Sally, you need to apologize to the posters here. You said NVDA would be $200 by the end of the year. Get on your knees, grovel, apologize for god’s sake. :-)
I will grovel and I will apologize. The "on my knees" bit - not sure about doing that. Too much discussion on that in the charged Harris thread.
Sally, you need to apologize to the posters here. You said NVDA would be $200 by the end of the year. Get on your knees, grovel, apologize for god’s sake. :-)
I will grovel and I will apologize. The "on my knees" bit - not sure about doing that. Too much discussion on that in the charged Harris thread.
gente, that GIF is priceless, and hit the nail squarely on the head. Whenever you write something for us, I know it's important and thoughtful, but I always feel like I'm reading it in Portuguese or something. On behalf of us all, could you add a plain language summary to all your posts, with emphasis on the (obvious?) point you are trying to lead us to? :-D
The discussion has been about interest rates and whether to buy long, short, or intermediate term bonds. I brought up the topic of bond breakevens as a way to asses your options. Using a simple BE example of the US 5YR and 10YR Notes, I showed what the current market prices indicated the 5YR Note's rate would be 5 years from now. Example:
In this graph, ending 10/18/2024, the BE (ebony line) is 4.25; the 10YR yield (cherry line) is 4.06% and the 5YR yield (blue line) is 3.87%.. If you believe that 5 years from now the 5YR will be less than the BE of 4.25%, buy the 10YR; if you believe it will be higher than buy the 5YR. From early 1953 to the end of 1979 rates were rising so the latter option worked. From 1980 to 2017 rates were trending down, thus the former option worked. Since 2017, rates started tending higher in 2022 so we're back to the 1953-79 situation. Will this continue? Remember, each trend lasted years.
The graph that I had to repost shows Nominal GDP year over year growth and the US 10YR Note rate. You'll notice they trend together. Is this signaling rates are heading higher?
Graph and download economic data for Gross Domestic Product from Q1 1947 to Q3 2024 about GDP, USA, 10-year, maturity, Treasury, interest rate, interest, and rate.
The other 2 graphs are about debt securities issuance and whether one believes it is too high compared to NGDP growth and past history. Hope this helps.
P.S. My wife always complains I start 3 or 4 sentences into a paragraph when I talk to her.
Ok, I totally follow you now. I have personally been steering toward longer term bonds BECAUSE I’ve been expecting rates to drop, but obviously if they keep rising (which frankly has been a scenario that’s given me more than a few restless nights, imagining a return to the 70s and 80s), it’s better to mature sooner and buy back in at higher yields.
i think my approach errs on the side of caution by avoiding the opposite case, which I consider more likely, and in any event gives income exceeding our target.
All that said, thanks for making the points (and following up with the dumbed down version…).
The NVDA Dec 20 (monthly) 195 Call costs $109 per contract. NVDA at 200 at expiry is $391 (359%). According to you that's money laying on the floor. By the way, implied volatility at 195 is 54.96% (historic is 36.59%) and the probability of a profit is 8.1%.
* The family next door had a son named Sal(vatore). He was younger than me, 5 or 6 years, small, but tough as nails. We called him Salamander. There was a kid on the next block, the same age as Sal, but twice his size. He was a bully. One day, all of us older kids decided to teach this kid a lesson. We had Sal hang around the next block and sure enough the bully starts giving Sal some $hit. Sal kicks his a$$ and sends the bully home crying. The bully's father comes out of the house and says "where's Sal?". Sal says, "I'm Sal". The bully's father was so embarrassed that a kid half his son's size had given his kid a whooping!
I am actually having some Graham’s 20-yr tawny as we speak. Very economical port that suits my taste at times.
Last year I was back in NJ attending family matters. I stayed with one of my sisters and got her hooked on the Tawny. Back when I lived in NY State there were many nights sitting around the fireplace with either Tawny, LBV, or Vintage Port. Here in Central Texas it's too d@mn hot most of the year for that.
let it be known that the wrongest wronger in the kingdom of the ever-wrong, Fred Hickey, got one right.
Gold up 38% in the past year
Gold up 38% in the past year
of course, stocks are up that same 38% and that pairing probably wasn't Hickey's view.
fred hickey @htsfhickey Important to note the reasons I'd given for a major gold rally: sentiment, positioning, U.S. debts, deficits, Fed pause etc. were all in place BEFORE the attack on Israel. Gold bears(&they are many) will try to claim this is a short-term, war-related move that'll fade. It is not. 9:21 AM · Oct 16, 2023 · 29.3K Views
Thinking about trying to choose bond maturity duration based on expected rate trends and likely break even points had me wistful about the terrible mortgage choices we always made. 😀
Growing up in the 70s and 80s, I was scarred by the high interest rates. When we bought our first house in 1992, we made what seemed like the obvious best (safest) choice and took a 5 year fixed rate mortgage, spurning the lower variable rate, thinking it to be a trap, lulling us with lower payments but poised to hammer us with higher rates when they came, as we “knew” they would. Every time we moved, sold, and bought a new place elsewhere over the next nearly 30 years (8 different home purchases), we made exactly the same choice, taking the comfort of certainty for the cost of slightly higher rates.
With the benefit of hindsight, our decisions turned out to be wrong in every single case during a long period of gradually declining rates. Had I made the better choices each time, maybe I could be rich like Flaphole!
All that to say two things… gente’s input here is thought-provoking and useful, and don’t listen to me as I’m clearly financially illiterate. 😂
Of course, peace of mind has real value, so our choices were right for us each time, and only “wrong” when viewed from the narrow perspective of minimizing costs. So were we crazy like foxes, or just crazy? Maybe a question for the philosophers… 😀
You can think about optimizing a bond portfolio, but as with equities, it comes down to your predictions and the confidence you have in them. Thinking about whether to buy 10's or 2 successive 5's still requires an educated guess as to what will happen in 5 years' time.
Interesting that this thread seems to have shifted from equities to bonds. I see it as no coincidence that retired, Flaphole (lol!), myself, and maybe others have stopped working for wages since the inception of this thread, others like Igy had I believe just recently done so, and others like agip have it in their crosshairs.
This, counter to what you hear about "retirees" as a group now having by far greater allocations to equities than ever before.
agip or others, I know there are many confounding variables, but what has equity market performance looked like in the past, after 2 crazy years like we've had? Assuming this year ends well, that is...What has happened the year after?
Also, re that faux conundrum about simultaneous inflation and GDP growth: it is only happening in the US, where again the GDP methodology has jumped the shark.
retired, funny. My brother bought a house in one of the hottest markets, and got what he considered to have been a "fixed" mortgage: it was "fixed" for 3 years! He had no real idea that you could get a fixed mortgage for the term of the loan, they just got the variable rate because they could afford it.
Many years later now, after I repeatedly cautioned him about the danger of his position, he has nearly paid off the house, at what have remained incredibly low rates. The whole time I had the hubris of being prepared to bail him out, I had even set aside the funds. I never told him, and just as well because he would likely have perceived it as some sort of insult to his intelligence.
He now believes that he has been smart, because he was able to correctly predict not only the particular housing market, but rates. When I suggested that his predictions amounted to nothing more than guesses (he offered no reasoning), he stubbornly refused to understand that his entire venture had been one big speculation on which he had gotten lucky. He still doesn't understand the gambling-speculating-investing spectrum, and he's a grown man.
So what if you "overpaid" a little bit? You did the right thing, and that sort of mentality will IMO serve you better in the future than my brother's will serve him.
lol there's that hubris again! To his credit, though, he hasn't made any other big speculations and is very conservative about his holdings.
The number of the beast; 666. Just downloaded my 666th Fred graph into excel on this computer (6 years old). I once ran a 5K and my number was 666. When they handed it to me I said, "I guess I'm running for Satan today". They offered to change it but I said no way. I was saving it, but my wife accidentally threw it out on purpose. Basically it's similar to the BE graph I did with 5 and 10 yr T-notes, only with 20 and 10 yr corporate bonds. The highlighted lines are the bond duration at par and the lower lines are spreads. Unfortunately, the data only goes back to 1984. If anyone has any questions ask me, just posting this for no particular reason.
P.S. I'm not drinking Port tonight, it's Pinot Gris.
Graph and download economic data for (((((1+(20-Year High Quality Market (HQM) Corporate Bond Spot Rate/100))^20)/((1+(10-Year High Quality Market (HQM) Corporate Bond Spot Rate/100))^10))^.1)-1)*100 from Jan 1984 to Sep 2024...
I want to add something to this bond conversation. Look we are not bond traders, we're just investors trying to find investments that meet our life goals. I believe looking at current and past data might show if the reward is worth the risk. But as The Lizard King once said, "The future's uncertain and the end is always near."
agip or others, I know there are many confounding variables, but what has equity market performance looked like in the past, after 2 crazy years like we've had? Assuming this year ends well, that is...What has happened the year after?
lots of variables obviously but from what I've read, if a bull market makes it to 2 years, as this one has, it almost always keeps going for several more years.
