Nickel and dime gains add up to real money over time and that is what we are seeing. I think the time for giant sized future capital gains was in the past and now we just have to stack up the coins as the slowly come in from dividends and interest payments. I am pretty much right on with my 7% target on yield–in the last year I have beat that pretty well with good capital gains, but now my focus is where do I want to lock in for the next year.
The 10 year treasury yield is drifting lower and lower and now is at 3.76% (The 2 year treasury is trading at 3.76% as well.)—pretty much reflecting employment numbers and generally softer economic conditions.
With the soft ADP jobs report today at only 99,000 new jobs it will be interesting to see the ‘official’ government report tomorrow—I am no longer curious as to whether there will be a rate cut in a couple weeks–there simply will be for sure–1/4 or 1/2% won’t matter to me. I am sure as soon as the rate cuts start we will have heavy talk about a recession coming–the same recession that has been coming for years (in some minds)–for sure there will be a recession in the future, just a question of when. GDP Now from the Atlanta Fed is showing 2.1% growth in GDP for the 3rd quarter–doesn’t sound like a recession soon, but who knows—life goes on.
ETF TLT 20 yr Treas just passed $100, up $4 this week.
I am buying and selling normal bonds on the longer maturities. Today I bought an Intel 3.2% for $606 due in ’61. I might have paid a bit more than I would like since I bought it at Schwab and not Fidelity. I’ll make my money on the price swings (hopefully). Otherwise I’ll hold to maturity. This has been a good strategy thus far. This is more my speculative funds since the coupon is real low and the maturity is loooong.
Anyhow there is still decent paper on the long end with the low coupons. If you want a higher coupon you get PSEC, Paramount, Warner Bros, Viacom, and such. Not for me on these riskier albeit higher coupon choices.
NWGG
I’m good with your strategy but I’m not sure I would put Intel in your Low Risk for 2061
@ Westie, Others
“This is more my speculative funds since the coupon is real low and the maturity is loooong.”
I was trying to say it would be in the riskier bucket for me. I usually look for a price movement higher quickly then sell. Sometimes, I’ll take one of the coupons too if the price doesn’t go my way. I did this about a month ago with Boeing bonds and others in the past. Now the guy who bought these at a hundred percent of par, well that’s not my kinda trade.
So all eyes are on unemployment? Do they mean the same indicator the DOL overstated by 33% for each and every month over the past year indicator?
Or the ‘sahm’ rule, Which I call the scam rule. She absolutely guaranteed inflation would be transitory. She said she spoke for all 400 economists at the fed. AND for every economist ‘in the business’ world wide.
When proven wrong she went mute. THOSE same economists are now mute on why the labor numbers were incredibly overstated.
I believe we may see the bond market yields maintain in this area, especially if they cut rates!
With rates due to be cut Sep 17 – either 0.25% or 0.50% the question in my mind is how it will affect a large portion of my preferred portfolio. Like many here, I own 3 groups of them
1. Ones which are callable (or will be soon) and typically trade close to par, yielding 6.3-7%. eg MS-F, MS-E
2. Ones that are callable, low sub 5.5% coupon trading below par and yielding 6.25-7%. eg BHFAM
3. Ones trading above par ad/or soon to be floaters yielding 7%-9% eg. WCC-A, FITBI
Question is not how much will be the first cut – question is how much of the first cut already in the price they are trading for right now.
I guess group #1 will increase in price or be called away if rates go down 0.5-1% (by end of year) but the other 2 groups tough to say how much is already in the price. Some I own have decent CapGain and it would be nice to postpone the gains and sell them in 2025 after 2-3 rate cuts
Nickel and dime gains add up over time as long as you don’t lose money along the way, That’s part of my game to stack nickels in addition to earning dividends but know that one loser can wipe out multiple winners.
Interesting times for sure. If we have a soft landing, no reason to go long now. If we have a hard landing, every reason to go long now. Is that any one else’s interpretation?
In a hard landing scenario, the indices are nowhere close to where they can drop.
Its funny how folks think a 2-3% or even a 7-10% correction is the worst scenario that can happen.
Even in a recession, it doesn’t mean everything goes down. There will be areas of growth that might be in commodities or in defensive companies, typically not a good time for the passive investor.
GDP coming from higher costs for existing needs. Not real growth. We are currently disinflationary but not deflationary, yet.
I’ve seen a large disconnect between boomers and other generations of folks when it comes to their views. Its part of where the wealth is concentrated, at least part of it.
I live in MA but also have family in MI. I drive yearly each summer. My mom and sister are small biz owners and so are my wife and I.
Since we talk with a lot of other small biz owners we can safely say that 2024 will be lower revenue compared to past years. It is not like a huge difference but you can tell some random days are soft when you would expect them to be busy. People are spending but there is a chunk of people who are being more careful or cannot. Put it this way.. the ole biz checking account just aint growing like the past with expenses having gone up all around.
Each economy is very different when discussing MI and MA. Yet the “feeling” is the same in each place for small biz owners. Certain aspects can be booming yet several others stagnant. People being much more selective in how they spend their money from restaurants, retail, or services.
I get the feeling weaker small businesses may very well start calling it quits which slowly causes a chain reaction in some areas. Like if weak small biz start failing, tech/bio-tech in MA starts laying off more people, etc… this could really hurt a bit as it gains momentum with other factors like taxes going up or the federal govt realizing they cannot keep spending. Everything costs so much here in MA.
MI on the other hand has been slapped around like a red headed step child for so many decades economy wise that they are pretty resilient now days as long as farmers are doing somewhat decently. Meaning a dollar goes further there if you can make some money. Yet things can slow.
So that is how I personally feel. Walking a tight rope right now. Clowns to the left of me, jokers to the right, here i am.
fc,
As you and your family are small business owners, then more of the lyrics probably resonate with you. Like:
“And you started out with nothing. And you’re proud that you’re a self-made man”
I live in Indiana, just 10 miles from Michigan. Really surprised that things would be slow in Michigan, as things are actually still very prosperous here in IN. Actually, I’m really surprised at the amount of new commercial construction, much of it retail businesses. When I read many comments on every website, I sometimes feel like I’m living in another country.
William,
Every area is different but wouldn’t you agree that anything commercial construction wise you see today was planned and devised 1-3 years ago? It will be interesting to see how much building is going on in 2025-2026.
Also more retail space? I would have thought there would be a glut of that. Are you saying most every retail space is rented with a functioning business in it? The one nice thing about places like Toledo, OH and cities north of it in MI was the abundant space available for cheap for a small business to start up. The amount of closed up marijuana shops was just stunning though! Lol. They were everywhere.
While here in MA owners of property ask for too much in bad locations. They sit forever or a small biz gives it a go and gone in a year. Near or in Boston simply costs way too much and the western area of MA might as well be a different state in how it functions.