We have had the Dow Jones Industrials hitting numerous new all time highs–but this 30 stock index is one that doesn’t represent the equity markets (in my opinion). Now we are on the edge of hitting new all time highs with the S&P500–today could be the day that it closes at an all time high which is 4796.56. Does it matter? Not really to me since I don’t have common stocks in my portfolio–but up is always preferred to down since a sharp move lower drags all stocks lower most of the time. All of this predicated on the Fed cutting interest rates. Right now the CME Fedwatch Tool is showing that there is a 16% chance of a rate cut at the next FOMC meeting in January–and a huge 83% chance of a rate cut in March.
We are set up for huge equity market moves in the months ahead–the question is whether it is up or down. Up because of euphoria in markets with rate cuts or down because of huge disappointments in the lack of rate cuts or because the economy slows so dramatically that rate cuts trumpet the coming recession.
Expectations make the coming CPI reports (Jan 11 and Feb 13) extremely important. We have the monthly employment report the end of next week–certainly this will be highly scrutinized.
I am not laying awake at night worrying about these things–the bigger hazard are the ‘black swans’ out there and by definition we can’t know what those may be.
Anyway equity markets are flattish this morning with interest rates at 3.88%–hanging in the range they have been in for a while.
Yesterday I had a CD mature so will buy something today or Tuesday (Monday is a holiday). I will write a little bit on a potential buy yet this morning.
Actually, I tend to believe the adage that the black swan is the truth that is hidden in plain sight. We just choose to not care about the severity until we do.
Back in GFC, why was 8% the percentage of mortgage defaults that mattered versus 7% or 10%? At some point, it mattered.
We are now past the last day where trades would settle in 2023 so now folks who want to take profits and have it count against 2024 can do it right now.
Legend, that doesnt appear to be true for US investors.
The key thing for investors to remember is that it has deadlines. For investors filing their taxes in Canada, the last day for tax-loss selling in 2023 is December 27. Stocks purchased or sold after this date will be settled in 2024, so any capital gains or losses will apply to the 2024 tax year. The system differs for those filing their taxes in the US, and based on information from the IRS, the last day for tax-loss selling this year is December 29.
https://investingnews.com/daily/resource-investing/mark-these-tax-loss-selling-dates-on-your-calendar/
Grid, you appear to be correct. Too many Canadian investors in my trading circle 🙂
Unfortunately, Legend, I decided to be patriotic and owe more taxes today. Oh wait, the Supreme Court long ago ruled paying more taxes is not patriotic. Oh well, I was going to owe it next year anyways.
Grid, You may have done yourself a favor as this year or next, and depending on one’s personal situation (AGI), it’s arguable that we’re experiencing the nadir of income tax rates.
Alpha, if not next year, then probably 2025 if Congress doesnt renew Trump tax cuts. That would hit me square in the teeth. I have a lot of STCG this year. So when I pay, there will be a teeny tiny drop in Federal deficit for just a fraction of a micro second. Dont blink or you will miss it big time! I creeped over plus 22% today and locking some in. Only to turn around and buy sumpin else. Oh well, its a yield arb gain and they ultimately pay off eventually, be it making more, or losing less.
22%. Love it. I’m somewhere in the teens but lost track with plenty o’ transfers in and out during the year and too lazy to go back and track it.
In the ballast/rate-inflation hedge bucket, locked in 2 more I-Bonds allotments with the 1.3 kicker, and will probably pull in four more (2 base + 2 gift) in Q1. Otherwise focusing on REIT and equity side and while MM is at 5%, patiently waiting for next preferred event.
Alpha, I have done some wheelin’ and dealin’ today. And carved out 10k while the getting is good for my 10k IBond purchase in January myself . I have a small amount of CDs maturing by end of February but I dont want time to change my mind ha. Then in March I will have GF gift me another 18k. That will get me around $40k in that 1.3% issue.
I like to keep track of what I own, but its going to take a few minutes to figure out what I have now. But I need to clean up and head to sportsbook soon with some friends so that will have to wait. Im still trying to shove one more sneaky market order in before market closes if I can get the right number. But I have to get the right spot to teach those leaching bot bastards again.
Grid–well, you did buy your girlfriend that ring, so hopefully she’ll push the button when the time comes. But there’s some speculation that the I-bond fixed rate may increase next fall. Will you split up purchases in 2024?
James, IMHO there is little chance IBond fixed goes up and probably could drop a fair amount. The TIPS fixed has recently cratered 50 bps, and 10 year has collapsed. The only prayer of a fixed holding steady or increasing would be if inflation stays around or below zero this cycle and Treasury throws a sympathy bone to float the rate up. But that isnt likely since they under cut this cycle to begin with and didnt throw the EE bonds a bone at all last cycle.
Im going all in this cycle.
A – does that mean you did not buy any other IBonds this calendar year other than what you locked in just now? Not wanting to jump thru too many hoops I’m not playing the gifting games or creating accounts in name only for my wife and myself strictly to buy IBonds, so I’m waiting till next month to buy 20k more to max out what I can do in ’24. Am I KISS too the third degree?
2WR, The hoops are worth it! Yes I nabbed two 0.4% Fixed component earlier in the year and two 1.3% Fixed component this week. Will add four more 1.3% Fixed in Q1 using gift box for two of them.
I-Bonds trounced the average preferred over the last two years, and even at current rates I-Bonds would still have trounced the average preferred over that period.
Other points:
1) No deminimus tax exposure like munis may have
2) AAA-rated
3) Guaranteed zero loss of principal
4) Auto-reinvest interest every six months
5) Tax-deferred gains (and associated compounding)
6) State tax-free in withdrawal
7) In combination with #4 and #5, the fixed component ensures a yield that will exceed inflation. So we’re retaining purchasing power, and modestly adding to it.
For a small corner of holdings, valuing I-Bond’s zero-drama hedge against rate/inflation/credit risks. Albeit slow at times, they’re always gaining value – no matter what else is going on. Risk-adjusted, they’re home runs.
So for the minor hassle of the gift box – I’m all-in. Wish they would lift the investment lid on these.
Thanks, A….. At my age, I really don’t want to extend with gifting beyond a year, nor make things more complicated for heirs who’ll have a hard enough time figuring out how to just access TD no less what to do with what’s there – and that even though I’ve already written out detailed instructions……. I don’t even want to get paper IBonds using a tax refund if I have one coming….. more power to you and Grid for successful hoop dancing! It goes along with your outsized performances for the year…. Nicely done……
2WR, I am going to have to stay on my GF’s good side for a while as it will now take a few years to unwind these 1.3% gifts. Technically they are mine, but she still will have to hit the send button since they are in her account.
Funny how the I bond discussions never seem to end up on the I bond page!
2WR, have you considered removing the beneficiaries from your I bonds and letting your executor deal with them (probably just cash them out and pay the tax from the estate)? It sounds like your heirs would prefer unencumbered cash, even if that’s not tax-optimal.
I doubt that this is relevant for most here but for tax purposes, long and short positions are treated differently.
All short positions are considered short-term trades, regardless of how long they are open. In addition, the settlement date of your buy to cover is the relevant date because a short sale is not closed until it settles.
IOW, in order to claim a loss from a short position on this year’s taxes, you must buy to cover 1-2 business days before the end of the year (one day for options and two days for equities).
These markets continue to defy gravity – I am not a permabear but I indeed worry that they are pricing in ‘perfection’ and a shoe is about to drop. Of course, that so-called shoe is probably the “slope of hope” wall to climb needed to keep this thing rising – who knows?
I wonder if we will see some crazy buying near the end of the day since it is end of quarter. Happened several times before when preferreds and baby bonds skyrocket into the close due to some fund making window dressing purchases at the end of the quarter I have really enjoyed those days in the past, lol.