We have all the usual investments
spread across the various Vanguard mutual funds.
At present, we have about $60k
sitting in cash with our Schwab stock account,
and now have a $100k CD maturing.
SO - where or what would you do with the $100k in this market ?
How is Schwab working out? Someone here posted amazing free benefits
for them that I never heard confirmation on. Anyway, not sure if you
are proposing to change your asset allocation (but we don't know your
current) or else considering a like replacement for a low risk low
First allow me to vent and scream YEEOW! My new monitoring technique
failed to note the recent crash in high yield and convertible bonds.
Are they tied so closely to Greece, yet my better-off emerging bonds
aren't? Is this just a just an overreaction to a US soft spot? I don't
think I got to use my joke that you can spell quality as J-N-K.
Anyway, they are on sale cheap if you feel like a gamble.
Well, corporate bonds and tips seem to be doing more steadily well.
Someone here warned that tips could put you in a low return trap if
there was stagflation, so I am looking into WIP which seems to be
foreign tips under real inflation. It's all premature from me since I
am caught off guard with my oversight.
My last reply to a similar question worked out well so far. Say you
like the market behavior of some higher risk bond funds (they are
resistant to some problems due to higher interest) but don't want that
much risk. What I did for that is to pair cash with a fund like EMB
which seems to cut both the risk and return in half. I think I got
pushback here about the EMB portion, but you gotta think of it
averaged together. I think you may get less dips from a jump in
interest rates this way vs 100% in a lower returning bond fund.
On Fri, 17 Jun 2011 19:29:33 CST, dumbstruck
Dumstruck I always enjoy your posts. Your comment above brought a
smile to my face. I remember a similar event in my past - it was one
of a long list of lessons learned on the way to becoming a passive
Hopefully you have time to put this lesson into practice. Good luck.
On the contrary, my high yield bond FHIFX has accumulated 65% total
return in just over 2 years. Looking at fidelity total return charts,
one could only exceed that to the tune of 67% by buying at the
03/09/09 bottom - I must have been a week late waiting to confirm the
uptrend. If I bought it even a long time earlier, it's price was
higher than it is now (eg. hasn't recovered, although has been
My JNK and CWB acquisition was less well timed but they still about
equal their purchase price. Their share stumble at first alarmed me,
but one factor is they deducted for large half=year dividends way late
into June - the memorial holiday must have delayed it. I don't know if
the remaining dip justifies a sale of these volatile things due to
early warning of geopolitical events. But I am trying to be a less
tardy seller, and quite appreciate this thread waking me up to see a
hole in my bond monitoring process.
So whither TIPS?
Until the end of summer, I'd hold cash. The stock market looks like it
is set for a 'correction' after a huge upward move within the past two
years. There are some very high quality stocks to buy when good entry
points (low prices) present themselves.
CNN or CNBC put out a series of articles explaining some of the
interconnections between Greece, Ireland, France, Portugal, Germany,
GB, and central banks. The issue it seems to me is the amount of
leverage banks have on the Greek bonds (and Credit Default
Obligations). Obviously, the philosophy behind the Greek deficits and
debt is the underlying problem, and it must be solved all the way
across the ocean to the U.S.. Some still refuse to see the reality
(e.g. Greek 'protestors' with slogans like "America, give us our money
back"). But this ('protesting') is contributing to uncertainty, which
prompts flight to quality, institutional style. The good news is that
rationality seems to be prevailing in Greece, as in GB and other E.U.
countries and the U.S..
The end of QE2, and the pace and structure of the U.S. economy, and
the resolution of the deficit and thus debt ceiling, are also factors
in the current thought. If a buying opportunity presents itself in
high quality stocks, then put some of the 100k there. Stocks are a
'participating interest' in producing assets and will rise as
On Mon, 27 Jun 2011 00:50:21 CST, dapperdobbs
Au contraire (this is a classy post.)
I not only know that Greece is going to collapse into anarchy, but I
know when (Fall, 2011). And I know this because my fabulous wife and
I have a trip scheduled there at that time. (We also were in Egypt
when it exploded.)
Seriously, I recommend chilling. All market cycles, recessions, wars,
economic expansions, etc. eventually end and next month we will have
something else to freak out about.
Meanwhile, live within your means, save regularly, diversify and watch
your costs. Do that long enough and you won't care about the news.