Bogleheads.org

Many people think we'll go back to a low-rate environment this year. If that's the case, you'll have missed out on the big rally and your cash will underperform. There's lots of degenerate gambling and investing in garbage coins on that side of the bet. All symptoms of the disease, not the disease itself. Anyway, I just sock away money in stocks that I don't need for 10+ years. Everything else is bonds or cash, regardless of rates. This market is crazy. I don't try to predict anything.

Since no one else has asked and I'm curious - why does it need to be in Bitcoin? This all seems like a hilariously dumb way to make something look super sketchy for no reason. Your buddy abroad needs to borrow money? Okay, it's legal to loan him money, although it's still a terrible idea to loan large amounts of money to friends. Get a loan agreement in writing, preferably drafted by a lawyer, with all the terms such as interest, etc.

Investing is a long game. There's no easy money without taking stupid risks and getting lucky. If you have FOMO like me, ignore all the posters who say they invested in X, Y, or Z stock and made millions in a few years. This is survivorship bias. You rarely hear from the people who took such risks and didn't make it, so thanks for sharing your story. You can see on BH what has worked not just for a few but for everyone - investing over a lifetime, accepting what the market gives you, and saving. Whenever you're ready to get back to investing, target date funds are great place to start but I would recommend Vanguard PAS for you.

You added "extended market" and wound up with too much mid-cap exposure. It sounds like small cap exposure is needed. I would suggest avoiding "Vanguard Small Cap" ETF or mutual fund, as Morningstar shows it has 41% mid-caps: https://www.morningstar.com/etfs/arcx/vb/portfolio By contrast, "Vanguard S&P Small-Cap 600 ETF" (VIOO) allocates 99% small cap and 1% mid-cap, again according to Morningstar 9-box data: https://www.morningstar.com/etfs/arcx/vioo/portfolio You may need to click "Weight" next to "Stock Style" to display the 9-box. You can also view VTSAX or VTI in the same manner: https://www.morningstar.com/etfs/arcx/vti/portfolio My bias is towards ETFs, so I don't know if there i...

We have an LG which has been running great for 10 years. Samsung is also good.

simplesimon wrote: ↑Fri Mar 24, 2023 11:09 am Interesting to see the person with the largest assets has the smallest expenditures, is single, and is not collecting SS yet. He could afford to really let it rip! (also probably like many BH's)

He's got a teacup collection going. I'm not sure he's the type to let it rip.

Edit: Oops, that's the motorcycle guy. Yeah, I can see him letting it rip.

teelainen wrote: ↑Sat Mar 25, 2023 9:10 pm Also, is there a third option that is even safer?

Cash under your mattress? Or better yet a private vault.

biscuit5 wrote: ↑Sat Mar 25, 2023 11:40 am

123 wrote: ↑Sat Mar 25, 2023 11:27 am I think a lot of cash is sitting in banks at low rates simply because rates were low for so long and many depositers have not yet woken up to the current interest rate environment. It may not be in the best interest of banks to wake their customers up to the availability of higher rates since deposits could flee.

Could this fuel the current 'bank crisis'? meaning, if everyone pulled their funds from their bank to move to MMFs or similar at VG or other brokerage.

I would be surprised if the average Joe even knows what an MMF is.

For unrealized bond losses, the Fed is providing bank loans up to the bond's face value. So there's a huge source of liquidity there for banks to tap into.

I'll probably never be completely out of stocks, but I hope to be 40/40/20 (VTI & VXUS / BND / cash, CDs, & inflation protected bonds) at retirement. That's about as simple as I can keep it and for my wife to understand.

tunafish wrote: ↑Fri Mar 24, 2023 9:39 am I don't understand this fixation with new car safety features. I've driven for about sixty years and never been in a accident that had injuries. All three of the cars I've owned have been mine for years and years. The only new safety feature I like is a backup camera.

With newborns, I remember being hypersensitive about all sorts of things. Maybe it's an innate instinct to protect. In retrospect, this was all small stuff.

ChinchillaWhiplash wrote: ↑Wed Mar 22, 2023 5:13 pm “Buy when others are fearful”. Does it make sense to back up the truck to sector funds such as financials? Seems like a good time to get a huge discount. You might have to sit on it until it rebounds but you would do that with any holding. What would having 10-15% of portfolio in this matter as far as the downside. Could go down more. If it does just DCA into it. Is this any worse or riskier than holding something such as a REIT fund at these percentages?

One thing is the opportunity cost of the investment. Even if it is at a discount, it could stay flat for a long time while other sectors gain, so you'd miss out on those. That why I have trouble pulling the trigger when bottom fishing.

I'm thinking about doing this indirectly through a small cap value tilt, since they hold a lot of smaller financials. It would be 25% of the portfolio. I'm not quite ready to do it yet. If there is a precipitous drop, further than the 2022 lows I'll go for it (nothing to suggest it would be but just not worth the risk/reward for me). Otherwise I'll just stick with my VTI.

Some of you must not have HOAs. Let your lawn get crappy looking? Don't repair large cracks in the driveway? The HOA would be all over me for that. I got a violation the other day because my front door needed to be repainted (there was just a little bit of peeling paint).

Svensk Anga wrote: ↑Tue Mar 21, 2023 8:48 am

strummer6969 wrote: ↑Mon Mar 20, 2023 11:21 pm The only thing I can think of is I-Bonds which had a yield of 9.62% last year. They do have a $10,000 cap.

That 9.62% was the variable rate. You would add to that the fixed rate, which varies according to when the bond was issued. For bonds issued at the peak fixed rate in the six months starting May 2000, that was 3.6%. These bonds got a composite rate of 13.39% for six months. See the column under 522, 4.81% fixed rate here: https://eyebonds.info/ibonds/rates.html

Yeah, I bet that's what they were talking about. I would be all over them with a 3.6% fixed rate now...

Don't take my word for it. A lot of economists and researchers are saying that they took on excessive risk. Taking on that excessive risk caused massive paper losses at the firm. The word got out, cause it does, and then people took their money out. I don't think the 26% withdrawals caused their paper losses, it just forced them to realize them. The paper losses came first. What percentage short-term, intermediate-term, and long-term bonds should a bank hold, or do you propose they put them all in short-term? Would 33/33/33 or some other ratio have made a difference? Or let's say they put 100% of it in short-term. If they do that, how do banks make money? Banking is a business. They don't just hold your money in a vault and pay you interes...

The only thing I can think of is I-Bonds which had a yield of 9.62% last year. They do have a $10,000 cap.

Eno Deb wrote: ↑Mon Mar 20, 2023 10:50 pm They could have hedged the interest rate risk using swaps, like most other banks do.

Agreed, that was egregious. Would that have prevented failure in a bank run of this magnitude? I'm genuinely asking.

Eno Deb wrote: ↑Mon Mar 20, 2023 10:50 pm This particular bank run began *after* SVB had to sell some of their bonds at a big loss (and publicly communicated about it in an amateurish way).

The CEO is not amateurish though. He's on the SF Fed Board. So that was strange. I believe that public announcement happened first and then a depositor told others to take money out. I look forward to seeing all this deconstructed someday on a Netflix special.

I don't think panic causes bank runs. I think badly run banks cause bank runs. SVB got greedy chasing long term yields that were susceptible to interest rate hikes. Had they been in short term, lower yielding instruments, they would have been ok. To be clear they still would have been hurt, but, they would be a going concern. My thoughts, for what they are worth. I disagree. Depositors sought to withdraw 26% of deposits in a single day. I don't think any bank, not even the large ones could handle that. If they had diversified their bond holdings, would they have still failed? I'm willing to bet they would have. This was a good old-fashioned bank run. They took a little extra risk on the bonds but it's not like they were investing it in cry...

Just lock every thread if someone uses a word you dislike…? No, I am obviously not stating that. It is in particular that the word panic is counter-productive, especially in an environment where a) we want people to make rational decisions, not panic, and b) when people panic, they cause real problems, like bank runs I don't think panic causes bank runs. I think badly run banks cause bank runs. SVB got greedy chasing long term yields that were susceptible to interest rate hikes. Had they been in short term, lower yielding instruments, they would have been ok. To be clear they still would have been hurt, but, they would be a going concern. My thoughts, for what they are worth. I disagree. Depositors sought to withdraw 26% of deposits in a s...

I honestly think any thread titled “should we panic” should be locked, or at least re-titled to something more mature and measured Just lock every thread if someone uses a word you dislike…? No, I am obviously not stating that. It is in particular that the word panic is counter-productive, especially in an environment where a) we want people to make rational decisions, not panic, and b) when people panic, they cause real problems, like bank runs I don't think panic causes bank runs. I think badly run banks cause bank runs. SVB got greedy chasing long term yields that were susceptible to interest rate hikes. Had they been in short term, lower yielding instruments, they would have been ok. To be clear they still would have been hurt, but, th...

Just move whatever balance you have above $250K somewhere else. There's no need to panic about it. This would be the case at any bank. I'm shocked that people not know what the FDIC limits were before all this.

alex123711 wrote: ↑Thu May 23, 2019 7:40 pm Are mid caps still at much better valuations? And what is the best way to invest in midcaps?

Current valuations for large, mid, and small cap.

https://www.yardeni.com/pub/stockmktperatio.pdf

Edit: I found out that many of these P/E ratios for small cap do not include non-earning companies which may skew the results. I'm not sure what if that's the case here.

I've always been curious about SCV tilting but it seems like timing is everything for this asset class. Do you guys think now is a good time for a SCV tilt with the small bank failures plastered all over the news, or is there further down to go? I really can't tell how serious of a crisis it is. If you have to ask, you're not fit to buy SCV. Just kidding :) Some people are "committed" to SCV. It's like a relationship :annoyed Others will time the market -- see livesoft's postings about this. Personally, I wouldn't make a buying or selling decision based on Boglehead's opinions about this or that. Ultimately you need to decide for yourself, otherwise you'll be changing your portfolio every other week, day, hour... I'd definitely s...

I've always been curious about SCV tilting but it seems like timing is everything for this asset class. Do you guys think now is a good time for a SCV tilt with the small bank failures plastered all over the news, or is there further down to go? I really can't tell how serious of a crisis it is.

Edit: This would be a permanent tilt if I were to do it. So I'm not market timing but just want to make sure I get a reasonably decent entry point.

DoubleClick wrote: ↑Fri Mar 17, 2023 3:43 pm

EnjoyIt wrote: ↑Fri Mar 17, 2023 2:33 pm For example, Although our last agent was very nice, I think they did very little with regards to earning their keep. They had a couple of open houses and when it was time to negotiate, it appeared they goal was to get it sold ASAP as opposed to negotiating in our best interest.

This has been our experience every time. Similar on the buying side.

Same. Also on the buyer's side, I find it a huge conflict of interest that they get paid a percentage of the transaction. What motivation is there to reduce the price?

investwise1983 wrote: ↑Fri Mar 17, 2023 10:32 am Anyone taking profits that hasn't been hit too hard?

Profits? What are those? Anyone owing a broad index portfolio is basically flat for the year and double digit negative for last year.

In times of global risk events (2008, 2020, ____?), the U.S. has been the place to be as our central bank has been willing (and able) to step in big time, more than others. For that reason, I have a modest home country bias.

Diversification aside, I have international because 1.) the valuations are at low multiples and 2.) I cannot predict the future. I can barely grasp what's going on currently. A scattershot approach is the only one that makes sense to me.

deleted - off topic

All Frontline has a documentary "the age of easy money" it is expected EST at 9:00PM tonight 3/14/2023 I am sure it will repeat or be available at your local area. https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/ "Around the country and across the world, the threat of a recession is looming and economic uncertainty is rising as markets, businesses and individuals adjust to a new reality: the Federal Reserve is raising interest rates and pulling back on its epic monetary experiment that started with the Great Financial Crisis. From the award-winning team behind The Facebook Dilemma and Amazon Empire, the two-hour documentary Age of Easy Money investigates how the Fed’s experiment has changed the American econ...

All Frontline has a documentary "the age of easy money" it is expected EST at 9:00PM tonight 3/14/2023 I am sure it will repeat or be available at your local area. https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/ "Around the country and across the world, the threat of a recession is looming and economic uncertainty is rising as markets, businesses and individuals adjust to a new reality: the Federal Reserve is raising interest rates and pulling back on its epic monetary experiment that started with the Great Financial Crisis. From the award-winning team behind The Facebook Dilemma and Amazon Empire, the two-hour documentary Age of Easy Money investigates how the Fed’s experiment has changed the American econ...

All Frontline has a documentary "the age of easy money" it is expected EST at 9:00PM tonight 3/14/2023 I am sure it will repeat or be available at your local area. https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/ "Around the country and across the world, the threat of a recession is looming and economic uncertainty is rising as markets, businesses and individuals adjust to a new reality: the Federal Reserve is raising interest rates and pulling back on its epic monetary experiment that started with the Great Financial Crisis. From the award-winning team behind The Facebook Dilemma and Amazon Empire, the two-hour documentary Age of Easy Money investigates how the Fed’s experiment has changed the American econ...

I've got a tax question about I-Bonds that I hope someone can help me out with. So I-bond interest can be tax-deferred or taxed annually, however you want to treat it. Let's say I have a $10,000 I-bond purchased for a child. If I choose for the interest on the bond to be taxed annually, I would pay no kiddie tax on that interest, since a dependent's unearned income below $1,150 is non-taxable. However, there's no way to show the income on my tax return, since parents aren't required to report children's unearned income below $1,150. Can I still exclude the interest when I cash it in? My position would be that we elected to have the interest annually but it was not required to be reported since it was below the threshold. Perhaps these arti...

I've got a tax question about I-Bonds that I hope someone can help me out with.

So I-bond interest can be tax-deferred or taxed annually, however you want to treat it.

Let's say I have a $10,000 I-bond purchased for a child. If I choose for the interest on the bond to be taxed annually, I would pay no kiddie tax on that interest, since a dependent's unearned income below $1,150 is non-taxable.

However, there's no way to show the income on my tax return, since parents aren't required to report children's unearned income below $1,150.

Can I still exclude the interest when I cash it in? My position would be that we elected to have the interest annually but it was not required to be reported since it was below the threshold.

Yelling fire in a crowded theater is a crime. Perhaps causing bank runs should also be. Amen, brother. No argument here. Cheers I mean, not if there is a fire, or you have to stem some other catastrophic event. Kinda hard to tell exactly what we are referring to here, but I dont blame the VC's for telling their friends to get out and get out now. The data has been there for a while showcasing the issues with SVB, and some of the same could have been said about 2008, folks just didnt fully pay attention. I personally am all for actually throwing KPMG and the other auditors under the bus, as well as the credit rating agencies like Moody's as the real bad guys in this whole thing. But then again, what the heck do we expect when public traded ...

Perhaps they shouldn’t have loosened the Dodd-Frank regulations then. This was a thing that was partially repealed in 2018 by our lovely anti-regulation representatives. SVB previously had extra stress testing, and due to the regulatory changes, they no longer had the same level of stress testing. Perhaps it would have mattered. Or perhaps not, because it’s hard to prevent a bank run from ruining a bank What exact regulation are you referring to that would have prevented the collapse? If you can't name the regulation then your posts are non-actionable and trolling. They already said. Dodd-Frank. They rolled back oversight requirements back in 2018 for banks with less than $250 billion in assets (like SVB). https://www.nytimes.com/2018/05/2...

fsrph wrote: ↑Sun Mar 12, 2023 10:37 pm

JoMoney wrote: ↑Sun Mar 12, 2023 8:56 pm

JenniferW wrote: ↑Sun Mar 12, 2023 8:49 pm I don't know why banks would purchase very long term bonds at 1.5% or so. That's so far below the average inflation rate of around 4%. What did they think was going to happen?

Because that's what Banks do. Short-term bonds were paying 0% ... even 5 year treasuries were <1% ....

If "that's what banks do" can we expect many more banks to become insolvent, especially if the Fed continues to raise interest rates?

Francis

You might not have to worry about that. Goldman is forecasting that because of the banking failure, the Fed will not hike rates this month. I'm glad that THIS is what we've learned from all this

I read in the news that over 1000 companies had deposits with SVB. I’d think those companies and their shareholders lose too if not covered. Correct. And some commenters on this thread seem to be rooting for that, for a world where everyone has to worry about their bank deposits. There is something to be said for holding people/companies responsible when they take risks. Leaving more than $250k in a small/medium bank is risky (or at least used to be before this latest bailout). 1) it is not a bailout 2) what is your proposed alternative? Where do you keep 10M-100M? Someone mentioned SVB was like the 18th largest in the US, so not small-medium, I think Right. $250K is peanuts for an organization. Would they expect companies to deposit at 10...

While SVB's collapse is troubling, as someone in their mid 30's with no assets with SVB, whose payroll is not linked with SVB, and who solely holds broad based index funds (100% equities, no bonds), is there anything actionable I am to do with SVB's collapse? (If it matters, 100% of my cash equivalent assets are in a treasury money market fund - FZFXX - whose duration matching seems appropriate to its obligations, unlike what happened with SVB.) I ask this because it seems that this really has no practical, actionable implications for me as an individual who has no relations with SVB. Just want to make sure I am not missing anything. You're not 100% equities then. You have cash which is an asset that should be included when you state your ...

While SVB's collapse is troubling, as someone in their mid 30's with no assets with SVB, whose payroll is not linked with SVB, and who solely holds broad based index funds (100% equities, no bonds), is there anything actionable I am to do with SVB's collapse? (If it matters, 100% of my cash equivalent assets are in a treasury money market fund - FZFXX - whose duration matching seems appropriate to its obligations, unlike what happened with SVB.) I ask this because it seems that this really has no practical, actionable implications for me as an individual who has no relations with SVB. Just want to make sure I am not missing anything. Reduce your risk exposure. 100% equities in a rising rate environment is not smart. I was 100% equities unt...

Better to start a bank run than to be left holding the bag at the end of one! That said I have only $1k in my checking account and about $80 in cash in the brokerage account, so I'm not panicking. Our investment shares are safe, right? If we had widespread bank runs, dollars under your mattress won't save you because they would be worthless. I'm not worried about it. I have cash at an FDIC insured bank. Even if it was above FDIC limits, I have no doubt that I would eventually be made whole. I guess you can either trust the system or stock up on canned food, ammo and gold. Or you can insure yourself by deploying 10% of your assets in a way that will gain in value if the banking system collapses and will generally keep pace with the economy ...

Time for schwab customers to start moving assets out? And start another bank run? Better to start a bank run than to be left holding the bag at the end of one! That said I have only $1k in my checking account and about $80 in cash in the brokerage account, so I'm not panicking. Our investment shares are safe, right? If we had widespread bank runs, dollars under your mattress won't save you because they would be worthless. I'm not worried about it. I have cash at an FDIC insured bank. Even if it was above FDIC limits, I have no doubt that I would eventually be made whole. I guess you can either trust the system or stock up on canned food, ammo and gold. Or you can insure yourself by deploying 10% of your assets in a way that will gain in va...

SVB is not all that unique in large banks.. SCHWAB has similar percentage (~70%) of it's deposits invested in securities (available for sale and held to maturities) . They also had to take a loan from FHLB to manage liquidity similar to SVB. From the reports I see on Twitter based on their monthly call reports,Schwab's unrealized losses on HTM portfolio exceed equity of it's banking entities which is pretty bad. What is better for them is that they have more equity in the parent level that it can inject into banks. But I can see Schwab's largest depositors getting nervous right now and looking to diversify which can worsen their liquidity problem. Time for schwab customers to start moving assets out? And start another bank run? Better to s...

How are you 100% stock folks holding up? I'm 70/30. I'm still feeling nervous but I believe I'll survive if any nightmare scenario plays out. I hope this blows over. Doing great at 80-85% of equities and just put $55k in a major bank yesterday. This is nothing compared to 2008. What Bogleheads don't realise is truly how close the global financial system was shutting down. Everyone's like "stay the course" which is great, but if Bernanke didn't call the CEO's of all the major banks and tell them to stay open and the Fed would support them to the last dollar.....the ATM's were going to stop and people wouldn't be getting paid that Friday. What Bogleheads don't appreciate because they don't work in the industry is how much the whole...

How are you 100% stock folks holding up? I'm 70/30. I'm still feeling nervous but I believe I'll survive if any nightmare scenario plays out. I hope this blows over.

Managing a bank without a Chief Risk Officer is sub-optimal. Still, they must have had a risk management department and, as noted, KMPG signed an audit report two weeks ago, something they should not have done if there wasn't a reasonable risk management function. As far as I can tell, this was not fraud, or something the auditors could have prevented. Nothing that SVB was doing was all that uncommon. The Treasuries were not marked to market and not required to. What was uncommon was the bank run that was precipitated by venture capital companies telling startups to pull their money out. There probably need to be some accounting rule changes. See "AS 2415: Consideration of an Entity's Ability to Continue as a Going Concern". http...

I'd imagine SVB had, and its regulators and auditors examined, some risk management model that led to the conclusion that SVB was fine. The Chief Risk Officer left the company in April 2022. A new one wasn't hired until Jan 2023. https://fortune.com/2023/03/10/silicon-valley-bank-chief-risk-officer/ Managing a bank without a Chief Risk Officer is sub-optimal. Still, they must have had a risk management department and, as noted, KMPG signed an audit report two weeks ago, something they should not have done if there wasn't a reasonable risk management function. As far as I can tell, this was not fraud, or something the auditors could have prevented. Nothing that SVB was doing was all that uncommon. The Treasuries were not marked to market an...

I'd imagine SVB had, and its regulators and auditors examined, some risk management model that led to the conclusion that SVB was fine. The Chief Risk Officer left the company in April 2022. A new one wasn't hired until Jan 2023. https://fortune.com/2023/03/10/silicon-valley-bank-chief-risk-officer/ Managing a bank without a Chief Risk Officer is sub-optimal. Still, they must have had a risk management department and, as noted, KMPG signed an audit report two weeks ago, something they should not have done if there wasn't a reasonable risk management function. As far as I can tell, this was not fraud, or something the auditors could have prevented. Nothing that SVB was doing was all that uncommon. The Treasuries were not marked to market an...

Bonds are sure looking great today.

martincmartin wrote: ↑Thu Mar 09, 2023 12:35 pm

Apathizer wrote: ↑Tue Mar 07, 2023 11:16 pm To me this looks like one of those unusual times when almost all assets seem fairly inexpensive.

Depends how you look at it. CAPE10 is 28.88. Higher than Black Monday (1987), the 1960s, and in fact any time other than just before the Great Depression, just before the dot com bubble burst, and just before COVID.

What about small caps? I don't know the CAPE but they were pretty beat up last year. https://www.marketwatch.com/story/small ... 1654175814

Why not Barcelona? The Gaudi architecture is amazing.