Boghies Account Talk

[Whipsaw]

Re: Always Look on the Bright Side of Life!!!

"I love SPAM! I'm having SPAM, SPAM, SPAM, SPAM, SPAM, eggs and SPAM!" :cheesy:

No different than :spam:

 

[ravensfan]

Re: Always Look on the Bright Side of Life!!!

 

[Boghie]

Re: Always Look on the Bright Side of Life!!!

The question we all ask is: When will we hit the 'New Normal'

At that point equities will probably wander the desert for 40 or 3 or 1 year(s). Me thinks our equity losses will not recover for quite some time. I don't expect an immediate bounce. There is nothing being presented that should instill long term confidence in growth. Zip, zero, nada.

Time will tell.

 

[WorkFE]

Re: Always Look on the Bright Side of Life!!!

And there are enough talking heads with pretty good batting averages that are thinking we will revisit the bottom from a few weeks ago.

 

[Boghie]

Re: Always Look on the Bright Side of Life!!!

And there are enough talking heads with pretty good batting averages that are thinking we will revisit the bottom from a few weeks ago.

I'm actually more concerned with a plop and a long term trend of nothing from here. I still have five to seven years before retirement and I still have stomach for risk. However, I think this market will drop a bit more (maybe to that bottom again) and just sit there till policies change. Even then math may play the deciding role. Math may simply decide to be math. This may be the end of the Singing Politician yammering promises that cannot be kept. If there is a plop and level then money lost is lost money.

 

[WorkFE]

Re: Always Look on the Bright Side of Life!!!

I'm actually more concerned with a plop and a long term trend of nothing from here.

I did speak a bit about being range bound for a while but your concerns are much deeper/longer.
Not predicting an end but we have had a good run for the past 10+ years, with some blips along the way. I would not be surprised if we went into a market stagnation of a year or so. We can hope that Ukraine/Russia does not drag on for years but I don’t think that is the totality of it all.

I am not in the same window as you but still need to make money.

A long-term concern. Population Growth is a key component of market expansion. When having conversations of human space utilization, finite resources, climate change etc. you have to also talk about populations. Those are tough ones to have and they run counter to market expansion. With so many undeveloped nations, you would think there is room to grow. Of course that will be long after I am gone but it is intriguing to wonder how capitalism will look 50 years from now.

 

[Boghie]

Re: Always Look on the Bright Side of Life!!!

Plop...

The goofballs in the media are yammering about a 1.4% contraction in GDP. They are wrong. The -1.4% drop is annualized, but there was a contraction when growth was expected. Unexpectedly, except it was expected by anyone with a brain.

I was going to show my confidence in 'Merica by moving holdings from C/S/I to G/F - but why!!!

The market is already changing my allocation.

See, that was easy




What we need to do to stop 'stagflation' in it's infancy is to increase regulation, have the gubmint sue evil plastic or something, and send the folks a check. Yeah, that's the ticket!!!

 

[Boghie]

Where is that Bright Side of Life???

Even a craptastic allocation like:

[table="width: 200"]
[tr]
[td]G:[/td]
[td]25%[/td]
[/tr]
[tr]
[td]F:[/td]
[td]30%[/td]
[/tr]
[tr]
[td]C:[/td]
[td]25%[/td]
[/tr]
[tr]
[td]S:[/td]
[td]10%[/td]
[/tr]
[tr]
[td]I:[/td]
[td]10%[/td]
[/tr]
[/table]

is now outside of it's normal range. The risk (standard deviation) in this allocation is around 7% with an expected gain of 7%. That means that in a normal year I can expect a return of between 0% and 14%.

I am now at -9.76%. That means that I am into the 3rd Standard Deviation. No bueno

I am very happy to have been holding a very conservative allocation this year. The question I have is whether or not I want to continue participating in this market at all. The above risk and return numbers are annual so it really is not fair to look at problems in the middle, but it is what it is.

The main issue I have is that bonds are taking a dump too. The FED has to defend the dollar from the Muppets in charge of the Treasury. They have to raise interest rates. And, they have to raise those interest rates during the expected, but I guess unexpected, economic slowdown that is in progress. This mess is actually difficult to do. But, we wanted it and we got it.

GLHF.

 

[Boghie]

Re: Where is that Bright Side of Life???

Hmm...

Has anyone actually noticed that we are currently IN the MAX DRAWDOWN in the F Fund over the last 35 years.



Beuller, Beuller...

We've been setting 40 year inflation records month after month. I wonder if anyone can find a reference for AGG that extends into the Miraculous 70s

I've actually had a decent percentage of my assets in this pig. It has been a drip, drip affair. I think it is oversold. Normally, bonds are priced with math - this seems excessive.

 

[rangerray]

I was last in the F Fund in 2020 for about 3 days, I think.


Scott Harrison
Senatobia, MS

 

[nasa1974]

Re: Always Look on the Bright Side of Life!!!

I can't remember the last time I was in the "F" Fund or the "G" Fund.

 

[bleeck]

Re: Always Look on the Bright Side of Life!!!

2020-11-25

 

[Boghie]

Science!!!

All funds should be looked at...

I am not a swinger, I normally hold one of three allocations with a little fudging here and there based on my 'feelz':

• An allocation over weighted for aggression
• A normal market allocation
• And, an allocation with a conservative weighting

Right now, I am holding an allocation that is more conservative than my normal conservative one. To be absolutely honest, I am trying to rework my allocations based on my holdings, age, and emotions. I really don't need to be as aggressive as I once was.

On the F-Fund... Let us look at the 'recent' (meaning since the start of the recent drawdown which ALL of the funds excepting G have participated in) performance of all of the 'at risk' funds we can invest in:

[table="width: 500"]
[tr]
[td]Fund[/td]
[td]Drawdown[/td]
[td]Dates[/td]
[/tr]
[tr]
[td]F[/td]
[td]-11.50%[/td]
[td]January 2022+[/td]
[/tr]
[tr]
[td]C[/td]
[td]-12.96%[/td]
[td]January 2022+[/td]
[/tr]
[tr]
[td]S[/td]
[td]-15.42%[/td]
[td]November 2021+[/td]
[/tr]
[tr]
[td]I[/td]
[td]-12.68%[/td]
[td]September 2021+[/td]
[/tr]
[/table]

For quite some time I have underweighted both G and F. The G offers NOTHING, and the F was in a bubble and needed a correction. The REAL question is: Which of the four funds is nearing it's max drawdown and which of them still have some travel time? Right now it looks like there is plenty of downside left for C/S/I. If I am doing the math right our F-Fund should have had a drawdown of 6.8% from July 2021 to April 2022 - not the 11.50% we have actually seen. If we carry the drawdown to where the 'Average Yield to Maturity' becomes:

• 3% the drawdown should be 9.3%
• 3.5% should be 12.1%
• 4% than the drawdown should be 14.8%.

The bond market has priced in an Average Yield to Maturity of 3.40%.

An article using July numbers for AGG: https://seekingalpha.com/article/4437734-agg-interest-rate-sensitivity-conservative-model-portfolio
This article documented the 'avg yield to maturity' (the coupon rate) of AGG as 1.47% on June 30, 2021.

An article presenting how bonds are priced: https://www.wallstreetmojo.com/bond-pricing-formula/
I think the Average Yield to Maturity is now 2.57%

A nice snapshot of AGG right now: https://screener.fidelity.com/ftgw/etf/goto/snapshot/keyStatistics.jhtml?symbols=AGG

Personally, I think I am likely going to take an October 2007 approach and go something like 40/30/10/10/10. Had I held that allocation my drawdown would be 8% right now, and the max drawdown in the last 35 years was 13.73%. This can become a very ugly market very quickly and the FED has to raise interest rates in the face of it. However, I want enough in the risk funds to appreciably share in the early recovery gains - which are often quick and dramatic. Nobody can claim an IFT is quick and I don't want to miss 3%+ jumps early in the recovery cycle.

Yowser. It was difficult to create policies that both damage the economy AND instigate inflation - but we did it!!!

 

[Boghie]

This Does NOT feel like a Normal Market

This decline has been by drips and drabs with some promising bumps. If this was a normal market we would probably be bottoming out. For the first time since 2008, I don't think this is a normal market.

The F-Fund (AGG) is priced for an average yield of 3.4%, we are currently at 2.57%. If the final resulting average yield is 4% then the drawdown should stop at 14.8% and we are currently at a drawdown of 11.5%. So, another 3%. Bonds come down to math. Equities come down to feelz. Me not like the feelz. I don't want to participate in feelz based equity losses and I really don't see anything positive out there. Somehow, our gubmint and elites have managed the almost impossible: They have managed to initiate inflation while regulating the economy into recession. No bueno.

Current Allocation (as of COB Monday, May 2, 2022):
[table="width: 750"]
[tr]
[td]Fund[/td]
[td]Allocation[/td]
[td]Banal Thoughts[/td]
[/tr]
[tr]
[td]G[/td]
[td]40%[/td]
[td]Ugh. Wimp move. Pathetic. But sometimes not losing is winning[/td]
[/tr]
[tr]
[td]F[/td]
[td]30%[/td]
[td]The FED has to bump rates. This will decline, but it has already overcorrected for this level[/td]
[/tr]
[tr]
[td]C[/td]
[td]10%[/td]
[td]Summer and let's see was good old regulation can do. Try it again, and again, and again[/td]
[/tr]
[tr]
[td]S[/td]
[td]10%[/td]
[td]Socialism and Fascism prefer big business. Easier to influence[/td]
[/tr]
[tr]
[td]I[/td]
[td]10%[/td]
[td]Maybe these guys are waking up, but the slumber has been so sweet![/td]
[/tr]
[/table]

Expected Annual Return: 6.32%
Expected Risk: 4.97%
Best Year: 17.67%
Worst Year: -8.00%
Biggest Dump: -13.73%

I hate this allocation. Add current inflation and I am guaranteed to lose purchasing power. We needed a strong market to go with the inflation we are experiencing. For example, if we do not contract the money supply and we end up with 10% annual inflation, and we manage to turn this turd around, then my 6.32% growth will become a -3.68% real gain. Nice, very nice. However, add 10% inflation to an economic deuce in the making and my purchasing power could easily head south by 30% or more. Finally, who actually thinks things will improve anytime soon. Beuller, Beuller...

But, we took it to them!!! Bad EXXON. Bad Keystone Pipeliners. Bad Energy producers. Bad developers. Bad truckers. Bad foodies. Bad the rest of the economic movers and shakers - And, Bad, Bad, Bad Musk and his damn richness!!!.

 

[WorkFE]

Re: This Does NOT feel like a Normal Market

But, we took it to them!!! Bad EXXON. Bad Keystone Pipeliners. Bad Energy producers. Bad developers. Bad truckers. Bad foodies. Bad the rest of the economic movers and shakers - And, Bad, Bad, Bad Musk and his damn richness!!!.

At least you can go to a movie and watch a bad movie from the Hollywood elites. Take your own popcorn, there is a shortage.

 

[Boghie]

Re: This Does NOT feel like a Normal Market

Come on Mr. Market!!!

Give me a nice smile before I bail on your @##.

Let's see what the last hour shows. Smart Money is Late Money.

 

[Boghie]

Re: This Does NOT feel like a Normal Market

Come on Mr. Market!!!

Give me a nice smile before I bail on your @##.

Let's see what the last hour shows. Smart Money is Late Money.

Not seeing a smile. All I see is a frowny. Come on smart money, let it rain!!!

 

[Boghie]

Re: This Does NOT feel like a Normal Market

Now, I'm seeing a smile!!!

I am bailing out COB (love those IFT time limitations), but if we keep on keepin' on late in the day then it will be time to get back in. Maybe we have hit the bottom. Who knows...

Going to give it a few. I have a bit in C/S/I so I will 'participate' in the early gains - I'm not zero'd out and won't be a complete spectator. But, I will kick myself in the @##. My previous allocation would have been significantly better. On the other hand, I don't see anything wrong with my analysis - so this could be a head fake or automated buying. Only time will tell.

 

[Boghie]

This Does NOT feel like a Normal Market

Today looks like capitulation - or the start of capitulation.

We shall see with the end of day activity.



I'm starting to think my mental shortcuts might be a bit out of whack. Normally, end of day activity is 'smart money' and the stuff at the beginning of the trading session is 'dumb money'. At least that was the pattern in the past. We really haven't had a good churning for a while, but end of day yesterday did not fit the mold. I cannot think of why the FED increasing interest rates would cause the boom, and if there was a reason why the reaction this morning was so dramatic in reverse.

I'm glad I am mostly watching other peoples money in this market. I am in a go broke slowly(ish) allocation. If I have to sit like this I will be on oxygen before I can retire with a Winnebago driver and a yacht captain:nuts:

 

[Boghie]

Re: This Does NOT feel like a Normal Market

You know what is the most tragic thing about this market - the market of possible investments in TSP???

A slowing economy brought on by enhancing regulation is causing C/S/I to fall. The C/S were in a bubble anyway so a correction was in the air - but, we are now past correction and well into bear territory. We did not have to have an economic contraction for equity pricing to normalize. But, we got it!!!

And, somehow we've "policy'd" ourselves into inflation during and economic contraction. This is actually hard to do, but we did it!!! Da Gubmint pulled all the right levers to contract the economy and inflate prices. Nice, very nice. Well done!!!

So, C/S and I (for similar reasons) are in the tank. The drain still has the force of swirling water.
The F is in the dumper because the FED is forced to raise interest rates even as the economy contracts.
And, assets in the G Fund are being inflated away at an alarming pace. Since politicians largely set the return, ...

Bonds can be influenced by fear, but they are largely priced to actual math. If we can figure out what AGG/BND are priced at with regards to the FED rate we can math it to 'FED Rate' + 'Differential'. That number (average yield) can then be used against the average holding period to get the cost of AGG/BND at say a FED Rate of 3.5% (consensus). One nice thing about this epic unforced error is that bonds (and, hence our F-Fund) will have value, return, and a place in your portfolio.