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Bottom fishing. My problem is seeing the bottom.
Made my last I-bond purchase today. Riding all my previous stocks and bonds. Overall, it was strong year. Not expecting next year to be as strong.
Gonna do some research on morgue stocks. Seems like a booming business.
Happy new year!
Yeah, 2021 was a great year for investing in riskier assets. TINY TINA pays off. There is no yield so there is no alternative. Hopefully, 2022 isn’t just TINY (a distinct possibility).
Morgue stock research? Remains to be seen if that leads to a dead end. Badum ching.
Morgue stocks are like investing in crypto, but without the o. Badum ching.
Getting rich off morgue stocks can put the fun back in funeral. Badum ching.
Gallows humor. Literally. Badum ching.
Thank you. I’ll be performing here all week. Ha!
Happy New Year! :)
Speaking of no yield…XBI certainly has very little!
Most of your past purchases have been income-oriented. Do I sense a change in investment strategy?
I get the end of year January effect thing as I’m doing it a bit myself, but be cautious in your position sizing. Rivers is getting too old to go back to eating out of trash cans!
Great Unknown question! Or maybe I should say great question from the Great Unknown?
No change in investment strategy. I was drawn by XBI’s low PE in a high overall PE world, much like I was drawn by Tyson’s. Yield has mostly been a secondary concern. Earnings matter most to me.
It started with my girlfriend’s mother asking me to look over her retirement account recently. I was surprised to see a biotech fund in an otherwise extremely conservative portfolio. My first reaction was what on earth was that doing in there!
As I was looking for alternatives for her high fee funds (she recently rolled them over from her 401k), I looked into a lower fee XBI. I figured if she must own biotech, at least have lower fees. It surprised me to see XBI have a low PE ratio too. It’s an equal-weighted stock fund that hasn’t been chasing the big market cap names driven higher by the pandemic.
I feel that although each individual stock in XBI is very hit or miss, which is definitely risky, a large collection of them together may actually be less risky long-term than the market overall (at these valuations anyway). Time will tell. In any event, XBI is roughly 35% off its high set earlier this year and I have no problem dumpster diving for relative value apparently.
As for position sizing, I expect to spread out more in the coming years, as more investment ideas appear. The concentration is not quite as bad as it looks. Other than my home, my largest investment is in a “safe” savings bonds ladder earning a good inflation protected yield. My second largest is long-term TIPS purchased years ago with intent to hold to maturity (also earning a good inflation protected yield). I can therefore theoretically afford to take more risk in my IRA than most, with the caveat that I won’t be getting much Social Security. Didn’t work that many years. I did work enough to qualify though, so it’s much better than nothing.
I would like to reduce my exposure to tobacco stocks (currently making up too much of my IRA). It will probably happen in one of three ways. They’ll either shrink on their own and I’ll wish I’d never bought them. They’ll appreciate and I’ll take some profits. Or, other opportunities will appear and I’ll use some of that money to fund them. Almost sold some to fund the XBI purchase, but was loathe to sell them at a slight loss at the same time others would be for tax reasons. Since they are in my IRA and are sheltered from taxation, seems to make more sense selling winners in December and losers in January, if only to avoid the herd. Since VPU seems fairly valued and has appreciated, selling it appealed to me more.
That all makes perfect sense.
It always amazes me how many lay-people are sitting in high-fee ETFs/mutual funds (steered there no doubt by commission-based financial advisors) when there are often equivalent, low-fee alternatives readily available.
XBI has definitely had a down year. On a relative basis you’re right that it will probably fall less than the rest of the market in a downturn. And the index is a lot safer than individual biotechs (which can be overnight widow-makers)!
Helene’s XBI chart - 31 Dec
https://twitter.com/hmeisler/status/1477249374589788163/photo/1
Great Unknown,
It always amazes me how many lay-people are sitting in high-fee ETFs/mutual funds (steered there no doubt by commission-based financial advisors) when there are often equivalent, low-fee alternatives readily available.
It’s the advertisements from Fisher Investments that really make me cringe. They do better when their clients do better, I’m told.
I suspect that tapeworms do better when their hosts do better. Don’t know why I mention it. Totally unrelated, no doubt. ;)
Helene’s XBI chart - 31 Dec
Yeah, that’s the line I was drawing. In theory, it makes sense that it would have a weak December. Selling for the tax loss on a poorly performing asset at the end of the year? In practice, of course, things are rarely that simple. XBI is roughly 10% of my IRA now. I think that’s enough to risk betting on the obvious.
And yet, part of me wanted to swing for the fences on XBI. A younger and more risk embracing Mark would have. That Mark is gone though. The new Mark is getting older and more cynical. Ha!
The older Mark is embracing his cynicism. Had it not been for XBI being down more than 5% today, my IRA would have closed at a record high. Fortunately, I’m positioned mostly defensively and did not swing for the fences.
Cracks in the dam. Defensive value stocks will eventually fail too if the dam does break. *cringe*
Riding it out, nonetheless.
Yes. I respectfully declined to post after yesterday’s drop. The day before that though, you were looking like a genius.
I suppose there will be a oversold bounce tomorrow.
We’ve all been there….
The good news is that if it drops another 90% from here, its distribution yield may move from 0.19% to 1.9% Would also allow the dividend reinvestment plan to take advantage of the cheaper price in a slightly more meaningful way.
So I’ve got that going for me, which is nice. Ha! ;)
https://youtu.be/X48G7Y0VWW4
In all seriousness, I’m bracing for more pain. Might be the start of a very bad year for both stocks and bonds. Not a prediction.
Good start to the year for my IRA. Sector rotation treating me well. Up 0.7% today and 2.5% in 2022, so far.
I’d mention it, but I don’t want to tempt the gods of fate.
Oops. ;)
Short-term downside risk seems very high right now. Continue to brace for pain.
As an example of bond pain, LTPZ is down 6.2% since the start of the new year, and it’s only the 6th of January. .*cringe*
(LTPZ is a long-term inflation protected Treasury fund, one that I have owned in the past.)
Another great day for my IRA (up 0.66% today), even as XBI continues to crash (now down 10.7% since I purchased nearly 2 weeks ago).
Tempted to sell the rest of VPU to buy more XBI, but don’t feel the need to throw more money at the very volatile falling knife. At least not yet.
I will say this though. The lower XBI goes the less I want to sell it. Patience is often a blessing, but sometimes a curse.
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