Sure and down is bad. At current valuations likely biggest move is down.
Sure and down is bad. At current valuations likely biggest move is down.
Yes, but when? Today's investors have been winning for years now. That's not unfortunate as you suggest.
Never said the past was unfortunate, only for those investors that buy today, or for those investors that take valuations for granted.
So it's only unfortunate for people buying today. That's a rather small sample size.
Hugh Jass wrote:
So it's only unfortunate for people buying today. That's a rather small sample size.
Huh?
If the market tanks now everyone invested takes the ride down.
Especially those with a lot invested -- more likely to be those who have been in for a long time.
Well you said it, he'll lose it.
I'm just repeating what the other guy said. Don't shoot the messenger. I think he's nuts too.
In and of itself the stock market being up isn't necessarily good. At the end of the day, its a market just like any other. If the price of a box of cereal doubles in price when it remains the same size and quality, why is that good?
Hugh Jass wrote:
I'm not saying valuation isn't important, but an investor's bottom line depends on stock prices. Up is good.
Pretty simple concept actually, your return is inversely correlated with the price you pay. For sometime now the market has been more of a casino with tickers the "seven come eleven."
You're confusing expenses and income. Obviously a rising market is good for the invested.
[quote]ryan foreman wrote:
In and of itself the stock market being up isn't necessarily good. At the end of the day, its a market just like any other. If the price of a box of cereal doubles in price when it remains the same size and quality, why is that good?
R U really asking why it's good for an investor to have the value of his investment double?
article in the WSJ says that the forward PE for sp500 is 18.1. Which is very high
but if you take out oil, it's only 16.6
Which explains some of why the market is rising even with a high multiple
re; whether hiding out in short term bonds is safe
So far this year...no.
Year to date
BSV (short term bonds) +0.64%
BIV (intermediate bonds) +1.31%
BLV (long term bonds) +2.79%
Again, the Fed only affects short term rates, not intermediate and long term rats. owning short term bonds does not guarantee safety in a rising interest rate enviro.
agip wrote:
article in the WSJ says that the forward PE for sp500 is 18.1. Which is very high
but if you take out oil, it's only 16.6
Which explains some of why the market is rising even with a high multiple
At the close of Q4 2016 (12/31/2016) the non-GAAP consensus EPS for S&P 500 was $30.48. Currently the quarter is tracking at non-GAAP $28.37. Expectations for full year 2017 was $130.92 on 12/31/2016, is now marked down to $130.68. The individual quarter breakdown is a fantasyland romp of Q1 $29.60, Q2 $31.99, Q3 $33.88 and Q4 $35.21. GAAP numbers show even more multiple expansion moving from 23.62 a year ago to 24.70 using a 12/31/2016 close of S&P 2,238.83.
Pleazse wrote:
Hugh Jass wrote:So it's only unfortunate for people buying today. That's a rather small sample size.
Huh?
If the market tanks now everyone invested takes the ride down.
Especially those with a lot invested -- more likely to be those who have been in for a long time.
So are you saying that people who have been invested for the past 5 years are going to be feel the impact of a 10% drop more so than the ones who have been sitting on the sidelines in fear of what the OP predicted.
agip wrote:
re; whether hiding out in short term bonds is safe
So far this year...no.
Year to date
BSV (short term bonds) +0.64%
BIV (intermediate bonds) +1.31%
BLV (long term bonds) +2.79%
Again, the Fed only affects short term rates, not intermediate and long term rats. owning short term bonds does not guarantee safety in a rising interest rate enviro.
The 10 Year Treasury hit a 52 week low of about 1.35% July 8, 2016. Since that time your have seen a falling NAV for all three funds. However, the duration of portfolios on the long end were most impacted. Using closing NAVs for 7/8/2016 and yesterday's close the impact is as follows:
BSV $81.09 $79.80 a drop of -1.59%
BIV $88.54 $83.78 a drop of -5.38%
BLV $101.24 $90.69 a drop of -10.42%
Fed policy may move the lower end of the curve, but expectations for the future rates are driven as well. And since the duration of longer term bonds is greater, the magnification is greater. Granted, the higher return cushions some of that blow, nonetheless the loss of market value is real as illustrated above.
Ghost of Igloi wrote:
agip wrote:re; whether hiding out in short term bonds is safe
So far this year...no.
Year to date
BSV (short term bonds) +0.64%
BIV (intermediate bonds) +1.31%
BLV (long term bonds) +2.79%
Again, the Fed only affects short term rates, not intermediate and long term rats. owning short term bonds does not guarantee safety in a rising interest rate enviro.
The 10 Year Treasury hit a 52 week low of about 1.35% July 8, 2016. Since that time your have seen a falling NAV for all three funds. However, the duration of portfolios on the long end were most impacted. Using closing NAVs for 7/8/2016 and yesterday's close the impact is as follows:
BSV $81.09 $79.80 a drop of -1.59%
BIV $88.54 $83.78 a drop of -5.38%
BLV $101.24 $90.69 a drop of -10.42%
Fed policy may move the lower end of the curve, but expectations for the future rates are driven as well. And since the duration of longer term bonds is greater, the magnification is greater. Granted, the higher return cushions some of that blow, nonetheless the loss of market value is real as illustrated above.
obviously you have to look at total return - makes no sense to look just at NAV
agip wrote:
Ghost of Igloi wrote:The 10 Year Treasury hit a 52 week low of about 1.35% July 8, 2016. Since that time your have seen a falling NAV for all three funds. However, the duration of portfolios on the long end were most impacted. Using closing NAVs for 7/8/2016 and yesterday's close the impact is as follows:
BSV $81.09 $79.80 a drop of -1.59%
BIV $88.54 $83.78 a drop of -5.38%
BLV $101.24 $90.69 a drop of -10.42%
Fed policy may move the lower end of the curve, but expectations for the future rates are driven as well. And since the duration of longer term bonds is greater, the magnification is greater. Granted, the higher return cushions some of that blow, nonetheless the loss of market value is real as illustrated above.
obviously you have to look at total return - makes no sense to look just at NAV
total return for 1 year
BSV (short); +0.92%
BIV (Inter) : +1.33%
BLV; (long): +4.61%
agip,
OK. I have no concrete view on interest rate moves over the next year, and can see good arguments either way. However, I believe the consensus is somewhere around 3% on the 10 Year Treasury one year from now. Using the 10 Year as a proxy for rates, and seeing that we are about 2.4% today, that is a 0.60% move. Doing a simple, agreed not totally accurate example, but good for calculation purposes, here is what you would get in loss of principal on the funds chosen using the .60% interest rate move times portfolio duration.
BSV has an effective duration of 2.76 years so 2.76 x .60 = -1.656%
BIV has an effective duration of 6.50 year so 6.50 x .60 = -3.9%
BLV has an effective duration of 14.92 years so 14.92 x .60 = -8.92%
Igy
Ghost of Igloi wrote:
Pretty simple concept actually, your return is inversely correlated with the price you pay.
Not really. That would only be true if two investors bought at different times in a rising market, but sold at the same time. Someone who buys at $1 and sells at $2 gets the same return rate as someone who buys at $2 and sells at $4. It's pretty simple arithmetic.