Search found 294 matches

by SovereignInvestor
Thu Jun 20, 2019 7:51 am
Forum: Investing - Theory, News & General
Topic: Why are 1 month t-bill rates low?
Replies: 10
Views: 1019

Re: Why are 1 month t-bill rates low?

Great question . I think bevause the treasury market includes all people not just Fed member banks. If a large institution wants to park short term money the most direct way is 1 month treasury in open market and not via Federal Reserve system. Also the fed pays interest on excess reserved at a rate...
by SovereignInvestor
Thu Jun 20, 2019 7:42 am
Forum: Personal Finance (Not Investing)
Topic: Interest Only Loans
Replies: 6
Views: 610

Re: Interest Only Loans

I also was looking for these rates and it's seems very few if any lenders have rates published for these. I got some quotes but only after typing in my information. The interest rates are typically much much higher than amortizing...so it becomes very much worth it to go with normal amortizing loan ...
by SovereignInvestor
Wed Jun 19, 2019 6:05 pm
Forum: Investing - Theory, News & General
Topic: What rating bonds are considered investment grade ?
Replies: 21
Views: 1095

Re: What rating bonds are considered investment grade ?

It is refreshing to see OP asking this question. In my opinion, too many bogleheads believe that all corporate bonds are too risky and confine their bond purchases to US Treasuries. Good point. In fairless even the safer corporate bonds usually selloff in panic market so the correlation to equity m...
by SovereignInvestor
Wed Jun 19, 2019 11:11 am
Forum: Personal Investments
Topic: Tempted to market time bond fund
Replies: 15
Views: 1217

Re: Tempted to market time bond fund

Interest rates keeping dropping which is why the muni fund rallied. To avoid a drop if you believe rates will pop up again you can seek a shorter duration fund if they have one.
by SovereignInvestor
Wed Jun 19, 2019 10:10 am
Forum: Investing - Theory, News & General
Topic: happy when the market is down - want to understand
Replies: 42
Views: 3340

Re: happy when the market is down - want to understand

Most people are not thinking rationally. They have $1 million portfolio, yet feel that they benefit somehow if the market goes down 5%, as they can buy $20k of stocks. Sometimes a market decline is short, but usually, it takes maybe 6 months to recover - and that is lost time when stocks would othe...
by SovereignInvestor
Wed Jun 19, 2019 7:16 am
Forum: Personal Finance (Not Investing)
Topic: Refinancing to 30 year fixed- which option to take?
Replies: 13
Views: 864

Re: Refinancing to 30 year fixed- which option to take?

The extra 15K isn't lost it reduces the balance. By putting in extra 12K (15K net of near 3K closing cost savings) you reduce your payment near 1K a year. That's about a 8% or so return on addititional capital...1K/12K Do you have access to liquidity at a rate lower than 8%? Seems like a steep price...
by SovereignInvestor
Wed Jun 19, 2019 7:08 am
Forum: Investing - Theory, News & General
Topic: happy when the market is down - want to understand
Replies: 42
Views: 3340

Re: happy when the market is down - want to understand

Yes a decline in share price is the best thing for a long term investor. Even if he or she doesn't have new capital as long as they don't want/have to sell anytime soon it still is beneficial. It is particularly beneficial when the index declines without actual economic or earnings deterioration lik...
by SovereignInvestor
Tue Jun 18, 2019 10:49 pm
Forum: Investing - Theory, News & General
Topic: What rating bonds are considered investment grade ?
Replies: 21
Views: 1095

Re: What rating bonds are considered investment grade ?

BBB- and higher for S&P and Fitch

Baa3 and higher for Moody's.
by SovereignInvestor
Tue Jun 18, 2019 9:32 pm
Forum: Investing - Theory, News & General
Topic: short term treasury ETFs a money market account substitute?
Replies: 17
Views: 1011

Re: short term treasury ETFs a money market account substitute?

ICSH seems appealing then.

The only downfall of money market is if we see 3 fed rate cuts like market expects this year or even more...money market yields may drop towards 1.0%.

At least if one had VCSH or VGSH they would have tiny capital gain to compensate.
by SovereignInvestor
Tue Jun 18, 2019 9:32 pm
Forum: Investing - Theory, News & General
Topic: short term treasury ETFs a money market account substitute?
Replies: 17
Views: 1011

Re: short term treasury ETFs a money market account substitute?

ICSH seems appealing then.

The only downfall of money market is if we see 3 fed rate cuts like market expects this year or even more...money market yields may drop towards 1.0%.

At least if one had VCSH or VGSH they would have tiny capital gain to compensate.
by SovereignInvestor
Tue Jun 18, 2019 7:00 pm
Forum: Investing - Theory, News & General
Topic: short term treasury ETFs a money market account substitute?
Replies: 17
Views: 1011

Re: short term treasury ETFs a money market account substitute?

I personally use VCSH as money market.
It has near 100 bps higher yield. Yes there is credit risk but with such short duration it doesn't sting it as much.
by SovereignInvestor
Tue Jun 18, 2019 5:40 pm
Forum: Investing - Theory, News & General
Topic: What's the Best Diversifier for Equity Risk? [Morningstar article]
Replies: 40
Views: 3334

Re: What's the Best Diversifier for Equity Risk? [Morningstar article]

Zero coupon 30 year Treasurys would be the most leveraged bet. But as others noted they are vulnerable to inflation so TIPS may hedge. I think gold can also be of use because if 1970s style inflation were to repeat it's probable gold performs as it did then. So even 5% gold stake can negate a lot of...
by SovereignInvestor
Tue Jun 18, 2019 5:30 pm
Forum: Investing - Theory, News & General
Topic: short term treasury ETFs a money market account substitute?
Replies: 17
Views: 1011

Re: short term treasury ETFs a money market account substitute?

It has about the same yield the issue is that is does have some volatility of principal. Very little, but if short interest rates were to spike it may lose 1-2%. This happened in 2017 when the fed went on a much more aggressive path than expected so short term yields spiked.
by SovereignInvestor
Tue Jun 18, 2019 5:15 pm
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

Two thoughts/comments about the safety of pensions: - If your private company pension is transferred to an insurance company (converted to an annuity) it is no longer protected by the PBGC (see http://www.pensionrights.org/publications/fact-sheet/what-happens-when-pension-transferred-insurance-comp...
by SovereignInvestor
Mon Jun 17, 2019 1:16 pm
Forum: Personal Finance (Not Investing)
Topic: Need advice - refinancing from 30 yr. to 10 yr. fixed mortgage
Replies: 39
Views: 2268

Re: Need advice - refinancing from 30 yr. to 10 yr. fixed mortgage

Are you only looking to use 1 lender? I see many local lenders offering 10Yr fixed at 3.0% now. One has 2.875%.
by SovereignInvestor
Mon Jun 17, 2019 7:19 am
Forum: Personal Finance (Not Investing)
Topic: Need advice - refinancing from 30 yr. to 10 yr. fixed mortgage
Replies: 39
Views: 2268

Re: Need advice - refinancing from 30 yr. to 10 yr. fixed mortgage

Would 10/1 ARM be helpful? Flexibility of.low payment via 30 year ammortization but low rate of 10 year loan.
by SovereignInvestor
Sun Jun 16, 2019 2:07 pm
Forum: Personal Finance (Not Investing)
Topic: Mortgage refinance options - should I proceed?
Replies: 8
Views: 685

Re: Mortgage refinance options - should I proceed?

The difference in rate is about 0.6% which on the balance it is about $3800/year in annual interest savings the first year and gradually dropping over time. The interest savings will cover closing cost in about 15 months so it's so worth doing. When you say you plan to stay at least 5 years then it'...
by SovereignInvestor
Sun Jun 16, 2019 11:20 am
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

Two thoughts/comments about the safety of pensions: - If your private company pension is transferred to an insurance company (converted to an annuity) it is no longer protected by the PBGC (see http://www.pensionrights.org/publications/fact-sheet/what-happens-when-pension-transferred-insurance-comp...
by SovereignInvestor
Sat Jun 15, 2019 8:01 pm
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

My point remains. Governments and MEPS are using 7-8% rate of return assumptions for funding. So those funding numbers are way overstated if you think 7-8% is too high. This is because they DISCOUNT at the assumed rate of return in plan assets Corporations use around 4.0% for funding as that is the...
by SovereignInvestor
Sat Jun 15, 2019 7:48 pm
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

Yes pensions are very back loaded. They alsp provide incentive heavily to not leave an employer which is very desirable in fields that would be hurt by higher turnover. Another benefit of 401k over a pension is more Present value of assets before retirement. If someone will accrued 1M net present va...
by SovereignInvestor
Sat Jun 15, 2019 7:38 pm
Forum: Personal Finance (Not Investing)
Topic: Compound interest for 10% interest rate?
Replies: 29
Views: 3069

Re: Compound interest for 10% interest rate?

If 10% is annual rate compounds over 365 days that's close to beING continuously compounds which would be e^0.10 - 1
by SovereignInvestor
Sat Jun 15, 2019 9:15 am
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

Would you rather get a pension from a corporation when PBGC guarantees it for aroundg 60K a year and it is 85% funded and must assume very low 3.9% investment returns for discounting or a plan that is only 73.7% funded under the assumptook the 50/50 ot 60/40 portfolio returns 7% per year? The disco...
by SovereignInvestor
Sat Jun 15, 2019 7:08 am
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

[Discussion of potential future legislation removed by Moderator Misenplace.] There's a reason why most SEP corporations froze out pensions...good luck finding them when you assume you only get 3.9% investment return. They require. A lot of money. When MEP can pretend like 60/40 portfolio (many onl...
by SovereignInvestor
Sat Jun 15, 2019 6:55 am
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

As far as corporate pensions go, how much do you trust CEOs and companies to keep their promises? That's what I thought. +1000 I agree, and don't trust them at all. Yet another reason I plan to take the lump sum when I retire. I'm fortunate my pension has that option. I'll take it, roll it to an IR...
by SovereignInvestor
Fri Jun 14, 2019 2:33 pm
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

The underlying theme here is to be conservative with ones expectation of returns. The pensions funds generally are using 7%-8% expected returns which are higher than junk bond yields. Aren't the pensions supposed to be "risk free" for retirees? The pension system is the complete opppsote of BH style...
by SovereignInvestor
Fri Jun 14, 2019 2:11 pm
Forum: Personal Finance (Not Investing)
Topic: HELOC Options
Replies: 19
Views: 1367

Re: HELOC Options

Third Federal is the cheapest in the nation at Prime -1.01%. Just closed on one in May. Check to see if they service your state. https://www.thirdfederal.com/ Cheers. Thanks for third federal. Havent seen anything under 0.25 below prime. Some local CU offer 2 year teaser of 3%, then it jumps to pri...
by SovereignInvestor
Fri Jun 14, 2019 8:54 am
Forum: Personal Investments
Topic: Deep out of Money Puts and LEAP Puts- What am I overlooking?
Replies: 29
Views: 2366

Re: Deep out of Money Puts and LEAP Puts- What am I overlooking?

In fact when the VIX is low like under 15 buying long term puts out of money can have positive expected returns in excess of risk free rate. Interesting. Just for my learning why wouldn't other people commit to this if it is known? Genuine question. Double line founder, Gundlach, recommended buying...
by SovereignInvestor
Thu Jun 13, 2019 9:58 pm
Forum: Personal Investments
Topic: High net worth individual seeks portfolio advice
Replies: 81
Views: 8258

Re: High net worth individual seeks portfolio advice

Echoing comments of.others I'd pick an.AA and stay with it. You're in great shape..good job. As for those racing to get into stocks here-- I am not shying away and spar with many others here about valuations. CAPE said stocks were overvalued in 2012 when S&p was 1200s..it's now near 2900. The forwar...
by SovereignInvestor
Thu Jun 13, 2019 6:07 pm
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

CALPERS has a funding ratio below 71% so it is not that safe. But better than many. https://capitolweekly.net/forget-naysayers-pension-funds-fine/ NJ funding ratio is in the 30% range. The funding ratio uses the expected rate of return. The alarming thing is when you see a low funding ratio for a st...
by SovereignInvestor
Thu Jun 13, 2019 5:58 pm
Forum: Investing - Theory, News & General
Topic: How safe are pensions in the U.S.?
Replies: 86
Views: 8392

Re: How safe are pensions in the U.S.?

Single employer corporate pensions are the safest of private ones. There are 4 main types 1) Single employer plan (SEP) 2) Multi employer plan (MEP) 3) state or local government 4) Federal Federal are bulletproof.  For SEP plan ERISA and Pension protection act force employers to discount liabilities...
by SovereignInvestor
Wed Jun 12, 2019 6:25 pm
Forum: Personal Investments
Topic: Is my employee stock purchase plan a no brainer?
Replies: 19
Views: 1579

Re: Is my employee stock purchase plan a no brainer?

Seems like a great deal. Yeah it's dilution but if they have low ratio of employee comp from this to market cap it won't dilute much

Employers like this because it gets employee to have skin in the game.
by SovereignInvestor
Wed Jun 12, 2019 7:26 am
Forum: Personal Finance (Not Investing)
Topic: Treasury Finishes Rules Ending State Tax-Cap Workarounds
Replies: 6
Views: 1144

Re: Treasury Finishes Rules Ending State Tax-Cap Workarounds

Usually when something violates the spirit of the law, here the tax reform which sought to cap SALT deductions, The IRS would strike it down. The workarounds definitionally tried to violate the spirit of the law. It's better there's a ruling rather than individuals not know and some take the risk an...
by SovereignInvestor
Wed Jun 12, 2019 7:21 am
Forum: Personal Finance (Not Investing)
Topic: How high of a Hurricane Deductible in FL? And is all Flood Insurance created the same?
Replies: 26
Views: 1522

Re: How high of a Hurricane Deductible in FL? And is all Flood Insurance created the same?

The impact on rate from deductible increase depends on many other factors so only the insurer would know precisely. As for Flood, as others commented the Federal government under FEMA dominates nearly all the market with standard 250K limits. However private flood insurance although tiny is growing ...
by SovereignInvestor
Sun Jun 09, 2019 8:11 pm
Forum: Personal Finance (Not Investing)
Topic: ReFi home to get 3.5% interest rate?
Replies: 31
Views: 3054

Re: ReFi home to get 3.5% interest rate?

OP will save 0.5% in interest on 475K balance or about 2300 per year initially and it decrease as principal payments build. To pay 2500 up front to save 2300 in first year and slowly taping down over 30 yeas to.0 is a no brainer, go for it! As for extending term of loan. Not true necessarily. The ne...
by SovereignInvestor
Sun Jun 09, 2019 8:05 pm
Forum: Personal Finance (Not Investing)
Topic: Refinance immediately after new home purchase?
Replies: 24
Views: 1974

Re: Refinance immediately after new home purchase?

I'm in same boat.

Another option if lender doesnt penalize is to do cash out refinance where the amount you cash out is equal to closing costs so the cash flow negative is tiny.
by SovereignInvestor
Sun Jun 09, 2019 5:45 pm
Forum: Personal Investments
Topic: Deep out of Money Puts and LEAP Puts- What am I overlooking?
Replies: 29
Views: 2366

Re: Deep out of Money Puts and LEAP Puts- What am I overlooking?

The expected value of index options generally matches that of the historical past so the idea OP would be wasting money on lotto ticket is off base. The expected return of puts converges to risk free rate so it is no different than selling equity and putting in treasurys. In fact when the VIX is low...
by SovereignInvestor
Sun Jun 09, 2019 6:06 am
Forum: Investing - Theory, News & General
Topic: Investing Techniques For People Approaching Retirement In This Aging Bull Market
Replies: 35
Views: 5224

Re: Investing Techniques For People Approaching Retirement In This Aging Bull Market

Pick an allocation and stick with it 50/50 isn't fully bulletproof if there's an inflation outbreak. Nornay in most deflation art downturns long term treasurys are best hedge for stocks like in 2008. But if its 1973 both got slaughtered and a small gold position hedged the inflation. Shorter term bo...
by SovereignInvestor
Sat Jun 08, 2019 4:29 pm
Forum: Investing - Theory, News & General
Topic: What percentage of time does 100% stocks win?
Replies: 52
Views: 6526

Re: What percentage of time does 100% stocks win?

It's potentially misleading to look at time periods even 20 years. Unless one has large sum of money to ibest and does it all at once many likely are putting in new funds every year for a period. If someone put in 1M into stocks in 1929 the 20 year return was poor. But if they put in 50K a year star...
by SovereignInvestor
Sat Jun 08, 2019 4:27 pm
Forum: Personal Finance (Not Investing)
Topic: Should I buy more life insurance?
Replies: 25
Views: 1347

Re: Should I buy more life insurance?

The 550K is pretax and since OP is in bay area that income leads to likely 375K or less after tax assuming reasonable deductions. The 3M + 1.75M or 4.75M if OP passes is likely well over 10 years of after tax income. I think taxes need to be considered here. Life insurance is after tax usually, no?...
by SovereignInvestor
Sat Jun 08, 2019 2:01 pm
Forum: Investing - Theory, News & General
Topic: US stocks still look better than anywhere else
Replies: 100
Views: 7558

Re: US stocks still look better than anywhere else

Not sure why EMH has to be all or nothing? The market is generally not offering free lunches but from time to time there are inefficiencies that can be found but they need to be hidden from most or won't exist. There are hedge funds secretly profiting off of inefficiencies as we speak and we will ne...
by SovereignInvestor
Sat Jun 08, 2019 1:56 pm
Forum: Investing - Theory, News & General
Topic: Why does the stock market grow faster than the economy?
Replies: 28
Views: 4180

Re: Why does the stock market grow faster than the economy?

Stock returns aren't unsustainable. Total earnings and market cap should grow with nominal GDP, in a valuation neutral world. This has not been the case because valuation (market cap relative to earnings) ncreased over the decades reflecting lower long term rates not versus say in 1980s. The for wa...
by SovereignInvestor
Sat Jun 08, 2019 1:41 pm
Forum: Personal Finance (Not Investing)
Topic: Should I buy more life insurance?
Replies: 25
Views: 1347

Re: Should I buy more life insurance?

The 550K is pretax and since OP is in bay area that income leads to likely 375K or less after tax assuming reasonable deductions. The 3M + 1.75M or 4.75M if OP passes is likely well over 10 years of after tax income. I think taxes need to be considered here. Life insurance is after tax usually, no? ...
by SovereignInvestor
Sat Jun 08, 2019 7:50 am
Forum: Investing - Theory, News & General
Topic: US stocks still look better than anywhere else
Replies: 100
Views: 7558

Re: US stocks still look better than anywhere else

Factually speaking the US should outperform all the developed world economies over the coming decades. The US Will have working age population grow about 0.5% annually through 2050. Japan, China, and EU will see theirs plunge anywhere from 1% to 2% annually. Those economies will have trouble stavin...
by SovereignInvestor
Sat Jun 08, 2019 6:20 am
Forum: Investing - Theory, News & General
Topic: Are market downturns & crashes really driven by fear?
Replies: 23
Views: 1769

Re: Are market downturns & crashes really driven by fear?

Japan never bounced back. US market history isn’t a guarantee. Japan Nikkei traded at over 50x forward earnings in 1990, right as the point in 1990 when anyone lookong at Japanese birth statistics and demographics would have saw their work force population dropping off a cliff in 2000 (down about 1...
by SovereignInvestor
Sat Jun 08, 2019 6:14 am
Forum: Investing - Theory, News & General
Topic: US stocks still look better than anywhere else
Replies: 100
Views: 7558

Re: US stocks still look better than anywhere else

Factually speaking the US should outperform all the developed world economies over the coming decades. The US Will have working age population grow about 0.5% annually through 2050. Japan, China, and EU will see theirs plunge anywhere from 1% to 2% annually. Those economies will have trouble staving...
by SovereignInvestor
Sat Jun 08, 2019 6:09 am
Forum: Personal Finance (Not Investing)
Topic: ReFi home to get 3.5% interest rate?
Replies: 31
Views: 3054

Re: ReFi home to get 3.5% interest rate?

The fed doesn't control long term mortgage rates only the fed funds rate. Longer term rates are set by the market and the longer term like 30Y mortgage the less its.impacted by fed policy and the more it is by growth and inflation expectations.
by SovereignInvestor
Fri Jun 07, 2019 1:05 pm
Forum: Investing - Theory, News & General
Topic: Economics Question
Replies: 8
Views: 650

Re: Economics Question

I think they made error by hiking in december. But in general it's very hard because the incoming data often is lagging and the rate changes have huge lag. So basically like the employment data or inflation data incoming reflect the economy 1-2 quarters prior yet the fed hikes or cuts affect it 12 m...
by SovereignInvestor
Fri Jun 07, 2019 1:03 pm
Forum: Investing - Theory, News & General
Topic: Economics Question
Replies: 8
Views: 650

Re: Economics Question

The fed is fallable. IMO they shouldnt have hiked in December. If they didn't then the yield curve wouldnt be as inverted as it is now. The fed rationale for hilong in 2018 was to fight possible inflation but when inflation cratered and global economy slowed they still did it. Into december the infl...
by SovereignInvestor
Fri Jun 07, 2019 7:27 am
Forum: Personal Consumer Issues
Topic: Everyone ought to be required to have an umbrella policy and life insurance!
Replies: 13
Views: 1443

Re: Everyone ought to be required to have an umbrella policy and life insurance!

I despise the insurance industry. They are a designed ripoff scheme and forcing people to carry such insurance is not the answer. (It may be the answer for a very small percentage, such as in the case you presented, but I'm talking about the other 99.999% of people). Most people living pay check to...
by SovereignInvestor
Thu Jun 06, 2019 6:22 pm
Forum: Personal Investments
Topic: why are Small Caps falling?
Replies: 113
Views: 9320

Re: why are Small Caps falling?

To start 2017 small caps traded at a 15% forward PE premium to large caps. Most of the relative underperformane was valuaton convergence.