple years is a "no, nevermind"

 

[Astro14]

You use CSA bonds as an example? OK. Wow. That was interesting.

Your points about income are valid. We have pensions as well, nice income and I agree with your thought process.

I assume you hold cash in different forms, money held for future deployment into ANYTHING. From checking and savings accounts to short term funds that actually do hold all sorts of notes like SGOV, BILS, BUXX, GSST, JPST, VNLA, BOXX and out to FAAA, JAAA, PAAA - There are many 1 yr-5yr-10yr bills and bonds. Most are not 30 year, but yes I'm NOT telling people to buy 30 year bonds. You reply as if I'm telling you to buy LT bonds, You come across as so argumentative to my posts? Why?

I say even if you don't buy bonds and I certainly am not telling EVERYONE they should do so. I mean I can use examples of people buying bonds at peak interest rates and making big money (well at least until redemption), but that's as useless as telling people bonds should be completely avoided. I do think people can and should educate themselves on most all aspects of bonds. Some really good books out there on the subject.

I thought the CSA bonds were a dramatic, but illustrative example of an important point.

Not all bond issuers are secure.

I’m not the one arguing in favor of individual investors buying long term bonds - you are - and you provided examples - and I don’t think they’re a good place for most investors. Not in the current climate of interest rates and bond yields.

There is a place for fixed income in a portfolio - but bonds are not without risk.

 

[Doc8404]

I escaped death this morning as I dumped last night...it dropped to a $1.18 record low...I did get back in again...lol

View attachment 337543

Even with short gain taxes, you make me want to retire early at 52 and day trade
and fish.

 

[Zee09]

Even with short gain taxes, you make me want to retire early at 52 and day trade
and fish.

Thank you !!!...it's stress but I enjoy it far more than work and I don't have to answer to any customers...

That age of 52 gives me pause...I turned 52 in the hospital with a heart attack and my buddy was 52 and he never made it to the hospital.. He had nausea and went to lay down and never woke up...a very smart and active guy with a bright future.... Best of luck to you and yours.....

BTW I stole another $300 and I'm calling it a day... stretching ones luck can be dangerous

 

[ATex7239]

If we had pensions and/or faith that the Social Security system will be fully intact when we retire I would probably go to 100% equities. However, since we have neither I like bonds and cash reserves to stabilize huge fluctuations. My wife and I are planning to live solely off of our investments. If we get Social Security income, that’s a bonus.

 

[Pablo]

I’m not the one arguing in favor of individual investors buying long term bonds - you are- and you provided examples -

I am? What examples?

 

[Astro14]

I am? What examples?

The story about your dad buying individual bonds, holding them to maturity, and how it, oddly, made him rich.

You may not have specified the term, but he was certainly an individual investor, buying bonds, and the fact that you said it made him rich, is certainly an endorsement, if not, and outright recommendation.

One other thing I learned from my dad, buying good individual bonds and holding to maturity won't make you rich (well it did him, oddly enough) but it won't burn you either. That said again, yes NOT for the younger folks here.

Were you not recommending bonds with this anecdote?

 

[chazthespaz]

Hot tip: Pistachios. Iran is a major producer of pistachios. Major supply disruption in progress.

 

[Marrk]

Sold CSCO yesterday at $105. I was a little early on that trade, but I locked in some profits.

I seem to be turning into what I, in fact, am: An old guy reducing risk.

 

[Pablo]

The story about your dad buying individual bonds, holding them to maturity, and how it, oddly, made him rich.

You may not have specified the term, but he was certainly an individual investor, buying bonds, and the fact that you said it made him rich, is certainly an endorsement, if not, and outright recommendation.

Were you not recommending bonds with this anecdote?

Pretty sure lots of people mention all sorts of good and bad experiences via anecdotes. Just a mention of my dad doing quite well with muni bonds in the old days - frankly I am really cautious here and everywhere recommending investment.

I actually think your actual recommendation to never buy any bonds for any reason is a bit interesting but I don't take you to task for that.

 

[tbm5690]

My wife and I are planning to live solely off of our investments. If we get Social Security income, that’s a bonus.

If anyone is planning contrary to this that is a concern in and of itself, and far more concerning than worrying about investment mix. At 36, I'm operating under the assumption that at best my SS will be highly eroded and/or deferred, if I receive anything at all.

 

[ATex7239]

If anyone is planning contrary to this that is a concern in and of itself, and far more concerning than worrying about investment mix. At 36, I'm operating under the assumption that at best my SS will be highly eroded and/or deferred, if I receive anything at all.

A little under a decade ahead of you. I doubt it will last much longer in the current form. I think the benefits will be substantial reduced or age delayed in the coming years. But I don’t think it will outright go away. If it does that would be huge stick in the eye to Millennials and Gen Z who will have to financially take all the burden of paying Social Security for Boomers and Gen X while getting zero for themselves at retirement.

 

[tbm5690]

A little under a decade ahead of you. I doubt it will last much longer in the current form. I think the benefits will be substantial reduced or age delayed in the coming years. But I don’t think it will outright go away. If it does that would be huge stick in the eye to Millennials and Gen Z who will have to financially take all the burden of paying Social Security for Boomers and Gen X while getting zero for themselves at retirement.

If I could opt out at this point, agree to zero benefits and accept my losses of what was paid in up to this point I would jump. Of course, a pipe dream.

 

[ATex7239]

If I could opt out at this point, agree to zero benefits and accept my losses of what was paid in up to this point I would jump. Of course, a pipe dream.

Same.

 

[Astro14]

Pretty sure lots of people mention all sorts of good and bad experiences via anecdotes. Just a mention of my dad doing quite well with muni bonds in the old days - frankly I am really cautious here and everywhere recommending investment.

I actually think your actual recommendation to never buy any bonds for any reason is a bit interesting but I don't take you to task for that.

I didn’t say never, and I clearly said that fixed income has a place in a portfolio.

However, I did say that bonds are currently unattractive, and carry risk. I stand by both of those positions, though, really, I was talking more about long term bonds, in which that interest rate risk is larger.

I do have a short term bond fund in the portfolio, but it is a small percentage, and I discussed how we have managed fixed income in our overall net worth.

There is specific issuer risk in buying individual bonds.

Individual investors should be cautious.

 

[Doc8404]

Hot tip: Pistachios. Iran is a major producer of pistachios. Major supply disruption in progress.

Don't say that. I get two (or is it 4?) pounds per month via amazon....but mine are CA grown.

 

[Pablo]

I didn’t say never, and I clearly said that fixed income has a place in a portfolio.

However, I did say that bonds are currently unattractive, and carry risk. I stand by both of those positions, though, really, I was talking more about long term bonds, in which that interest rate risk is larger.

I do have a short term bond fund in the portfolio, but it is a small percentage, and I discussed how we have managed fixed income in our overall net worth.

There is specific issuer risk in buying individual bonds.

Individual investors should be cautious.

I agree!

And for those reasons I own no actual long bonds! I do hold a very very tiny amount of TLT (20 year Treasuries) which is pretty flat actually - mainly for interest /INTEREST to watch (AROUND ~4.9%). And here I go: I might buy another 100 or 200 shares today or if there is a rate hike (doubt). THIS NOT A RECOMMENDATION!! I am gambling. It's speculative. Don't do it. I don't recommend this.

 

[Zee09]

I bailed early today as it did this yesterday and later tanked

 

[Marrk]

I didn’t say never, and I clearly said that fixed income has a place in a portfolio.

However, I did say that bonds are currently unattractive, and carry risk. I stand by both of those positions, though, really, I was talking more about long term bonds, in which that interest rate risk is larger.

I do have a short term bond fund in the portfolio, but it is a small percentage, and I discussed how we have managed fixed income in our overall net worth.

There is specific issuer risk in buying individual bonds.

Individual investors should be cautious.

I'm not sure that I understand the risk to bonds that you are talking about, especially with regard to Treasuries. Is there a link that I could read?

Thanks.