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Didn't the US market grow faster due to loose fed policy that kept interest rates low after the financial crisis? Meaning US markets were partially propped up by the Fed. More money supply, lower corporate taxes, low rates. Basically we should have raised rates 10 years ago. The economy had recovered by 2012-2013 and instead we kept lowering them. So we had 10+ years where the only place to put your money was stocks. Absolutely the US govt propped up the stock market. Agreed, they should have normalized 10 years ago, and they shouldn’t have stopped normalizing in 2018. But it wasn’t just the US. Rates in Europe have been low for most of the same period, even negative in Germany at times, and the Bank of Japan has had a ZIRP for 35 years. T...

Sector mix in US being different means there should be good reason why either US or exUS outperforms during various cycles. We have now seen the unwinding of Big Tech in the S&P 500, a period where rising interest rates, high US debt, and a focus on near term cashflows could cause exUS and Value to greatly outpetform Growth. It is currently happening. There is no reason why "Tech" should necessarily do better than dinosaur industries when adjusted for earnings growth. That's why you diversify. Can't predict which sectors will outperform during various periods. Yes, that is true. And I had hoped that if value took its turn in the spotlight, that international shares, which are arguably more value-laden, would have their turn t...

25 years ago (as far back as my chart goes) the dollar index was at 101, today it's at 103. It had a 2-year trip above this level to as high as 120. It spent 10 years below 90, reaching as low as 80, then another 5 years bouncing in the mid-high 90s before the recent breakout. Currency effects cannot explain the long-term underperformance of international shares. They can partially explain some of the changes seen over the past year. This article may be of interest regarding the sector weighting and P/E sides of the argument: https://www.putnam.com/newsroom/post/perspectives/6924-are-international-stocks-truly-cheap/ It's 5 years old and very outdated. A more recent article (still 2 years out of date) claims the opposite: https://www.topdow...

I'll try to dig up Benz' article. It was written some years ago. All I can find is this interview: https://www.morningstar.com/articles/966016/why-international-stocks-have-lagged Quoting Daniel Sotiroff: These are actual businesses at the end of the day, and they have to earn a profit at the end of the day. So, what we did is, we took the returns, the total returns, from those two indexes and then decomposed them based on the P/E multiples. So, we basically came up with two components that if you add them together, you get the total return. So, that is, the multiple expansion, which is how has price grown relative to the earnings generated by that index. And then, you have EPS growth, which is sort of like, basically how have you grown you...

Everything can be explained after it happens. Their lost decade was due to lowering valuations and an unwinding of debt. Valuations can do a myriad of things. They were in lockstep with US until late 2000s, and then diverged as US valuations rose The sector mix in the US is very different. I am talking about valuations on an apples-to-apples basis. US valuations took off largely because we have more of certain IP-heavy sectors such as computer technology, information services, and biotech. So if I just look at comparable sectors, or even companies, I'm pairing off P&G with Unilever, Ford and GM with VW Group or Toyota, Merck and Pfizer with Roche and GSK, Exxon and Chevron with BP and Shell, and on down the line. In almost any traditio...

Some people seem to have very short or selective memories. No price growth in S&P 500 from 1996 to 2009. It happens. That’s why you diversify. I have an excellent memory of all of that, having lived it. Read my post above. You could see the lost decade unfolding in the run-up prior to the crash, if you were paying attention. My point is that these things don't "just happen", they are not completely random, there is always some sort of cause and effect. It seems the attitude here is to treat asset classes as black boxes, "ignore the noise". But while everyone will agree that "past performance is no predictor of future results", this is exactly what people are basing their asset allocations on! Otherwise you...

The U.S. had a lost decade prior the the ex-US lost decade. True. But it could be explained. It started that decade at outrageous valuations, and that was also at a time when bonds sported decent yields Fast forward to 2021, the US market was arguably overvalued (by historic metrics), but to nowhere the same degree. And versus the pathetic bond yields at the time, even less so. But yes, the downfall can be explained almost entirely by the movement in bond yields. Meanwhile, international developed markets have had middling valuations for their entire lost decade, and yet still can't seem to get out of their own way. During much of that time, bond yields in developed countries (Germany, Japan to name two) have been low. So the puzzle is, wh...

You can look at VEU which has a track record back to 2007, or VXUS (which I owned for 10 years from it's inception), or VEA (which I still own). They all show a similar rollercoaster to nowhere pattern in share prices. The dividend yield on VEA used to be somewhat attractive but fell last year below 3%. Some posters here keep reminding me that only total return matters. I don't agree, in the same way that I see a difference in fixed income investments between a bond that has a juicy coupon and one that doesn't, even if the YTM is the same. Having the dividend or coupon payment makes the investment partially self-liquidating. In the case of stocks, this cushions the effect of price movements and it makes a difference in tax treatment (you're...

With an estate of that size she should consult a tax adviser. The $18 million is going to mean some estate tax will likely be due. Anything you can do to reduce that will help. One oddball thought is that by taking the IRA out at higher than the RMD, and paying income tax on the distributions, will reduce the net amount subject to the estate tax. She might consider this up to the limit of whatever tax bracket she's in, which is hard to judge from what you've stated. I'm sorry to say that the Roth conversion idea was something for her to consider 10-20 years ago. She could have chipped away at the $1.8 million (or whatever it was worth at the time), converting to Roth and paying the tax along the way. This would allow her to leave the Roth a...

MathWizard wrote: ↑Sat Jan 07, 2023 8:01 pm
Yes, long bonds is what hurt me.

VBLAX down 27.22% in 2022.

My VBILIX was not hurt as bad, down 13.27%

Together my bond holdings were down 20.55%

My VTSAX was down 19.53%

-20.55% is worse than -19.53%

and certainly -27.22% was way worse than -19.53%

My longest bonds were only 5 years out and they still lost 15%. Versus the crummy 1% (or less) yield, it's 15 years of expected returns gone. Contrast that with stocks, where a 20% drop is about 3 years expected return gone. I knew this could happen to longer duration bonds which is why I kept my ladder relatively short. I never expected to see losses like this in 5-year instruments.

The international investments are probably the biggest headache - the entire reason for owning them was to get yield I could not get from bonds. Am I making a behavioral finance mistake to hold them hoping for a rebound? I do think the premise of holding international for yield doesn't make sense, total return is all that matters with stocks. But as you can see, I hold international for diversification. I think selling now would be the mistake, holding on is the only sensible course of action. Remember, it has only been about 370 days since the all time high. Are you really going to change course over one bad year? It is possible, probable in fact, that we will hit a new all time high before the year is out. The pain of missing out on retu...

toddthebod wrote: ↑Fri Jan 06, 2023 9:58 am Fixed income did great in the 2000s.

But not this time.

I've also found this drop particularly hard to take. The whipsaw movement in interest rates is unlike anything I've ever seen. Bonds went from uninvestible (2% or less on a 10-year treasury?) to the only game in town (4.4% on a 2-year treasury?) in nothing flat. A huge pain point for me has been watching the losses in my bond ladder, which didn't reach for yield and had relatively short duration of 4-5 years. Versus the puny returns expected, the losses are staggering. Another huge pain point is the losses in international shares, which were nowhere near as overvalued as the US, and which used to offer dividends well above what you could earn on bonds. Now they're down just as much as the S&P 500, and the dividend yield has slipped even...

For what it's worth, the last of my 12/31/22 Treasury interest payments did not get posted to my account at Schwab until mid-afternoon today (Jan 4, around 2 p.m.). All of the rest posted yesterday at various times. Either way, if you are still not seeing it, I'm sure Schwab can trace and resolve it. Knock on wood, in 5 years of Treasury investing, Schwab has never failed to post an interest payment for me. Good luck - I'm sure you will get it resolved. It's finally showed up. At the office they told me a lot of folks had been asking what happened. I guess they can take 2-3 business days after the payment date to credit your account. I'm not sure what effect this will have on 2022 taxes. The account in question is one where I have fiduciar...

It’s still not posted. I guess I’m heading down to Schwab’s local office to see if I can sort it.

I have a treasury bond that is supposed to pay interest every 6 months. The last payment was supposed to be December 31, 2022. I still don't have the payment. Is this normal? Admittedly that was a Saturday and January 2 was a bank holiday. But shouldn't it have been paid by now, January 3, 2023?

Tesla stock is more attractive now than it was a year ago. People seem to really like the product (cars). They are now common place. Elon Musk is talented and capable of surprising with innovative products. Tesla sells other products as well, other than cars. As I said, my grumbling is all about the share price and being made an unwitting buyer at a very high valuation some years ago. I acknowledge the success of the company, the products, and Musk himself. He almost single-handedly jump-started the moribund EV industry. Twitter is an unnecessary distraction. I think he realized that soon after making the offer and tried to get off the hook, but the courts didn't let him, so now it's the dog house for Musk until he can get clear of it. Thi...

Still trading at 4x the multiple of other car companies. Still resentful of the S&P committee forcing me and other indexers to play the role of bigger fool on this issue by adding it at a significant weight to the index some years ago. Tesla joining the S&P is invisible on the chart, good or bad: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=2021&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&...

Still trading at 4x the multiple of other car companies. Still resentful of the S&P committee forcing me and other indexers to play the role of bigger fool on this issue by adding it at a significant weight to the index some years ago.

drumboy256 wrote: ↑Sun Dec 25, 2022 9:38 am The funniest thing I think I feel sad for is most on this forum that only invest in the US because this isn't a US only localized event (as BlackRock pointed out) and if you're not invested in ex-US, you're going to miss out on the returns not seen in our lifetimes.

Why are other countries immune to these same effects? Won't the loss of comparative advantage effects hurt everyone?

secondopinion wrote: ↑Sat Dec 24, 2022 3:06 pm
I stayed mostly in CDs (which at the time was pretty decent) and other very short-term investments for a while. This is the first time I have bought significant amounts of long-term bonds.

Because I treat long-term bonds as a risk asset if they are not TIPS, I waited until there was a sizable expected premium to back up the investment.

What's your definition of long-term? I never buy anything longer than what most would consider intermediate term (5 years out). The exception is TIPS - that's the only type of bond I'll hold for up to 10 years.

I do not hold long-term bonds when they are not expected to have a strong-ish real returns (as priced in TIPS). That is the rule of thumb I follow; and I have yet to regret it. Having said that, bonds are better now as a choice over cash-like investments. Some market timing, but hopefully the pain has past. I avoided the pain mostly, so I guess I am being a little cocky. Me either. The longest dated bond I had was out 5 years. I still got brutally punished. Take a look at a chart of the 5-year yield over the last 10 years and you'll see what I mean. To make matters still worse, I threw in the towel on bonds and bought VEA (international) to get better yield. I figured I could just ignore the price volatility. What I didn't figure is a shar...

stocknoob4111 wrote: ↑Sat Dec 24, 2022 8:14 am If you have a good amount of fixed income in your portfolio hopefully that is offsetting this cut with the 5x rise in interest rates.

Are you kidding? Bonds are just a world of pain for me. My ladder of bonds will yield crummy rates for years, and the bonds themselves are down 10-15% on paper because no one wants to buy a low-yielding bond when they can buy one with a higher yield. The drop in value is disproportionate to the expected low yields. Warren Buffet once said bonds (at those low rates) offered "return-free risk". Boy was he right.

Inflation is a result of economic processes, not the cause. Yes, equities are a claim on real assets and thus a good hedge against inflation. However if the economy is struggling then you will probably not see good returns. How "real" the assets are is a matter of perspective. Buy a company like XOM and you're going to own a lot of physical assets. Buy a company like MSFT and a lot of the value is intangible. Companies are valued based on the earnings stream they yield. If a company does well, it's earnings stream may come to be valued (by the share price) as much greater than the money originally invested in it to purchase whatever physical assets it has, even whatever money was invested in R&D to get the IP that now has val...

You can’t see the effect in a noisy chart that’s moving for other reasons. You may find this analysis interesting (and it includes a chart): https://www.researchaffiliates.com/publications/articles/832-revisiting-teslas-addition-to-the-sp500 TSLA was added at a 1.69% weighting, while the exiting stock left at 0.012%. It’s therefore fair to say an S&P 500 investor was forced to spend 1.69% of his/her investment on TSLA shares on that day. It’s gone from 220/share to 120 today (and IMO still with more room to fall, if you compare the multiple to other car companies). Versus the SPY over the same time period it’s down 50%. It’s fair to say the addition cost an S&P investor around 0.8% (so far) when you include dividends. Quoting from A...

Some of us index investors are still grumbling at being made the bigger fools when TSLA was added to the S&P 500. That’s not to take anything away from the company, the cars, or the founder. It’s just an old man grumbling at the valuation he was forced to swallow. Why would you say that? That's the very core idea of passive index investing - don't look for the needle. Instead, own the haystack. And yes, owning the haystack does come with owning all the fluff in it. Besides, total stock market always included Tesla, is (perhaps arguably) more true to the idea of owning the haystack than S&P 500 index fund, and does not so far show any meaningful performance difference from S&P 500. If you owned VOO instead of VTI, you absolutely...

I agree with WhiteCoat, my biggest obstacle is that I like what I do and I'm really really good at it.

As a childless person with lots of close family and friends who have children, I would love to trade places with them. Instead I live vicariously and try to help my family financially in every way possible.

nisiprius wrote: ↑Thu Dec 22, 2022 4:01 pm I personally wouldn't touch either of these with a ten-parsec pole.

And with that, you win the internet for the day!

pmindex wrote: ↑Mon Dec 19, 2022 7:26 pm I’m new here but really surprised to see this discussion on this forum. TSLA seems to me a case study in why index investing is better than stock-picking. (But I’ve never had money I was willing to gamble on a “genius” CEO.)

Some of us index investors are still grumbling at being made the bigger fools when TSLA was added to the S&P 500.

That’s not to take anything away from the company, the cars, or the founder. It’s just an old man grumbling at the valuation he was forced to swallow.

Second paragraph though could just about as easily be applied to the stock market as a whole. Lots of industries in TSM have questionable futures too. In fact they all do. The conventional wisdom (eg. green/EV type stuff will rule, fossil fuels will fairly soon disappear) is just that, it's not the future written in stone. Recent WSJ, basically Toyota's management thinks EV's are overhyped but other managements in the industry are reluctant to say so publicly. But the tricky part is to determine how various sectors/industries will fare *relative to how they are priced now*. There's obvious likelihood EV's will grow, fossil fuels shrink at some point eventually, the trend toward shopping online rather than at malls will probably continue (b...

I don't really consider REITs to be the same as directly-owned RE. There's management risk and embedded leverage. The leverage in particular always concerns me because you don't control it, so you have to assume it needs to be rolled over periodically.

Also, there's a lot of very different types of RE in many of the indexes. Apartment buildings versus shopping centers versus office buildings versus data centers versus storage facilities. Given how the economy is changing, some of these have questionable futures.

gasman wrote: ↑Mon Dec 19, 2022 4:46 pm FWIW, my take from the article is that the good Dr. Siegel thinks that TIPs are a solid buy compared to nominal Treasurys.

Me too. That beeping you hear is the sound of my truck backing up to the terminal...

For example in January the fund buys a 6 month bond with a yield of 2%. After 3 months it sells the bond. The bond would return 2% during this period. The fund would use the proceeds to buy a new 6 month bond with yields of 3%. It makes 3% return for 3 months and then sells and buys a 6 month bond with a yield of 4%. So despite rising interest rates it still makes money. You cannot sell a bond yielding 2% at par when new bonds are yielding 3%. So you will lose principal. And these were all expected rate increases, yes? So it is entirely possible to lose money on bonds (if you sell before maturity or hold a bond fund) even during expected rate increases. Indeed, I have bonds with embedded losses as large as stock indexes. This rate regime d...

dagsboro wrote: ↑Sun Dec 18, 2022 9:57 am I have had good success redeeming EE bonds at my local regional bank and their only request was that I not bring in large numbers of individual bonds because that can be time consuming for them. Personally, if I had a bank that wouldn't cash my bonds, I wouldn't do any further business with it. Some mega banks have become very arrogant about the way they treat their customers and have been fined and censured as a result. A previous suggestion that bonds be cashed in small quantities over a period of time seems a constructive way to meet customer needs and not burden banks which are making huge profits.

Mom can’t leave her bank at this point, too many direct deposits and auto payments are tied to that account.

To be clear: do you want to prepare the K-3, or enter an existing K-3? TurboTax Business will prepare K-3 for 1065 and 1120S. "Regular" TurboTax (1040) has a "K-3 Foreign Transactions Worksheet" entry screen. At first glance it doesn't look like it would handle the full 20+ page K-3, and there is a note on the worksheet that manual entry on the appropriate form may be required. Enter a K3 that you've received, i.e. regular 1040 TT. Last year if you checked the box for a K3, TT gave you a screen saying you needed to get an accountant. The advice from Inuit was to uncheck it. Which all my siblings had to do. Well, as I said it doesn't look like the 2022 version of regular TT can handle a full K-3 at this point. But their ...

MP123 wrote: ↑Sat Dec 17, 2022 5:41 pm To be clear: do you want to prepare the K-3, or enter an existing K-3?

TurboTax Business will prepare K-3 for 1065 and 1120S.

"Regular" TurboTax (1040) has a "K-3 Foreign Transactions Worksheet" entry screen. At first glance it doesn't look like it would handle the full 20+ page K-3, and there is a note on the worksheet that manual entry on the appropriate form may be required.

Enter a K3 that you've received, i.e. regular 1040 TT. Last year if you checked the box for a K3, TT gave you a screen saying you needed to get an accountant. The advice from Inuit was to uncheck it. Which all my siblings had to do.

FWIW I lived through the 1970s and this this doesn't look like that era. Our economy was hit with two oil shocks, and in addition had a very long period of loose monetary policy under Arthur Burns. Campaigns such as "Whip Inflation Now" or the "Piggy People" ads on TV, odd/even rationing, wage-price controls, none of that got the job done. It was only in the early 80s that Paul Volker finally made us take the pain needed to break the inflationary spiral. Still probably the greatest Fed chairman of my lifetime. This time, we had accumulated supply chain shortages post-pandemic coupled with unbelievably loose monetary policy in the years prior. Then we got hit with the sharp rise in oil and gas prices due to a long period ...

Last year, the IRS introduced a new reporting form, K3, which applies to certain entities such as LLC partnerships. TurboTax was unable to handle it. Since the IRS wasn't requiring the form to be reported in 2021, Intuit's advice was to uncheck the K3 box. The problem is, if you do that, you don't get the foreign tax credit. Does anyone know if they've fixed this for 2022? Everyone in my family uses TT for their taxes, except me who has an accountant. When I launched the LLC in 2021 I assured them that TT would have no problem handling the K1s I was expecting to issue. I've been issuing a K1 to mom from my late father's trust for 20 years, and also using it to prepare mom's taxes in TT. Since it's a trust, it didn't have to issue K3. But th...

Willis99 wrote: ↑Sat Dec 17, 2022 7:10 am Hey, when exactly did you receive the automated message from the Treasury Department when they initially got the bonds in the mail?

It came about 2 weeks later. What surprised me (and also worried me) was that the form we submitted did not include her email address. Somehow they knew it anyway, perhaps they used the SSN on the form?

PMruns wrote: ↑Fri Nov 04, 2022 9:14 pm Thank you. Yes, learning curve for sure.

The Trust documents have been verified for years. I’m not sure why they are questioning them now.

The accounts are all in the name of the Trust.

If that's the case, all you should need to do is show a death certificate for your friend and then you take over control of the account. But yeah, the POA is useless once the principle passes.

Update: mom finally got paid! And to be fair, it was within the 13 weeks they quoted. Thanks to everyone who responded here and bucked me up. I'll stop being such a Nervous Nellie!

I did the slow conversion for my mom. It took 15 years of patient work. Your situation sounds more like hers than my own. What I did was take enough conversion to run her income to the top of whatever her tax bracket was for the year. The reasoning was that there was no prospect of her ever being able to realize the income at a rate lower than X%.

In my own case, I've ripped the bandaid off (over 3 years, one more to go). There is no prospect that my tax rates will be lower in future years. So I'm going all in on maximizing the tax-free compounding. But in a way, it is similar to that for mom - I am tearing off large chunks up to the limit of my Y% bracket and also avoiding California's highest brackets.

For me all fixed income in TIPS other than cash in the checking account is a simplification that makes sense to my situation. That makes sense to me... IF the TIPS are in a retirement account. In a taxable account dividends and imputed gains do not simplify my life. --vtMaps My thinking exactly. I love TIPS bonds and wish I had room in retirement accounts to buy more. I loaded up on them during the 2008-2009 crisis, but they've been unwinding and until this year I've not been able to replace them because the real yields have been negative. I bought more TIPS bonds this week, at a real yield above 1%. What this means to me is that I'll get my purchasing power back, plus 1% per year, when the bond matures. Only I-bonds offer a better deal.

There's a difference between companies that originate mortgages, companies that service them (manage the payments), and the lender (the entity holding the bag if rates rise). I seem to recall the Fed has been buying most mortgages for some years now, but I could have the wrong end of that stick.

I was going to say Sealy Posturepedic! Just kidding.

I-bonds are a good bet but I can really only nibble at them due to annual limits.

With serious cash, I've been buying TIPS bonds with positive real yields for the first time in years. I can only do this within the limited space of my IRA and 401k though.

With taxable monies I've been loading up on 1-year CDs and 2-year treasuries. You're right, bonds seem to be a lose versus inflation, but this has IMO been true for a very long time, once you consider paying income taxes on the interest. It's still better than taking the inflationary loss and equity losses.

Municipal bonds may be attractive now if you're in a high tax bracket.

OK, I guess I’ll try it at another bank that mom has an account with. I live 2500 miles away so the logistics are a problem. My next visit to mom is months from now, and months after the bonds mature.

I have another, larger, tranche to submit in February. If we haven't been paid for this one, I feel like I should wait until it's resolved. Probably worried about nothing. Oh, and there are tax reasons why it was important to split the redemptions between 2022 and 2023, another headache. I do my best for mom and try to optimize her income versus her tax bracket. Can you take a small amount, say $5-$10k, in to the bank periodically? It’d be a slow process, but even mid five figure amount would be done in a few months. Maybe actually faster than mail in them in. Thanks, this occurred to me. The next tranche is 12 bonds - a lot of trips, and the people at the bank know me (and mom, who's unforgettable!) so I think they'd get on to us quickly....

TD processing times are long right now. Did the email your mom received include an estimated review and processing timeframe? The TD acknowledgment emails usually contain an estimated timeframe for review and processing. - The email I received acknowledging receipt of a paper EE Bond for redemption that I mailed in August said to allow 13 weeks (it actually took about 8 weeks from receipt until I had the funds deposited in my bank account). - The email I received a couple weeks ago related to receipt of a mailed I- Bond form also said to allow up to 13 weeks for review and processing. They said it could take up to 13 weeks. That means end of December. That's a maximum, though, right? Last time we did this mom was paid in about a month. We'...

JoeRetire wrote: ↑Mon Dec 12, 2022 6:03 pm

dmcmahon wrote: ↑Mon Dec 12, 2022 5:47 pmIt turns out that banks will no longer redeem these if they're over a very modest amount, and you're therefore obliged to mail them in to a Treasury department in Minneapolis for redemption.

What is the amount?

This past year I redeemed over $85,000 worth of EE bonds at my bank. It took a while, but otherwise wasn't a problem.

It's a mid-5-figure amount. Mom's bank (Truist) wouldn't do it. This isn't a knock on Truist (formerly BB&T), they've provided mom excellent service for years. But they won't do this.

My mother has a set of paper EE savings bonds that have come or are coming due within a 6-month period. The first tranche matured in September. It turns out that banks will no longer redeem these if they're over a very modest amount, and you're therefore obliged to mail them in to a Treasury department in Minneapolis for redemption. I prepared the necessary form (1522) and got mom to sign it in the presence of a bank officer who affixed the necessary guarantees and seals. (We've done this once before.) It's been over 2 months, and the only acknowledgement we've received is an email to mom that the request had been received and it was "case number #### for client #####". Otherwise, nothing. Oddly, mom's email address was nowhere on...