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Closed all positions within my IRA. Sitting in cash.
Down 0.15% for the day, up 2.98% in 2022, and up 21.10% since I bought stocks in late December of 2020. (I'm also owed some dividends from all 3 tobacco stocks.)
I patiently await new opportunities. It is my hope that real rates will continue to rise and my next investment will be long-term inflation protected Treasury bonds (my preferred "safe" investment).
Right or wrong, this liquidation was triggered by the narrowing spread between the dividend yield on VPU (utilities fund) and the yield on the 10-year Treasury bond. At roughly 1%, it's way too narrow for my liking. Since I've earned more than the equivalent of a 10-year Treasury bond held to maturity (in just one year), I feel no great need to push my luck.
Side note: XBI continued to crash. Was my worst performer, by far, and I'd only held it two weeks.
Schedule for Week of December 22, 2024
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Happy Holidays and Merry Christmas!
The key economic report this week is November New Home Sales.
*----- Monday, December 23rd -----*
8:30 AM: *Chicago Fe...
3 hours ago
11 comments:
Interesting. Nothing has changed for me. Rates are rising but I think there is a fairly low ceiling on high they can go. My divvy stocks are still paying and so far have plenty of cash flow to support ongoing and increasing divvies. I expect a bumpy year as far as stock prices go.
Hindsight will probably show that I am paying to watch (missed opportunity cost), much like I did throughout 2020. I’m fine with that, just as I was then.
The Fed has a long history of poorly applying the brakes. Maybe they’ll do better this time. Or maybe they won’t? *shrug*
Using TD Ameritrade. Closed positions this morning. Remaining fractional shares were to be sold overnight.
MO and PM paid dividends today. Dividends were reinvested into closed positions.
Now own some more shares of MO and PM even though I closed my positions. Looks like the fractional shares I still owned triggered the reinvestment.
That’s kind of goofy. May need to to close positions in MO and PM again tomorrow.
Not a big deal, but definitely not what I expected. When I close things, I expect them to close and stay closed. Go figure.
I noticed BTI making a strong move up despite the general market swoon. Up over 4% in the last week, not far from the 52-week high, paying out the fat div in Feb. BTI is winning, even though I feel like I have yellow nicotine fingers and smell like an ashtray.
May BTI bring you many years of fat dividends, even during periods of market turmoil. :)
In hindsight, overweighting BTI compared to MO and PM was kind to me. Eventually. And tobacco, in general, did not leave a bad taste in my mouth. Figuratively. ;)
It feels good sitting on the sidelines again though, no matter what happens. 20%+ in a year definitely exceeded my original 1.67% 30-year Treasury bond expectations.
If I weren’t such a coward, I’d buy TLT and await the eventual economic Japanification that I’m still relatively convinced is someday heading our way. Maybe even someday soon.
Or, you could have simply gone SP for a 25%+ gain.
Bottom line, you trade too much. Lot's of people do now, that's the effect of "free" trading and a market that never goes down.
With a good exit strategy you can beat the SP with the SP.
Anonymous,
It was never my intention to beat the overall stock market. My primary goal is, and has been, to simply preserve capital. If you will recall, from my original stock trading post one year ago, I was simply looking for a bond alternative in a world where the 30-year Treasury bond was yielding 1.67%. I clearly did much better than that and have no complaints.
Had I only traded once, all I would have owned was my original defensive VPU (utilities) purchase and I’d have less money to show for it. So, too much trading is not really the issue here. The issue, if you can call it that, is that one cannot expect to beat the overall stock market if one has the goal to simply preserve capital.
In any event, buying the 1.67% 30-year Treasury bond one year ago would have been a big mistake for someone simply looking to preserve capital. The 30-year TIPS did not perform much better (my preferred investment). The Fed pushed me into riskier assets with their policies, so they temporarily achieved their goal as well.
I’m very comfortable sitting on the sidelines now. I successfully swung for the fences earlier in life. At my current age, I feel no great need to keep swinging. You will no doubt be very disappointed in the future returns of my nest egg, given that the bulk of it sits in savings bonds accumulated over many years and that my IRA now sits in cash.
May your investments outperform my own, and if they do you will deserve the extra reward for taking on the extra risk.
I believe right now is a good time to sit on the sidelines unless you plan to day or swing trade. Not much value out there.
Great Unknown,
Definitely not planning to day or swing trade. I’m willing to pay an opportunity cost premium to see how these rate hikes play out. Not confident that the Fed can or will do it flawlessly.
There’s plenty of policy risk out there. Check this trivia out:
https://twitter.com/EconguyRosie/status/1481661301126483971?s=20
And here’s another risk that concerns me. I created this chart in FRED.
https://fred.stlouisfed.org/graph/fredgraph.png?g=KRaD
Dangerous territory.
This seems relevant...
https://www.pragcap.com/who-will-buy-the-bonds/
Mr Slippery,
So, how much room does the Fed have before the dog will freak out? Just looking at the current structure of the interest rate curve it looks like they have a relatively razor thin margin for error here.
Yes, very relevant!
This dog don’t hunt now. And when I say dog, I mean me. ;)
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