fresh all time highs for US stocks today (ticker VTI)
very very quiet out there in stockland
'never short a dull market'
or
the calm before the storm?
fresh all time highs for US stocks today (ticker VTI)
very very quiet out there in stockland
'never short a dull market'
or
the calm before the storm?
You answered the first question correctly, but offered no answer for the second.
Having admitted that 8.32% tax-free would be "way too low" for you when you are my age--or let's say for sake of argument 6%, which is closer to what I have gotten--what would be "too low" for you at that point? Or in other words, what ROR would be "high enough"?
I suggest that your feelings about this issue will change when you reach my age. Mine did.
Former mediocre marathoner wrote:
You answered the first question correctly, but offered no answer for the second.
Having admitted that 8.32% tax-free would be "way too low" for you when you are my age--or let's say for sake of argument 6%, which is closer to what I have gotten--what would be "too low" for you at that point? Or in other words, what ROR would be "high enough"?
I suggest that your feelings about this issue will change when you reach my age. Mine did.
The interest on muni bonds is tax-free. The capital gains on them (which is the bulk of the hypothetical 8.32%) is not. Thus, your reference to 8.32% tax-free is misleading at best.
Further, capital gains can just as easily become capital losses when interest rates rise. The only reasonable way to view any muni-bond position is to count on only the interest income (1.75% - 3.8% if one wants to assume FP's numbers).
Former mediocre marathoner wrote:
You answered the first question correctly, but offered no answer for the second.
Having admitted that 8.32% tax-free would be "way too low" for you when you are my age--or let's say for sake of argument 6%, which is closer to what I have gotten--what would be "too low" for you at that point? Or in other words, what ROR would be "high enough"?
I suggest that your feelings about this issue will change when you reach my age. Mine did.
No...I didn't say 8.32% was "way too low" for me when I'm retired. I just think that what they will AVERAGE will be too low. 8.32% is decent...but that's a very GOOD year for munis. If I could guarantee over 8% in retirement, I would take that in a heartbeat...even though I think I can do better.
My position could change. We'll see. Right now my plan is to have 3+ years of expenses saved liquid and the rest in stocks within mutual funds.
Right, and wrong.
Right that the interest only is tax-free, wrong on the rate that I get. It is a portfolio of MN muni's that I have had for almost 5 years, the interest on which is just a shade over 5%.
Right also that I consider only the interest income, and will not sell them before maturity. Also, in all likelihood, I may expire before many of the bonds mature. It's a strange thing to comprehend.
Wrong also that the 8.32% was misleading, within the context of the question. It was Flagpole himself who stated that such a yield would be too low to be acceptable to him.
He didn't say that.
Former mediocre marathoner wrote:
Wrong also that the 8.32% was misleading, within the context of the question. It was Flagpole himself who stated that such a yield would be too low to be acceptable to him.
I think he meant 1.75% to 3.80% would be too low.
"here's why I will not have my money in just munis and cash like that when I retire...return is way too low.",
and
"To answer your question though, today what you can expect going forward for municipal bond rates range from 1.75% to 3.80% depending on length to maturity and A rating, but 2014 has been good for them...up 8.32% as of the end of October. So, I would guess somewhere between 3.8% and 8.32%."
are what he said. After having stated that whatever ROR I'm getting would be too low for him, he guessed it to be between 3.8 and 8.32
His response is confusing at best, because to my mind his guessed range should have been 1.75-8.32.
What I am getting is still very much in the middle of that range, and I think it fair to to proceed on the basis that he meant that 5% would be too low for him.
Sure it depends on a lot of things, but that 5% is tax-free. Filings and expectations are greatly simplified, and management is trivial. Of course whether this is acceptable to any individual person depends on many things, in my case it is a perfect fit. Maybe Flagpole won't have enough to live on 5%, or maybe he has big plans relative to what he will have at the time.
For me, these bonds are the greatest thing since sliced bread, as long as defaults don't creep into the picture any time soon.
I have been enjoying this thread, my primary interest here is as a runner, but it's nice to see some varied discussion.
you own actual physical bonds, right? not funds?
because your bonds would lose a lot of money, should interest rates rise. If you own physical bonds, that just means you'll have to wait to maturation date to get your money back. but if you own a fund, it doesn't work exactly like that since there is no maturation date for a fund.
Put another way - muni funds are up 8% this year. They could lose 10% in 2015 and 15% in 2016, if things go very awry. You would still get your interest, but the value of your bonds would fall, and most likely at that point you could get 5% in a risk free savings account.
So these are wonderful times for muni investors - but it can go the other way too.
Former mediocre marathoner wrote:
Right, and wrong.
Right that the interest only is tax-free, wrong on the rate that I get. It is a portfolio of MN muni's that I have had for almost 5 years, the interest on which is just a shade over 5%.
Right also that I consider only the interest income, and will not sell them before maturity. Also, in all likelihood, I may expire before many of the bonds mature. It's a strange thing to comprehend.
Wrong also that the 8.32% was misleading, within the context of the question. It was Flagpole himself who stated that such a yield would be too low to be acceptable to him.
Well, yeah, except that he didn't say that. Indeed, he just came back on here a few posts up and explicitly stated that he did not say or mean that.
Other than that, you are right on the mark. LOL
Physical bonds, not funds. I am aware of the risks and rewards of holding these bonds, and am delighted that I made the investment.
Former mediocre marathoner wrote:
Physical bonds, not funds. I am aware of the risks and rewards of holding these bonds, and am delighted that I made the investment.
That's good. Always good to hear from someone who has made good choices in their life and is happy with their investments.
Cheers
Thanks. At least my investment choices have been good. I can't say the same for everything else, especially women. And my diet.
I think M was a douche, but I hope his "big-number" prediction comes true. Dow closed at 17,687 yesterday, looks good. What if he was right and there will be a huge run-up in the markets? Fortunes, big fortunes could be made, hehe. i'm thinking of dumping all my bonds (sorry thonner) and going 100% equities for as long as i can.
Well, he also predicted a crash. Of course a run up and a crash are both 100% certain at some point.
yeh, maserati changed his view, had multiple views - he was market driven - changed his views according to what the market was doing.
Best I could make sense of it was that he thought in the end, the US economy will be a smoking heap of dust and cellulose, but in the meantime, 'they' would manipulate stock and bond prices to keep things going. Until they couldn't any more.
idk, i'm starting to think he was right. i'm closely following investigations into an abuse of the patent office telework system. what's important is that patent office management was complicit in the scam. employees, that's one thing, but when managers are in on the game, it's alice in wonderland. the same dynamic is prevalent in the other federal agencies that i deal with, and the bottom line is that the fairytale can't last for much longer. i have the feeling that if the republicans win in the next presidential round, all of the "beneficial fudging" that has been going on will all of a sudden end, and take the economy south with it, which disaster will then be blamed on the then-current republican administration. otoh if the dems win, it's anybody's guess how long the system will be able to survive, before it can no longer support its own weight. i'm still invested, but i'm nervous about it, to the point where i have started buying physical metals in small amounts. it is the value of money that worries me most, which is why i have almost no cash.
sorry here's a link
http://patentlyo.com/patent/2014/11/uspto-telework-abuses.html
He did predict a crash, but didn't he say that the correction was the start of it but that the sort of 'new market' that he described has governors on the rate of decline, such that we would never again see a real 'crash'?
BTW I don't think that was his original idea, it seems to me that I had heard it some time in the past.
um, this 'scandal' appears to be managers not enforcing work at home rules. It has nothing to do with making up economic numbers and passing them off as fact.
I mean - you have 4.3 million people working for the federal government - it would be shocking if some lax management weren't happening.
But to infer from that fudging of economic data for political purposes? It's like saying 'yeah, the Yankees HR department didn't file the right form. There must be wholesale PED use on the team'
as for your larger fears - well, the deficit is falling like a rock, tax receipts are soaring, spening has stayed flat, health care costs are rising only at the rate of inflation...not sure what you are seeing out there that is so bad.
there was an article today that the port of los angeles is overrun - week long backlogs, etc. Too much economic activity for it to handle.
We need to tighten up monetary policy so we have some weapons for the next recession...but right now in the US, these are good times.