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