tede02
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Posts posted by tede02
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Sold my interest rate hedge PFIX which strangely has hardly moved in price even since rates came tumbling down. I feel reasonably confident that long-rates, which peaked at 4.25%, have seen the top. Even if they revisit that range, the upside on this hedge isn't huge from here.
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I grabbed a 3-year brokered CD still yielding over 5% off Fidelity's fixed income patform.
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Did anyone get some 2-year Treasurys at the five-handle? I bought one tranche for my personal account before the market tumult! Amazing how fast the sentiment can change. Makes this game so interesting.
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Big move in short-rates today to the upside. Market is trying to digest all the opposing forces (as am I!). I think the Fed goes 25 bps next week and then waits to see if there is any more wreckage between then and the next meeting. The bank failures are such a great reminder that these things always come out of no-where. I'm sure there will be more surprises this year. I'm still thinking the risk-reward for short-term Treasurys looks better than stocks (generally speaking) in the near term.
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1 hour ago, thepupil said:
I always want to be liquid and never want my liquidity to be dependent on one corporation.
This resonates with me. Just before the pandemic hit in early 2020, my wife and I had signed a purchase agreement to buy a property we'd been watching for years. Excitement turned to fear in a matter of weeks in March 2020 because we had signed a purchase agreement to buy, but still needed to sell. I've always been pretty financially conservative but I never felt so naked and sold a few long-term equity positions that had declined but fortunately weren't bombed out (Luckily I was able to buy one back at a lower price a few months later). Everything worked out but I told my wife I NEVER want to feel exposed like that again. As a result, I keep over two-years of living expenses spread across banks, I-Bonds, brokered CDs and short-Treasurys. Jamie Dimon always talks about a fortress balance sheet and that's how I've tried to shape my own.
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1 hour ago, TwoCitiesCapital said:
Weird how a regional banking crisis would occur AFTER the bottom for equity markets, right?
We all know the Fed basically just follows the 2-year rate and that it's the reversion of the curve from rate cuts AFTER an inversion that typically signals equity weakness.
With the 2-year ~0.80% off its highs from just days ago, will this be the end of the rate hiking cycle and the admission that the economy is weakening at a dramatic pace?
Duration starting to look reallllll attractive.
I'll be very curious to see what happens with short-rates in the weeks ahead. Is this a temporary blip as the market piles into treasurys? Or will employment numbers and monthly inflation data continue to come in strong forcing the Fed's hand? I don't know the answer, but before these bank failures, I thought short-term Treasurys were starting to look better than the S&P500 on a risk-reward basis in the short-run. That still might be the case even after this big decline in rates. The equity market has seemed sanguine to me this entire year.
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3 hours ago, Spooky said:
What if Cramer bought the inverse Cramer ETF? Would it create a paradox?
LMAO! Good one!
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I'm tempted to buy the inverse Jim cramer fund.
SJIM
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This is total conjecture from me but it seems like we're setting up a for a fast sell-off of 10-20% assuming Fed keeps ratcheting up rates and then we get an economic scare. The equity market seems exceptionally sanguine presently.
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I've been buying short-term treasurys with cash. 5% yield STATE income tax free.
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20 hours ago, gfp said:
It's hard to untangle because many of the operating subsidiaries, including BNSF, are entirely owned by the Insurance Companies - is BNSF's equity funded by float liabilities or the substantial positive net worth of National Indemnity? Same with so many other subsidiaries. It's hard to know what he is valuing when he says the Insurance group is worth $90-100 billion or whatever is being implied there. I wouldn't worry too much about the specific number.
I totally agree with respect to how hard it is to untangle. It's always fuzzy to me what percentage of the equity portfolio is float vs. positions owned outright by BRK. Likewise for all the cash disclosed on the balance sheet.
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Gary Shilling likes to show a chart of zeros from the early 80s. If memory serves me right, CAG was in the mid-teens. I always remember that and Druckenmiller who has said a number of times that his biggest years came from taking leveraged positions in treasurys ahead of Fed cuts.
As an aside, I've always wondered what kind of leverage he used, in other words, what terms. Did he have positive carry before the bets paid off?
I've also found it interesting when he said he's never lost money on junk debt because he's always bought when we're in recession and spreads have blown out. Makes good sense.
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10-year is moving back toward 4%. This fascinates me because a strong consensus formed in January that inflation was coming down, the Fed pivot was imminent, etc. Equities and fixed income rallied and now we have the reversal as the most recent signals suggest the economy is charging ahead and price pressures remain.
Looking back to 2022, it was so obvious yields were going to rise off of zero but determining where they peak out seems much more difficult. With all the negative sentiment, perhaps we're close to peak yields right now.
I annualized the month over month CPI figues going back to July. The 6-month average came out to 3.26%. Inflation is definitely easing since peaking last summer but there's a lot of noise mixed with the signal.
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This is a legendary talk. I also started with Lynch's books in the early 2000s. It is what introduced me to investing and led me on to Buffett.
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4 hours ago, maplevalue said:
Is it not interesting how the "high inflation is now a secular phenomena" theme emerged precisely after a bout of inflation which was quite clearly caused by shutting down most of the economy while sending out cheques to people to not work.
I feel like it's very easy for economists to construct a narrative around high inflation when they can point to the current YoY rate and shout "deglobalization" "demographics" "a new commodity supercycle"...much harder for them to go out and understand the tremendous, and in my opinion underappreciated, efficiency gains from technology happening (for goodness sake Moderna had designed the COVID vaccine by March 2020!).
Inflation is a very very very very difficult thing to understand/forecast. Which is why I am coloured skeptical of the new consensus that has emerged around it.
Narratives are interesting. The financial media makes them up daily to explain market moves when they typically have no idea.
The inflation rate is certainly coming down. But the way everything is priced presently creates a lot of downside risk if it (inflation) sticks around or we get some jumps in the coming months. The new narrative is the the economy is slowing, inflation is coming down, Fed is going to pause soon. Today was a good reminder that it may not be that predictable.
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All the bond guys say the Fed isn't going to make it to 5%. Will be interesting to see if they exceed that level and market response. I feel like we're in for one more run up in long-rates before this hiking cycle is over. But this is total conjecture on my part.
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I've had a small position in a non-traded office REIT for over 10 years. Class A in markets across the US. I've hung onto for a variety of reasons. It's done decent and I just kind of enjoy following it as one barometer for what's going on in commercial real estate.
The shares wered marked down 16% in 2022 but most of it was due to an equity position the REIT holds in a spin off that is publicly traded and the impact of rising rates on valuations. What's interesting to me is occupancy has hardly moved over the last three years and is hanging in the 88-89% range. Rents have been flat. If you would have told me that's how things would play out after the pandemic hit, it would have been hard to believe.
More recently, the dividend was recently cut around 20% because the REIT is rolling debt at obviously much higher rates. I'm annoyed that management didn't secure better terms before rates surged. This seems like a big miss.
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3 hours ago, gfp said:
Awesome. We have a bunch of excavators in my family (not me personally) - the newest is a "midi" Takeuchi which is a really nice one. The Takeuchi can dig 14 feet down! Is your 60hp considered a "mini" or a "midi?"
I had to look it up but it would be considered in the midi class. It's a Komatsu PC60-7 with a blade. I'd like to get a hydraulic thumb on it eventually for handling logs and anything else I want to pick up.
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I have a 60HP excavator. I absolutely love operating that machine. It weighs about 15,000 pounds. It can do some serious damage, LOL. The hours feel like minutes when I'm running that thing.
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I found this wide ranging discussion on commercial real estate very interesting. One theme here is you can't really generalize on this topic. There are so many types of real estate, markets, etc.
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In all seriousness, prior to 2021, I hadn't spent a minute thinking about the UFO topic until I heard retired Top Gun navy pilot, David Fravor, talk about his his now famous encounter off the coast of California. It was pretty mind-blowing. More recently 60 minutes had a piece on the subject. Made me second guess my pre-conceived notions:
Fravor interview:
60 Minutes episode:
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I have an uplift desk at home and office. Since I went to a standing desk 7 years ago, I've liked having a bar-stool style swivel. The first one I bought at Wal-mart for $30. I wore it out after 5-years. Now I'm using the same style from Target which is currently priced at $40. They work great. I never put my desk down.
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Likewise, I always tuned in when he was on Bloomberg and CNBC. He usually had some interesting takes. I was bummed to hear this news. You just never know when your time is coming.
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Crypto took over my thread. LOL. It's all good. Some interesting insights on a subject I don't know much about.
To try and bring the discussion back to the original theme, is crypto (maybe bitcoin specifically) a good inflation hedge and why? Or is it the same concept as Twocitiescapital described about gold (that being the relationship between interest rates and inflation).
Bonds!
in General Discussion
Posted · Edited by tede02
typo
Sounds interesting. Where do you get the fund-level YTM figures?