" Can one of you stock market timers explain these things?"

I always find it interesting at how many claim (while being anonymous) how well they've done - 'timing' the market(s). Sorry, if I don't believe 90% of ya.

While the last month has been a bit rough, I personally will continue with my (relatively conservative) investment allocations and will sleep comfortably knowing that I don't need to sell/draw down anything, as I am fortunate to have defined benefit pensions for my retirement income. Recognizing that not everyone is as lucky, I would still caution against panicking and selling at such a low point, since history shows that doing so puts you at risk of missing out on some significant gains in a very short period - 'when' (not 'if') the markets rebound.

Good luck to all.

How much stronger can the dollar get against pounds and euros? At some point it will not drop any further.

Not for me as I do like to at least see some dividends coming my way.

I am definitely not a timer but the answer I would give you is that when people think the economy will decline they assume less burgers will be sold.

I haven't a clue.
I just stated that anyone considering a trip to Europe or UK, now is a very good time to buy the currency.
Tomorrow could be better, or worse, but now is a bargain.

Another horrible CPI report today. How high will interest rates rise?

According to traditional economic definitions we are already in a RECESSION, however upcoming midterm elections (with associated rhetorical devices) prohibits the open use of the word. My bet is that the next 12-18 months (possibly longer) will be tough economically. Not a good time to be selling a home...

First daily volatility swings is not investing, but the results of very large trading positions unwinding or the collision with huge funds reallocating funds or the collision with monthly 401K inflows positioning into equities

Second, market valuation movements is due to investor preference between real treasury bond interest and capital gain rates and stock potential real cash flow growth and dividends.

Macdonalds might has a terminal growth rate of 3 pct over inflation, but still subject to human management mistakes or other event risks to the company. if bonds have a 5 percent return over inflation, where would you put new money for the moment? bonds would be where one would get a better yield at the moment.

So in reality, its the competition between future stock company uncertainty of cash growth rates, and the relative certainty of bond real interest rate and capital gains certainty by the return of capital at the bond life end.

simple, but portfolio implementation is very difficult with the uncertainty of the future in any particular equity.

current recent long for me, though underwater, are long treasury bonds and XLE

posing CFA guy

My point about McDonald's is that some people buy a stock because they think that, if the company sells a product and makes a profit, they will share in that profit. But, it is not nearly that simple or logical. It's pretty clear that McDonald's makes a profit on every hamburger they sell. But, when the overall stock market declines, the McDonald's stock will also decline, even though they are still making a profit on every hamburger. That is why I don't pick stocks or time the market.

As interest rates continue to rise your long treasury will also lose money so would think you would be better off in short term instruments.

What is XLE?

I agree and think that dollar cost averaging into well run stocks or funds makes the most sense

TLT was a trade and not a good one, was playing for some good news, but the bad just keeps coming
XLE is the oil/energy ETF

finance hack

Interest rates were NOT "totally predictable at least 6 months ago". Many thought inflation would peak and even start to decline giving the Fed an easy out of their aggressive rate hiking policy. Even if inflation stayed constant, many smart Wall Street people thought the Fed would at least communicate the possibility of pausing in the near future and actually, when they might even LOWER rates. Basically, many thought the Fed would revert back to their extremely accommodative rate policy that is IMO, 70% of the reason we are on the brink of another financial crisis. Surprisingly, the Fed has stayed the course and continues to not only raise rates in significant chunks but more importantly and speaks to your "predictions of future events", they continue to communicate that fighting inflation is still their #1 goal and that they need to see consecutive points of data that suggest inflation has been controlled and that might take 3-6 months. Remember the Fed proclaiming inflation is "transitory"? Well, they were dead wrong. Inflation is sticky and infectious. Companies are raising prices not only because THEIR input prices are also rising but BECAUSE THEY CAN.

The problem with bond funds is that they have no end or maturity date. T-bills, or corporate CDs have an end date. T-bills are bought at a discount.. meaning you might pay 980, 990 or even 995 for a 1000 par value bill. At maturity..and I'm talking 3 month to one year bills, you receive the face value. New Issue CDs, are bought at par, and depending on the type pay interest and then return the face value upon maturity. CDs have a variety of "bond ratings".. investment grade is considered BBB or better. Most are FDIC insured. T-bills are backed by the US (no need for political jabs). Current CDs are running 3.3 for six month thru 4.2 for some one years. T-bills and soon to be maturing T-notes are yielding very close to that. You can create your own ladder or have a online brokerage take you thru it. Obviously, with one or two more 75 basis point hikes in the works, and assuming this is in lieu of cash, you might want to put more on the short term side.. or ladder 3, 6, 9 and 12 months. FWIW

I don't consider it a problem for bond funds to not have a maturity or end date. You can buy and sell shares at any time. I use bond index funds for the bond portion of my portfolio. It is split between a short term bond index fund (average maturity of about 3 years) and an intermediate term bond index fund (average maturity of about 8 years).

I don't like CDs because it is much easier to invest in a bond fund, usually with a higher yield. I use "Penfed.org" as a gauge of current interest rates. They are always competitive. Their current CD rates are:

TERM and APY
6 Month, 1.70%
12 Month, 3.15%
15 Month, 3.20%
18 Month, 3.40%
2 Year, 3.50%
3 Year, 3.60%
4 Year, 3.50%
5 Year, 3.60%

I don't know where you can get 3.3% for 6 months or 4.2% for 12 months, unless there is some risk or deposit limit involved. Can you name the company that provides these rates?

Just checked. My Schwab account trade platform shows one year T-bills at 4.58%.

After getting a huge capital gain in May I put 30% of it in stocks a little at a time. When 9 month T-bills topped 3% I put the rest there. That is the best I could do at the time. Stocks scare me right now.

Agree with most of what you said but do think that 6 months ago or even longer it was obvious that interest rates would be going up with bond prices going down.

The Fed is mandated to control inflation and even though they took longer than they should have they are now trying to get it under control.

Now if only the Feds would do the same

What about Treasury's?

Don’t Even Think About Buying Bank CDs. Here’s Why.

So, T-bills pay a higher interest rate than CDs. I didn't know that, but I wouldn't buy either product. The Vanguard short term bond index fund is paying 4.38 percent, and you don't need to tie up your money for 12 months.

Their high yield fund (junk bonds) is paying 7.46 percent, which is a good way to increase your overall yield with a small percentage of your bond portfolio.

current rates and bond funds
 

Fidelity and merrill Lynch (Etrade and a score of others). Sorry, but your information is out of date. You may be quoting BANK Cds, similar to bank savings accounts that tie up your money. They will nearly always be less than corporate CDs bought from brokerage firms.. You can buy T-bills from brokerages or from TreasuryDirect. Regarding BondFunds, yes, you can sell at any time, and get the MARKET price, which fluctuates throughout the day and goes down as rates go up. That is the problem, as I see it, with bond funds. To reiterate, when you buy an individual corporate CD or Tbill, you know exactly when it matures and you know exactly how much you;ll be receiving. There is no market risk. Nearly all bond funds have been exposed to market risk this year.. You may have received some interest, but your principal has deteriorated.

I was quoting credit union CDs from penfed.org, which are similar to bank CDs. I didn't think that corporate CDs came with FDIC insurance, or the insurance offered for credit union CDs.

Is that you Mrs. Robinson?
.

26 week bills are paying low 4's. High yield junk bonds ARE a "good way to increase your overall yield" but there is definitely some risk associated with this product.

If you are going to invest in junk bonds and I have, better to do it with a fund to mitigate risk.

Treasury yields at Fidelity right now are 4.5% for one and two year bonds and 4.3% for six month.

I shopped too soon……,,,
 

The last time the market truly tanked like this, 5% CDs were still around in bricks and mortar banks for backup.

Not only were they there, but if you owned a CD in an IRA but had reached 59 and 1/2, you could get money out, early, penalty free, under certain circumstances — like with some community banks.

But (sigh) it looks like those days are gone forever. The money is there for you, but that’s pretty much it. Banks are holding all the cards while depositors get zero, zilch, nada.

Banks doing nothing for depositors — not even giving so much as a toaster (said Boomer showing her age) — has been another driver of that old bull market we have seen running like crazy since about 2008 — with a stumble here and there — but nothing of any real consequence until now. (YIKES!)

As a boring, buy and hold, dividend investor, I shopped too soon, a couple+ months ago, and added a few companies that have been getting pounded along with the overall market, but I chose companies with (I hope) sustainable dividends, paid and increased annually for decades. Had I waited, the yields would have been even better.

Oh well, I’ll hold……and planning to maybe shop again soon.

I think this is going to be a looooong one, but what do I know…. zero, zilch, nada.

Covid and the War in Ukraine have been Black Swan events, unlike the 2007 mess which even I, bumpkin though I may be, could see coming.

I have long thought — that for this entire century — the Fed rate has been stupidly low — and now we are paying the piper. Too much. Too late.

If the dependable, boring, long time dividend payers go belly up, we are all #%*@&$ anyway, so what the heck — I am thinking about taking another chance soon by shopping again. But I have never, and will not, bet the farm — just the butter and egg money.

Meanwhile. it’s times like these, when I am especially glad that there is no advisor between me and the money. I am a seasoned woman, perfectly capable of taking responsibility for my own mistakes. Advisors I have interviewed still get 1% of the total portfolio value — whether the investor is winning or losing. That just does not work for me.

My two rules:

Know what you buy.

Know yourself.

(Btw, I don’t think the fat lady is even warming up to sing yet, but I will just cling to my decades old “Dividends pay you to wait” philosophy of investing……….I think I like that little thrill of the possibility of share price increases in the future, too. Well…. I don’t just “think” that, I know that’s just how I am.)

Boomer

Plus, T-Bills are exempt from state income taxes if you pay taxes in another state.

As I provided earlier, brick and mortar bank CDs are only one piece of the pie. Online, FDIC insured CDs can be found for a much better rate but they won’t throw in a toaster either.

Not Too Bad :wave:

My Intel stock is still doing fine. From August 2003 through 2018, it's wavered between $25-35 per share. It's currently at $29.07. It had a huge drop recently but it also had a huge spike. Back in the late 1990's it had a huge spike as well, and then it split and I ended up with twice as many shares as I started with. Each share is now worth around thirty times what I paid for them, with twice as many of them. So I'm doing just fine.

And here we go again……

I assume today will be another huge hike………

Too much. Too late.

I cannot comprehend why the Fed let things run amok for so long, so now, we are being slammed as the Fed tries to catch what they let go.

OK…..I’m not an econ major, I’ll give you that……but would somebody who gets this, please explain how this entire stupid century of basically giving away money at insanely low interest rates was not supposed to backfire.

Boomer

They were dealing in the short term and for whatever reason did not change their approach when economy started opening back up.

Now they are playing catchup. Why in the world is govt running huge deficit at same time?

Econ 101,
Run deficits during time of recession and surplus when economy is at full employment.

This economics major has been seeing what was going to happen a while ago.

Well, as we likely all know by now The Fed increased its rate another 3/4%.

It is still T-Bill time for me whether at tee time or tea time.

Well, manaboutown, looks like it’s time for me to buy some T-Bills, too, but I have never done that before.

There are some limitations aren’t there, like amount that can be bought and time they must be held?

How do I buy T-Bills? I want to put some cash to work in a safe way. Are T-Bills it?

(Cliff’s Notes instructions or a link would be appreciated if someone would not mind doing a tutorial.)

Boomer

I used Schwab.

All of the T-bills I bought mature early next year so owning them will not increase my income this year. As I previously mentioned I received a huge LTCG earlier this year and am trying to avoid any unnecessary additional income through the remainder of the year.

What Are Treasury Bills (T-Bills) and How Do They Work?

Fixed Income Pricing - Fixed Income | Charles Schwab

Hammer time. Sso the way to go

You can buy T-bills from Vanguard, Fidelity, Schwab, or directly from the U.S. Treasury. I would recommend one of the first three. There is no limit on the amount you can purchase.

I prefer to use the Vanguard Short Term Bond Index fund for that type of investment, not individual notes, bills, or bonds. The current yield is 4.65 percent. Very safe, but your principal can go up or down.

Through Vanguard you can purchase but not sell treasury instruments which is why I used Schwab.

"Vanguard Brokerage doesn't make a market in Treasury securities. If you wish to sell your Treasury securities prior to maturity, Vanguard Brokerage can provide access to a secondary over-the-counter market. In general, the secondary market for outstanding Treasuries provides liquidity, and the spread between bid and offer is usually narrower than for other fixed income securities. Nevertheless, liquidity will vary depending on a specific bond's features, lot size, and other market conditions. Treasuries sold prior to maturity may be subject to substantial gain or loss."

From: Vanguard - Treasury Securities

From Schwab: Fixed Income Pricing - Fixed Income | Charles Schwab

Treasuries - new issues and secondary trades $0. Broker assisted trades $25

Treasury bills, notes, bonds
Treasury inflation-Protected Securities (TIPS)
Treasuries Floating Rate notes

I followed some of the mentions in a thread back in February, right here on totv. The discussion was about etf in the market. I took some dough and bought some. Lost nearly 30% since then.

When the market goes down the etf will do the same. If you think the market will recover hold on.

Don't know what ETF you bought but 2/1/22 the S&P 500 was almost 4500 and is today about 3760. That is a drop of only 16.44%.