Search found 9606 matches

by Kevin M
Wed Jul 18, 2018 10:56 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

Thanks for the help. The criterion was "N-year Treasury returns more than (N-1)-year Treasury". My understanding was that if yields go up by X bp that wipes out the "roll down return", but you still have the larger coupon from the N-year Treasury. But if yields go up another X bp, then the roll dow...
by Kevin M
Wed Jul 18, 2018 8:04 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

How does the expense ratio play into the the total yield for the Vanguard Prime money market account? SEC yield is net of expense ratio, so what you see is what you get. Actually, when yields are increasing, as they have been, you're actually earning a bit more, since SEC yield is the average yield...
by Kevin M
Wed Jul 18, 2018 3:23 pm
Forum: Investing - Theory, News & General
Topic: Classifying CDs as Bonds or Short Term assets
Replies: 12
Views: 1033

Re: Classifying CDs as Bonds or Short Term assets

I've used Fidelity's Asset Allocation analysis tool before and was confused why their percentages for Bonds and Short Term didn't match my own spreadsheet calculations. I dug into it more today and found out that Fido calls a CD a "Bond" if maturity is more than 1 year out and it calls a CD "Short ...
by Kevin M
Wed Jul 18, 2018 2:58 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

It is a generally accepted principle that "the best estimate of the future yield curve is the current yield although not a very good one". I don't think this is a generally accepted principle--it's a view propagated by Larry Swedroe and DFA, and supposedly based on some work by Fama, but it is far ...
by Kevin M
Wed Jul 18, 2018 12:29 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

Maybe Kevin and Doc can comment on this: I was reading Kevin's thread and this post explains how the 1-year return is affected by a shift in the yield curve. It appears that, to a good approximation, if the slope between the N-year yield and the (N-1)-year yield is X basis points, a " rolling down ...
by Kevin M
Wed Jul 18, 2018 9:43 am
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

I had been thinking about placing an order at the 1-year Treasury auction, which now is open. Fidelity is showing "Expected Yield" of 2.380%, while Vanguard is showing "Indicative Yield" of 2.339%. Any ideas on why they are showing different expected/indicative yields--about 4 basis points differen...
by Kevin M
Tue Jul 17, 2018 6:09 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

I define "roll-down return" as the annualized return between purchase and sale. As I keep explaining, this is just annualized (total) return, so there is no need to call it something else. I've never seen anyone else define roll-down return this way, including in all the references you've linked to...
by Kevin M
Tue Jul 17, 2018 5:28 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

No. That's where our conflict comes from. I don't lose money because I sell the note when it drops to par. You keep saying this, but I challenged the feasibility of this strategy in my post yesterday, https://www.bogleheads.org/forum/viewtopic.php?p=4024638#p4023488, and you did not answer the chal...
by Kevin M
Tue Jul 17, 2018 5:17 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

How does the expense ratio play into the the total yield for the Vanguard Prime money market account? SEC yield is net of expense ratio, so what you see is what you get. Actually, when yields are increasing, as they have been, you're actually earning a bit more, since SEC yield is the average yield...
by Kevin M
Tue Jul 17, 2018 3:55 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

In order to calculate the amount of the roll down yield you have to assume a constant yield curve. OK as of today we don't expect a constant yield curve so we can't calculate the roll down yield but as long as the curve is positive the roll down yield is there. This is where you're going wrong. It ...
by Kevin M
Tue Jul 17, 2018 3:12 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

IUsing the higher expected yield of 2.38% would provide a taxable-equivalent yield (TEY) of 2.673% for me at 28% federal and 8% state marginal tax rates = 2.38% * (1-27%)/ (1 - 27% - 8%). Where does the 27% come from? I expect to be in the 12% federal income tax bracket in 2018, but I have qualifie...
by Kevin M
Mon Jul 16, 2018 7:48 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

You apparently didn't understand what I was trying to illustrate. Let me try an example. I buy a 5 year note with a 3% coupon. At that time a 4 year note has a 2% coupon. Let's stop right there. You're positing a yield curve with a slope of 100 basis points per year between 4-year and 5-year maturi...
by Kevin M
Mon Jul 16, 2018 7:18 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

I think a better way to make your point is to look at all 20-year intervals from 1977 to the present day. There are 20 such periods, and out of those (and fixing stocks at 60%) only the first three had a tangency portfolio dominated by ST treasuries. I think this is a good argument against my origi...
by Kevin M
Mon Jul 16, 2018 6:51 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

Where do you have your money at 2.5% in a savings account? Ally only giving 1.75% currently and inflation is almost at 3% sheesh... I answered this question upthread: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=253896&p=4023403#p4019701. Even Vanguard Prime money market now is paying 2.05...
by Kevin M
Mon Jul 16, 2018 6:42 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

... I've always thought of bond PRICE as essentially the same as PV (present value) .... So I've always thought of yield as the constant discount rate that equalizes price (present value) and the sum of all future discounted cash flows ... But because of the bond-equivalent yield (BEY) convention, ...
by Kevin M
Mon Jul 16, 2018 2:16 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

What term premium? The current yield curve is very flat for intermediate-term maturities, both nominal and real. It could be argued that the term premium actually is negative... I would gladly hold a bond allocation that is 75% IT treasuries and 25% ST TIPS today before I would hold one that is 100...
by Kevin M
Mon Jul 16, 2018 1:53 pm
Forum: Investing - Help with Personal Investments
Topic: All-In VTSAX
Replies: 37
Views: 3823

Re: All-In VTSAX

All these posts make me want to increase my international allocation to market weight instead of 30 percent. If everyone wants to market time in one direction based on recency bias, I figure the opposite is the way to go. Although I will likely just stay the course and it won't make much difference...
by Kevin M
Mon Jul 16, 2018 12:49 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

<snip>For the 52-week bill issued 6/21/2018 YIELD with frequency = 2 produces approximately the same value as the Treasury's formula (differs in the 5th decimal place).<snip>[/url].) Thanks for the deep dive on all of this. Since the Treasury only displays rates to the 3rd decimal place, at least i...
by Kevin M
Sun Jul 15, 2018 8:41 pm
Forum: Investing - Theory, News & General
Topic: US T bills - first time user
Replies: 115
Views: 9251

Re: US T bills - first time user

In other threads, we've discovered that Schwab seems to give higher yields for minimum quantity 10 than does Fidelity--maybe even higher than for larger quantities. They appear to be making buying Treasuries more attractive for small investors--perhaps to attract and retain their business. Just so ...
by Kevin M
Sun Jul 15, 2018 8:37 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

[*]The extra return of intermediate-term bonds, compared to short-term bonds (or cash!) is large enough to care about. Really? Don't you mean "has been" instead of "is"? And doesn't it depend on the period we look at? How do you know what the returns will be going forward over any particular time p...
by Kevin M
Sun Jul 15, 2018 4:24 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 89
Views: 4752

Re: In defense of short-term treasuries

If your concern with IT treasuries is inflation, diversify them with TIPS and you can earn the term premium of intermediate bonds while taking less inflation risk than if just holding ST treasuries. What term premium? The current yield curve is very flat for intermediate-term maturities, both nomin...
by Kevin M
Sun Jul 15, 2018 3:23 pm
Forum: Investing - Help with Personal Investments
Topic: All-In VTSAX
Replies: 37
Views: 3823

Re: All-In VTSAX

Are you sure this isn't driven at least partially by recency bias, rather than just a desire to simplify?

Kevin
by Kevin M
Sun Jul 15, 2018 2:00 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

Of course, I will always have a buffer of true cash (in a MM or online savings account) to bridge me until the next Treasuries mature "just in case" a need arises. Ah! A new definition ;-). What you are calling "true cash" is my definition of cash. As I said, I understand that financial markets def...
by Kevin M
Sun Jul 15, 2018 1:08 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

This is interesting: Vanguard -> Fidelity CMA : arrives T+1 Vanguard -> Ally : arrives T+2 Is T+1 for other funds (e.g. Prime MMF) as well? Yes, T+1 for VG Prime MM -> Fidelity CMA, for example. This is for an old-platform mutual fund account, so there is no settlement fund. Checking a recent examp...
by Kevin M
Sat Jul 14, 2018 9:21 pm
Forum: Investing - Theory, News & General
Topic: Change in Flagship Rep Service ?
Replies: 21
Views: 2226

Re: Change in Flagship Rep Service ?

I've always just called the Flagship phone number and talked to whomever answered. Called a few times last week about an issue with Vanguard Advantage checks, and was surprised that the wait time was about six minutes each time. Don't recall ever having to wait at all before. Also, was given incorre...
by Kevin M
Sat Jul 14, 2018 9:05 pm
Forum: Investing - Help with Personal Investments
Topic: How to buy T-Bills
Replies: 33
Views: 2628

Re: How to buy T-Bills

Vanguard Treasury Money Market Fund ..(VUSXX) (exp .09%) SEC 1.84% Vanguard Prime Money Market Fund .... (VMMXX) (exp .16%) SEC 2.05% I guess if your state tax is about 10% then 1.84% with no state tax is equal to 2.05% with state tax. <snip> If you itemize and fully deduct state taxes on Schedule ...
by Kevin M
Sat Jul 14, 2018 6:33 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

Trying to do all this with a high yield savings account at a bank that don't have a decades long personal and business relationship with would give me ulcers. I wouldn't use a savings account to do "all of this", but that doesn't mean I don't consider the savings account as highly liquid, other tha...
by Kevin M
Sat Jul 14, 2018 5:41 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

Some more observations about Treasury rate calculations, APY, etc. (I see that #Cruncher posted a reply while I was writing this, but I'm going to go ahead and submit it before reading #Cruncher's latest post). <snip>For a T-Bill, first compute the price based on its stated yield -- which I'm assumi...
by Kevin M
Sat Jul 14, 2018 4:33 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

You are right you don't need the immediate credit. Just need to get it there by the settlement date. Occasionally I need to move dollars from one broker to another. In this case you can't use a pull from the receiving broker because the pull is actually going to a correspondent bank and I don't hav...
by Kevin M
Sat Jul 14, 2018 12:36 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

Makes sense. I live in a no income tax state so that benefit of Treasuries is meaningless to me. Thanks for sharing though. Then the 1-year CD at 2.50% would provide a higher return, assuming you would hold the 1-year Treasury to maturity--at least based on the estimated yields currently displayed ...
by Kevin M
Sat Jul 14, 2018 12:00 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Municipal Money Market VMSXX 1.39%
Replies: 208
Views: 22922

Re: Vanguard Municipal Money Market VMSXX 1.39%

Yes I’ve switched to prime again. I think I’m going to stick with it because the yield is stable and only going up. 2.05% is competitive with the best non risk liquid yields. I switched from CA muni MM to Prime on 5/21/2018, as that's when the TEY of the muni fund fell below Prime yield. I then swi...
by Kevin M
Sat Jul 14, 2018 11:48 am
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

If indeed you can get immediate credit in you brokerage account by initiating a pull from your savings account there is no difference. I don't need immediate credit. Trades settle in T+1 (Treasuries) or T+2, and all that matters is that the cash is in the settlement fund by the settlement date--at ...
by Kevin M
Sat Jul 14, 2018 11:05 am
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

I assume you have shared on the forum where you are getting a savings account with rate guarantee at 2.50%? Care to share the details? That seems like a sweet deal. I would be hesitant to mess around with tbills too if I had access to that. It's Poppy Bank, but it's a local deal, it may be availabl...
by Kevin M
Sat Jul 14, 2018 10:49 am
Forum: Investing - Help with Personal Investments
Topic: Vanguard Municipal Money Market VMSXX 1.39%
Replies: 208
Views: 22922

Re: Vanguard Municipal Money Market VMSXX 1.39%

am wrote:
Fri Jul 13, 2018 9:46 pm
Where do you think yields will go from here? It’s 1.10% right now and doesn’t make sense any more at my bracket.
1.08% as of Friday.

Kevin
by Kevin M
Fri Jul 13, 2018 7:25 pm
Forum: Investing - Theory, News & General
Topic: 2-year CDs at Vanguard and Fidelity Today
Replies: 320
Views: 42774

Re: 2-year CDs at Vanguard and Fidelity Today

What I meant was after purchase. Go to "positions". Click on any brokered CD you own. Click on link called "View fixed income analysis for your bond holdings." In there, it lists out all your fixed income positions including brokered CD, and there is an "estimated yield" column. On that column, it ...
by Kevin M
Fri Jul 13, 2018 7:01 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

If you're going to precisely compare a T-Bill or a T-Note to a bank savings account or CD, I'd suggest converting their stated yields to an Annual Percentage Yield (APY) which is what the bank quotes. Thanks for the suggestion. For a T-Bill, first compute the price based on its stated yield -- whic...
by Kevin M
Fri Jul 13, 2018 6:36 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

We don't have the same objective for short term assets. For me liquidity is the most important factor and that means Treasuries. Liquidity is of prime importance for my cash (the shortest-term asset), but if I can earn additional yield without sacrificing liquidity, why not do so? How are Treasurie...
by Kevin M
Fri Jul 13, 2018 2:54 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

Re: 1-year Treasury Bill auction

I assume you mean the 52 week bill. Of course. Vanguard refers to this as "1 Year US Treasury Bill" in the "Issue" column of their Treasury auction page. Of course "52-Week Bill" is the official Security Description, and the term is 364 days. I think everyone knows what is meant when we say 1-year ...
by Kevin M
Fri Jul 13, 2018 1:58 pm
Forum: Investing - Theory, News & General
Topic: 2-year CDs at Vanguard and Fidelity Today
Replies: 320
Views: 42774

Re: 2-year CDs at Vanguard and Fidelity Today

After buying, does Fidelity's "estimated yield" mean anything? It looks like it is based on the last trading price, and not the purchase price if held to maturity. Is there an easy way to get Fidelity to show the yield to maturity based on the purchase price? I don't see the term "estimated yield" ...
by Kevin M
Fri Jul 13, 2018 1:49 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 49
Views: 3640

1-year Treasury Bill auction

I had been thinking about placing an order at the 1-year Treasury auction, which now is open. Fidelity is showing "Expected Yield" of 2.380%, while Vanguard is showing "Indicative Yield" of 2.339%. Any ideas on why they are showing different expected/indicative yields--about 4 basis points differenc...
by Kevin M
Thu Jul 12, 2018 2:30 pm
Forum: Investing - Theory, News & General
Topic: yield curve inversion
Replies: 47
Views: 4200

Re: yield curve inversion

Going back to this question I raised last week: A question partially raised by another thread that's going on now as well. Is there any suggestion that inverting the curve *causes* a recession to occur? Or would the claim simply be that long-term rates tend to be a little "smarter" in economic fore...
by Kevin M
Wed Jul 11, 2018 5:45 pm
Forum: Investing - Theory, News & General
Topic: Selling Treasuries before maturity
Replies: 11
Views: 1112

Re: Selling Treasuries before maturity

The bid/ask spread for this relatively small quantity was about 15 basis points (0.15 percentage points Was this during trading hours? I've noticed that quoted spreads on Fidelity are smaller during trading hours than if I look in the evening--generally about 8 basis points for small lots. But thos...
by Kevin M
Wed Jul 11, 2018 2:47 pm
Forum: Investing - Help with Personal Investments
Topic: Northern Bank Direct MM - 2.26% APY (offer ended 6/20/18)
Replies: 22
Views: 3017

Re: Northern Bank Direct MM - 2.26% APY (offer ended 6/20/18)

I'm a bit bummed, as I just found and opened a local savings account at 2.50% guaranteed through 12/31/2019! Turns out it has been available since April, but I just got the mailer a few days ago. Now I'm working on the most expedient way to transfer most of the cash from NBD to this new account, whi...
by Kevin M
Tue Jul 10, 2018 7:54 pm
Forum: Investing - Theory, News & General
Topic: Selling Treasuries before maturity
Replies: 11
Views: 1112

Selling Treasuries before maturity

In a fairly recent thread that started off discussing the latest CIT money market account rate, Treasury bills were raised as an alternative to money market accounts or savings accounts, which led to a discussion about liquidity. Some people seem to consider only trading costs as a liquidity factor,...
by Kevin M
Tue Jul 10, 2018 5:45 pm
Forum: Personal Finance (Not Investing)
Topic: Penn Fed 3% 5 year CD's 30% penalty if early withdraw
Replies: 5
Views: 787

Re: Penn Fed 3% 5 year CD's 30% penalty if early withdraw

I've just purchased a PenFed 15-month CD at 2.4%. Andrews FCU is offering 9-month CDs at 2.75% APY, but I've learned about it too late. Victoria A 15-month at 2.4% is not so great, with the 1-year brokered new-issue CD yield at 2.45% at Fidelity and 2.40% at Vanguard. I just opened a savings accoun...
by Kevin M
Tue Jul 10, 2018 5:16 pm
Forum: Personal Finance (Not Investing)
Topic: Penn Fed 3% 5 year CD's 30% penalty if early withdraw
Replies: 5
Views: 787

Re: Penn Fed 3% 5 year CD's 30% penalty if early withdraw

Not only is the EWP harsh, the rate is not very good. A new-issue brokered 3-year CD pays 3.05%, and I have been easily finding them at 3.1% or more on the secondary market when the new-issue rate was 3.00%. New-issue 5-year brokered CDs earn 3.30%, but personally I don't think it's worth extending ...
by Kevin M
Mon Jul 09, 2018 1:29 pm
Forum: Investing - Theory, News & General
Topic: 2-year CDs at Vanguard and Fidelity Today
Replies: 320
Views: 42774

Re: 2-year CDs at Vanguard and Fidelity Today

The highest new-issue 2-year CD yield at both Fidelity and Vanguard still is 2.80%, and still only offered by Wells Fargo, with the closest competition at 2.75% at Fidelity, and 2.70% at Vanguard. Highest secondary net yield for ballpark 2-year maturity I saw today was about 2.81% for 23.9-month, wi...
by Kevin M
Sun Jul 08, 2018 7:59 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Recommendation
Replies: 18
Views: 1772

Re: Bond Recommendation

By reading this thread I realized that bond index funds are better suited to be in non taxable accounts such as 401k. I was thinking of adding VBMFX in my 401K, but the only Bond options i can see available to me there are: PIMCO Total Return Fund Institutional Class Vanguard Institutional Total Bo...
by Kevin M
Sun Jul 08, 2018 7:15 pm
Forum: Investing - Theory, News & General
Topic: Yield curves and bond returns
Replies: 31
Views: 2557

Re: Yield curves and bond returns

<snip> You can get ridiculously complete yield curves from the Federal Reserve at <snip> <snip> It's been a long time since I worked on it, and I don't think the complexity of using that dataset is worth it for what I'm doing here. Just looking at my old spreadsheets makes my head hurt ;-) I think ...
by Kevin M
Sun Jul 08, 2018 4:59 pm
Forum: Investing - Theory, News & General
Topic: Yield curves and bond returns
Replies: 31
Views: 2557

Re: Yield curves and bond returns

And I still don't know where Larry's 20 bps per year comes from. :( It's not necessarily definitive, but here's something I found that discusses this: The Variable Maturity Approach to Fixed Income Investing (Part I) . First two paragraphs: The variable maturity approach to fixed income investing i...