19 replies to this topic

[RadioHead]

I forgot. Long stocks from 1974. Hahahaha. Every time from now on!

[RadioHead]

Its going to be lonely at the top. Just you and me. And about 100 million Americans invested in pension funds. And everyone else will be short and losing money
Hahahaha

[12SPX]

Love hearing the bulls coming out so quickly after a meagre few percent off the bottom which tells me the grind will continue lol!!!  I have an interesting feel about the pension funds maybe moving out of stocks into a heavier bond position with the rise in rates.  Maybe early to say but will be interesting to see in the future....

[pdx5]

Love hearing the bulls coming out so quickly after a meagre few percent off the bottom which tells me the grind will continue lol!!!  I have an interesting feel about the pension funds maybe moving out of stocks into a heavier bond position with the rise in rates.  Maybe early to say but will be interesting to see in the future....

 

With every rise in federal funds rate, bonds lose in value.

Edited by pdx5, 19 October 2022 - 08:47 AM.

[12SPX]

That doesn't make sense, why is the 10-year yield at 4% then?  YOu buy that and in 10 years get a 4% payout, even better 2 year at 4.5%.

[pdx5]

That doesn't make sense, why is the 10-year yield at 4% then?  YOu buy that and in 10 years get a 4% payout, even better 2 year at 4.5%.

You invest $1000 to buy 10 year bond paying 4%.

After one year you get $40 interest. All of that 40% is taxable interest. 

Then purchasing power of your $1040 money loses at inflation rate, say 8% leaving you $960 purchasing power..

 

Reason 2 year is paying more than 10 year bonds is, bond investors are expecting recessionary periods in future.

(which will then reduce interest rates available)

Edited by pdx5, 19 October 2022 - 09:11 AM.

[12SPX]

Ya but I'm just looking at it just from an investment vehicle is what I'm talking about.  With a market down -25% then with inflation your down -33%, not great either....

[pdx5]

Ya but I'm just looking at it just from an investment vehicle is what I'm talking about.  With a market down -25% then with inflation your down -33%, not great either....

Correct, this is the first time in a VERY LONG TIME, both stocks and bonds have hurt the investors at the same time.

That famour 60-40 (stosks, bonds) formula has been a fubar this year.

[MDurkin]

 

Ya but I'm just looking at it just from an investment vehicle is what I'm talking about.  With a market down -25% then with inflation your down -33%, not great either....

Correct, this is the first time in a VERY LONG TIME, both stocks and bonds have hurt the investors at the same time.

That famour 60-40 (stosks, bonds) formula has been a fubar this year.

 

Yes, I have the historical yearly returns of Vanguards oldest fund- Wellington (VWELX). It has a 60/40 mix. The fund opened in 1929 and went down for 4 years in a row during the Great Depression. In 1973/74 it went down 2 years in a row. In 2008, the last large down year, it went down 23 percent. It is down about 20 percent this year. Will it go down in 1923..for 2 years in a row?

[pdx5]

 

Yes, I have the historical yearly returns of Vanguards oldest fund- Wellington (VWELX). It has a 60/40 mix. The fund opened in 1929 and went down for 4 years in a row during the Great Depression. In 1973/74 it went down 2 years in a row. In 2008, the last large down year, it went down 23 percent. It is down about 20 percent this year. Will it go down in 1923..for 2 years in a row?

 

 

If federal funds interest rate goes above 5%, that fund would look intriguing for long term.