Search found 9633 matches

by Kevin M
Sun Jul 22, 2018 4:03 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Municipal Money Market VMSXX 1.39%
Replies: 215
Views: 23687

Re: Vanguard Municipal Money Market VMSXX 1.39%

Thanks for that. <1% is definitely tolerable. But how about if the day of reckoning comes for the pensions, or another “expert” predicts defaults, etc. I don't think anyone can predict the pension thing, but I think as long as you stick with fairly short-term maturities and high quality, you'll pro...
by Kevin M
Sun Jul 22, 2018 3:40 pm
Forum: Personal Finance (Not Investing)
Topic: Long-term capital gains taxation question
Replies: 9
Views: 544

Re: Long-term capital gains taxation question

Depreciation recapture (section 1250) is a big one, especially if you've held the property for a number of years. How did you estimate your LTCG? If you didn't include depreciation recapture, you could be paying taxes (at higher rates) on a lot more than $250K. Who has been doing your taxes? Wouldn'...
by Kevin M
Sun Jul 22, 2018 3:21 pm
Forum: Investing - Help with Personal Investments
Topic: Vanguard Municipal Money Market VMSXX 1.39%
Replies: 215
Views: 23687

Re: Vanguard Municipal Money Market VMSXX 1.39%

How much do you think the short term muni can go down in the worst of cases? For some reason, I don’t have a good feel of the downside risk I’m taking in these muni funds. You can at least see the monthly historical returns since Jan 1985 using Portfolio Visualizer backtest for VWSTX . Maximum mont...
by Kevin M
Sun Jul 22, 2018 2:36 pm
Forum: Investing - Theory, News & General
Topic: In Search of... the Inverted Yield Curve
Replies: 8
Views: 744

Re: In Search of... the Inverted Yield Curve

We can see that it does tend to go negative before recessions, but there also are some false alarms, and the timing is not consistent. With the 10-2, I'm not seeing any false alarms, only variable time until the recession started. Yeah, I was looking at the 10-1 for the false alarm. More history, m...
by Kevin M
Sun Jul 22, 2018 2:35 pm
Forum: Investing - Theory, News & General
Topic: Is SEC yield of any value?
Replies: 22
Views: 2516

Re: Is SEC yield of any value?

The difference, as I have said before, comes from the difference between economic and accounting income. Without looking at the fund, I am going to assume the 2% comes from ordinary income. i.e. coupon income. The other .81% is coming from expected capital gains. i.e., Amortized income from discoun...
by Kevin M
Sun Jul 22, 2018 1:37 pm
Forum: Personal Finance (Not Investing)
Topic: Union Bank 18-month CD @ 2.75% APY
Replies: 17
Views: 1410

Re: Union Bank 18-month CD @ 2.75% APY

The Andrews deal seems good, but probably still not good enough for me. I’m at 35% federal bracket and 6% GA bracket. Factor in extra medicare taxes, net investment tax for those of us making >$200k, and I think VMSXX (Vgd Muni MMF) is still a better yielding, safe bet after taxes are concerned. At...
by Kevin M
Sun Jul 22, 2018 12:42 pm
Forum: Investing - Theory, News & General
Topic: Is SEC yield of any value?
Replies: 22
Views: 2516

Re: Is SEC yield of any value?

I understand your point about the disconnect between accounting and economic income and why SEC yield is a better metric to use. I want to return to the purpose of the post, identifying distribution expectations over the next 12 months. Yeah, we have gotten off on some tangents if that's your main ...
by Kevin M
Sun Jul 22, 2018 11:54 am
Forum: Personal Finance (Not Investing)
Topic: Union Bank 18-month CD @ 2.75% APY
Replies: 17
Views: 1410

Re: Union Bank 18-month CD @ 2.75% APY

Andrews FCU is offering a 9-month CD at the same APY, with a minimum of $1K. There is one catch: At maturity, all 9-Month Certificates will automatically renew at the 12-Month share certificate rate and term. Each individual member limited to one Special 9-Month Certificate during the promotional p...
by Kevin M
Sat Jul 21, 2018 9:59 pm
Forum: Investing - Theory, News & General
Topic: In Search of... the Inverted Yield Curve
Replies: 8
Views: 744

Re: In Search of... the Inverted Yield Curve

A common measure of the yield curve is the 10-year yield minus the 2-year yield. We can chart that directly using FRED, and see how it relates to recessions: https://fred.stlouisfed.org/graph/fredgraph.png?g=kl9V There's a longer history for the 1-year Treasury, so let's look at 10-year minus 1-year...
by Kevin M
Sat Jul 21, 2018 9:46 pm
Forum: Personal Finance (Not Investing)
Topic: Union Bank 18-month CD @ 2.75% APY
Replies: 17
Views: 1410

Re: Union Bank 18-month CD @ 2.75% APY

shell921 wrote:
Sat Jul 21, 2018 9:26 pm
I got that offer in the mail today too. So does that mean if I put in $25,000
at the end of 18 months I will make $687.50 in interest ?
No. That's how much you'd earn in one year. In 18 months you'd earn about $1,038 = 25,000 * (1+2.75%)^1.5 - 25,000 = 25000 * ((1+2.75%)^1.5 - 1).

Kevin
by Kevin M
Sat Jul 21, 2018 9:38 pm
Forum: Investing - Help with Personal Investments
Topic: Why Buy Bond Funds When Patelco/Provident CU Accounts Return 2-3%?
Replies: 8
Views: 952

Re: Why Buy Bond Funds When Patelco/Provident CU Accounts Return 2-3%?

The SEC yield on VBIRX could leapfrog ahead of bank CDs that are locked in now at the 2-3% now available (2-5 years?) That is the reason I plan to continue to hold VBIRX. First, the yield on a 2-year new-issue brokered CD is 2.80%, and the 3-year is 3.00%, so quite a bit higher than the low-end of ...
by Kevin M
Sat Jul 21, 2018 9:19 pm
Forum: Personal Finance (Not Investing)
Topic: Union Bank 18-month CD @ 2.75% APY
Replies: 17
Views: 1410

Re: Union Bank 18-month CD @ 2.75% APY

Andrews FCU is offering a 9-month CD at the same APY, with a minimum of $1K.

Kevin
by Kevin M
Sat Jul 21, 2018 8:15 pm
Forum: Investing - Theory, News & General
Topic: Is SEC yield of any value?
Replies: 22
Views: 2516

Re: Is SEC yield of any value?

There is often times confusion on what bond funds are paying income on. They are not paying income based on the coupons. Sure they are. It's just that that's not all that goes into the income equation. The other part is the amortization of premium or accretion of discount based on the purchase pric...
by Kevin M
Sat Jul 21, 2018 3:06 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 6562

Re: In defense of short-term treasuries

There's nothing wrong with this chart, except calling it a "roll down yield" chart. I don't care what you call the chart. Good, then let's not call it a roll down yield chart, since that's not what it is. I am interested in the total return of a Treasury sold before maturity so that I can place new...
by Kevin M
Sat Jul 21, 2018 2:23 pm
Forum: Investing - Theory, News & General
Topic: Why Take Risk on Equity Side?
Replies: 78
Views: 5005

Re: Why Take Risk on Equity Side?

<snip> The listing of holdings for Vanguards Total Bond portfolio includes 7553 individual items. https://investor.vanguard.com/etf/profile/portfolio/BND/portfolio-holdings click on coupon rate twice to show the highest yielding first. <snip> Coupon rate does not equal yield. A high-coupon bond you...
by Kevin M
Fri Jul 20, 2018 7:35 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 6562

Re: In defense of short-term treasuries

Oh! And that's another thing I forgot about entirely. I forgot that the 2-Yr treasury ALSO has its own roll down return. So even the unhelpfully complex formula I worked out is wrong because I was comparing the 3-Yr total return to just the coupon of the 2-Yr . I thought it would be fun to work the...
by Kevin M
Fri Jul 20, 2018 6:14 pm
Forum: Personal Finance (Not Investing)
Topic: Bank account decision
Replies: 7
Views: 837

Re: Bank account decision

I read the review of the Heritage Bank RCA at DepositAccounts.com , and scanned all the comments. Anyone considering it might want to do the same. It's tempting, but it would be yet another account to open, and the transition from my LMCU RCA to the new one would take a little work, and some strateg...
by Kevin M
Fri Jul 20, 2018 3:16 pm
Forum: Personal Finance (Not Investing)
Topic: Bank account decision
Replies: 7
Views: 837

Re: Bank account decision

I have been using a local bank with a kasasa checking account for a very long time. It is my primary account for paychecks and expenses. I keep a $15,000 emergency fund there as it pays 1.71%. It used to pay more with a higher limit, but until recently, it was still a pretty good deal. The kasasa r...
by Kevin M
Fri Jul 20, 2018 2:24 pm
Forum: Investing - Theory, News & General
Topic: Some 'hints' about brokered CDs
Replies: 45
Views: 8814

Re: Some 'hints' about brokered CDs

Kevin M: Thanks for the reply! When I go to Vanguard and open up info about the WF CD, it shows: "CD snapshot...Research bonds and CDs Price $100.002" Also...before buying, the CD description page also showed a price of $100. When I went to buy, I had to enter the number of CDs that I wanted. I did...
by Kevin M
Fri Jul 20, 2018 2:17 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 6562

Re: In defense of short-term treasuries

Daniel, or anyone else, if you want to run backtests with simulated ST and IT Treasuries as far back as 1871, you can use the Simba backtest spreadsheet, the latest rev of which you can download from this post: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=2520&start=1100#p4004199. The thing...
by Kevin M
Thu Jul 19, 2018 9:54 pm
Forum: Investing - Theory, News & General
Topic: Some 'hints' about brokered CDs
Replies: 45
Views: 8814

Re: Some 'hints' about brokered CDs

Kevin M: I purchased my Wells CDs from Vanguard...but you probably already knew that. Thanks for the useful info on smaller quantities than 10K for the secondary market. Then I don't understand your comment about WF quoting their brokered CDs in $100 batches. Vanguard sells WF CDs in the same $1,00...
by Kevin M
Thu Jul 19, 2018 9:47 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 6562

Re: In defense of short-term treasuries

Here's my Roll down Yield chart from the beginning of the month: https://s8.postimg.cc/4tz02ess5/Roll_Down_Capture.gif There's nothing wrong with this chart, except calling it a "roll down yield" chart. What you're showing are the expected annualized (total) returns for zero-coupon bonds assuming a...
by Kevin M
Thu Jul 19, 2018 7:37 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 6562

Re: In defense of short-term treasuries

Kevin, a zero coupon bond has no coupon so all of the return is the roll down return by both of our definitions. Sorry to interject in your discussion with Kevin, but I think he has made it very clear that this is not the case. A zero coupon bond has a yield, just like a par bond. It makes perfect ...
by Kevin M
Thu Jul 19, 2018 7:25 pm
Forum: Investing - Theory, News & General
Topic: Some 'hints' about brokered CDs
Replies: 45
Views: 8814

Re: My first brokered CD order...UPDATE

I had around $800 left over in the Settlement Fund. I kept thinking that I had to have a minimum of $1000 to buy a mutual fund. Then it hit me...ETFs! So I bought 10 shares of BND. Then I had around $60...so I bought 1 share of VMBS. Now I have $2 in my settlement fund. Minimum initial purchase for...
by Kevin M
Thu Jul 19, 2018 2:32 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 6562

Re: In defense of short-term treasuries

<snip> My take is that there are many different theories/models/opinions on the future shape of the yield curve. The professional bond traders/investors are aware of these and they "vote" on which is one is most correct by trading/investing their money. The resulting money weighted average is the c...
by Kevin M
Thu Jul 19, 2018 2:07 pm
Forum: Investing - Theory, News & General
Topic: 1-year Treasury Bill auction
Replies: 50
Views: 3971

Re: 1-year Treasury Bill auction

The 2-year Treasury note auction is open. Auction closes 7/24 and settles 7/31. Vanguard shows indicative yield at 2.591%, and Fidelity shows estimated yield at 2.590%. For comparison, Treasury.gov CMT 2-year yield from yesterday was 2.60%. Using 2.590%, TEY for me would be 2.909%. APY is 2.607%, wh...
by Kevin M
Thu Jul 19, 2018 1:12 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 6562

Re: In defense of short-term treasuries

The return line is steeply upward sloping from 2-year to 3-year returns because the initial yield curve is much steeper between 1-year and 2-year (23 bps/year) than between 2-year and 3-year (7 bps/year), so the 2X increase in the 1-year yield (46 bps) had a proportionally larger impact than the 2X...
by Kevin M
Wed Jul 18, 2018 10:56 pm
Forum: Investing - Theory, News & General
Topic: In defense of short-term treasuries
Replies: 114
Views: 6562

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: 50
Views: 3971

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: 1118

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: 114
Views: 6562

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: 114
Views: 6562

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: 50
Views: 3971

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: 114
Views: 6562

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: 114
Views: 6562

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: 50
Views: 3971

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: 114
Views: 6562

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: 50
Views: 3971

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: 114
Views: 6562

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: 114
Views: 6562

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: 50
Views: 3971

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: 50
Views: 3971

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: 114
Views: 6562

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: 3873

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: 50
Views: 3971

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: 9287

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: 114
Views: 6562

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: 114
Views: 6562

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: 3873

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: 50
Views: 3971

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...