Are interest rates heading up or heading down? Is there a recession just ahead or is GDP going to head higher–irrespective of what GDPNow says (current GDP forecast for the 1st quarter is -2.8%)?
Should one buy perpetuals or should they by term preferreds and/or baby bonds?
How many CDs as a percentage of my portfolio should I hold? How much should I leave in money market funds?
The questions go on and on—and certainly the more ‘seasoned’ folks on the website have their plan of attack–and likely have been dealing with all of these questions for decades. So what is the right strategy?
We know (or we should know) that each and every one of us has our method of investing–some folks do better than others, of course, but is it luck or skill? I have no idea–I only know what works for ME–and what allows me to get a good nights sleep. There is not another single person on this website that I would ever say to do this or do that–it is just not possible to know what is best for others.
All I know for sure is I want 6-7% year in and year out and I am pretty darned conservative. I write about what I am doing–but that is just what works best for ME–no one else.
My method has worked well for me–but I am certain I lag many folks in performance because they are somewhat more aggressive–that is just fine–as long as I reach my goals I don’t care if I lag others.
So don’t hesitate to post what you are doing–it is right for you hopefully and while others may disagree because it is not right for them it is of no consequence.
We all certainly have to make our own decisions and determine what is right for us and although I think I am a bit younger, the 7% blended target for income producing reasonably reliable assets has been good for me as a benchmark for non retirement accounts that I intend to spend at some point in the mid term as we may need it for living costs.
I still like options plays and to short bad companies though as a small portion of these accounts and the 7% keeps me grounded.
I bought some May 15 COST 900-895 put spreads yesterday. I think a lot of stuff is overvalued so I’ll do more of this kind of thing and maybe sell some call spreads too. but the big picture is that most of the value is in stability and the risk is defined/hedged.
Always love everyone’s input here and it has influenced my overall strategy in a positive and sustainable way.
> All I know for sure is I want 6-7% year in and year out and I am pretty darned conservative
@III: How much are these numbers fixed by your financial needs and sense of what’s fair, and how much do they vary with market conditions?
When interest rates were much lower, did you accept more risk and stick with the same target, or did you accept a lower target? And if interest rates go up from here, are you likely to keep your same risk tolerance and be “ultra safe”, or will you keep target something higher?
You guys are more conservative than I am. My IRAs are still mostly 7 to 11% dividends. I figure added trading profits are enough to compensate for increased default risk. We shall see. I don’t consider fluctuating prices to be a loss if they keep paying.
My taxable accounts are closer to 6-7% with a lot of Qualified dividends for the no-tax benefit.
I’ve been poking around in the 2026 maturity baby bond junk pile and uncovered a few of names (ATLCL, SWKHL, RCC) that I think will make it across the redemption finish line. As my higher yielding CDs and treasuries mature I’ve been deploying some of the proceeds into these names with the goal of holding them to maturity.
Citadel, no Riley 26 notes?
Being more defensive these days –
“He who fights and runs away
May live to fight another day;
But he who is in battle slain
Can never rise to fight again.”
― Oliver Goldsmith, 1761
Great timing for this thread, and concur, 6-7 a worthy goal. To his/her own, always interested in what most others are saying. I fear there is too much gambling type activity going on these pages lately. Or maybe it’s been there the whole time and not as prevalent to me. Hope everyone navigates these interesting times profitably or at the very least without loss.
Pig, I have gotten the same feeling lately on here.
I have culled the herd a bit although I still have a few pesky strays I am trying to get rid of at my ask. What is left I don’t worry about to the point I can take a few days off without looking to see what they are doing. I also went through my low ball asks and cancelled a few I am not so confident about wanting to hold now.
I do some gambling but it is only with a pot set aside for that.
Charles, yes, as I said, to each his/her own. Respect each person’s strategy and just have to assume if there is any gambling activity then its house money one gambles with. Hopefully those gambling and taking risk don’t then get on here and lament the fact their President is making things more risky. Its choppy out there, my viewpoint is don’t mess around, especially now.
Pig you are of the same opinion as storm watch Westie. Some things I worry about I have no control over. There could be anything from another Covid to the tech bubble or the Great financial crisis or even losing everything in the stock market like the Great Depression. I can’t plan for everything.
What I couldn’t deal with is Elon Musk and his DOGE and others like him doing away with the one thing I would have left and that is SS. If the government can save banks in a crisis, save car manufacturers, cut deals for 3 trillion in tax cuts for businesses then they should be able to save the only thing some average Joe and Jane’s have left.
Charles, Elon is rich because he apparently lives in many people’s heads rent free. He doesn’t live in my head at all. I have zero worry about Elon Musk. LOL
Funny that.
The trouble with those low ball asks is they can hit when something goes bad. I had a huge very low ball ask on AMTRUST when it was delisted out of the blue. I lost thousands. I have got much of it back now over years of divs but it made me rethink those low balls lol.
Libero, Why I dropped a few and moved some lower. That is part of the problem with Fidelity now, trying to change a limit order and drop the ask price. If it’s a lower volume stock, you have to cancel and start over probably needing to call in again.
“Swing your swing. Capable of greatness. Prized only by you. Perfect in its imperfection. Swing your swing. I know I did”…….Arnold Palmer (RIP)
Totally risk off for time being.
Currently have about 72% in cash/tbills/cds/sgov, 18% preferred (12 positions with largest equalling 2%), 8% cefs (5 positions with largest 2%), ETFs (2 positions 1% each). Overall dividend /interest return is around 6%. Some positions are up, some are down from purchase prices but overall portfolio is in the black by a couple percent and hopefully stays that way. OK with that and allows me to sleep well. Have a few CD’s coming due that pay 5.5%+ so biggest headache will be how to deploy the money as those rates are long gone.
that’s a good way to get 6%. I keep thinking I’m gonna have to accept more duration and risk to get there, but your suggestion proves it’s easier in the short term. I just don’t want options to disappear.
JR –
Do you ever look at agency or municipal bonds as possibilities as CDs or Tbills come due?
Have not looked at agencies before. Have been in and out of municipals over the years but have ignored them as I began loading up in CD’s and Treasuries once they started offering rates in the 5.5% neighborhood. May have to revisit Municipals again and look at Agencies. Thanks for the suggestion.
Hi JR,
As things mature, I have been moving some of my CD/treasury stack into agencies as a way to maintain somewhat better returns. Not moving it all that way, but “layering” some more in, especially in my (modest) taxable accounts.
No idea how the current administration will treat the agencies going forward, but I don’t see them failing to pay/defaulting on things that have already been issued.
I have never done much in munis. Most of my US liquid investments sit in tax exempt accounts so I don’t really need their tax advantages. Plus, because I live in CA munis are a bit more of a hassle.
Good post Tim. You are absolutely correct I don’t exactly know what’s right for myself let alone anyone else. There’s a lot of expertise here, so thanks to you and everyone else who contributes.
Great advice Tim. Your sleep at night target of 7% and low volatility approach also works for me. Thanks for all you do with this site and your sound advice.
Same here Tim. For me I have been recently looking through the wreckage of the REIT sector trying to avoid the pitfalls and landmines. I don’t know if I know what I’m doing is right or not.
We seem to have hit a standstill on some that were at risk, maybe things are looking better for them or not. Past analysis of this sector of the market said there was high risk of cuts in dividends, defaults and other problems and there would be a peak sometime between now and say 2027 as income is down on properties and debt has to be rolled over, possibly at higher rates.
This is on top of rates seeming to be stuck and making refinancing more costly than what it was 2 to 3 years ago.
I sold out of REGCO and REGCP last year and have been waiting to get back in. Last couple trading days someone or some fund has been dumping them and I bought in tranches riding the prices down because I have confidence in this company. These are cumulative and redeemable. Although with rates where they are at I doubt the company will call them anytime soon. In the meantime I collect over 6% and the next dividend in 2 weeks.
If I had the spare change sitting around I would be doing the same with the BFS preferred. At some point in the future I might even have some capital gains.
On the other hand, I have concerns about the industrial REIT REXR because there is concern that tariffs will affect shipping into West coast ports. This is certainly a risk but it might offer a buy opportunity close to 7% at some point on it’s preferred if you’re willing to take the risk if it drops.
Those who want to analyze BFS may even find an opportunity to snag 8% in a market panic drop.