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Where Do I Go Now?

Our portfolios remain composed of a balance of high quality preferreds and baby bonds, balanced with high yield BDC baby bonds and a few high yield preferreds–thus far performing almost perfectly (from my perspective). This portion of our investments account for maybe 55% of our total with the balance being in CDs and money markets. I don’t see too much day to day movement and see the largest movements from our collection of dividends and interest each month. The dividends and interest have kept balances moving higher.

I continue to be torn on future investments–I want to move to 60%-70% preferreds and baby bonds simply to capture the 2-3% spread between high yield and CDs, but this is based on my thought that interest rates would move lower through the summer. Obviously this thought is imperiled by continuing inflation. Holding as many CDs as I hold is boring–but the interest income has been very comforting.

In the end I need to be data driven–so every day and every week I get more info–and in the next 2 days we get plenty of data with the CPI and Fed decision tomorrow and then PPI on Thursday. This means I have no reason to make any decision today or tomorrow on further purchases–sit on my hands and watch (and collect dividends and interest).

Equity markets are soft this morning–down a bit while interest rates are trading down a little in the 4.43% area. Yesterday we had no real economic news and the same goes for today so markets are trading on ‘what ifs’ as we await inflation data. This week has the potential to get real wild–but maybe all news will be ‘on forecast’ and we get a quiet market–I wish.

12 thoughts on “Where Do I Go Now?”

  1. I still search for CD’s. I know it takes time, and patience, but you can be rewarded. Last week I loaned a credit union $25k for nine months @ 6.17 APY, fixed, non callable, better than my 5.92% bank variable!

  2. Tim, I had an 60 month IG bond ladder for income until the rates cratered and I found this site. Now that my FtF issues are getting redeemed I’ll probably start rolling some short term money that direction again.

  3. Tim –
    Curious why you don’t use short term treasuries instead of CD’s due to better after-tax yields?

    I’ve learned (and made) a lot from your you and your site (and donated a little 😉 too). Many thanks to you.

    1. SeatyMarbles–no good answer for you–although I will take another look at it. Maybe part of it is simply that I got so used to just punches those buttons. Everything I buy is in IRAs so no taxes (now). Thanks for the $$ of course that is always appreciated.

    2. SMs – that is only applicable to taxable accounts, no? I use treasuries in my taxable account and CDs in the tax deferred ones. Though, the delta between the two lately almost makes them a wash either way.

      1. Yes, only helps in taxable accounts. I have a hand full of rolling 3 month treasuries. And yes, looks like the delta between them and CD’s is much less than it was just 1-2 months ago, but increases at the 1-2 year term options – too long for me.

  4. JPOW just did his press conference. What did he say? What did he really say?
    Will he cut rates? Does he even know anything?
    I agree, Do nothing and enjoy my income. Listening to the Fed will make you crazy.

    1. Aren’t they meeting today & doing the press conf tomorrow at 11 EST?
      Not finding one today- that would be odd- given that he would not be at the meeting.

  5. Yes agree, I did a similar , still 47% cash mostly in SGOV; slowly-very slowly- moving into pfds, have a few stink bid limit orders in for things I want to buy this week, we’ll see.. As I move into pfds find I am up a little over 20% in that bucket. Volatile weeks are good for low ball bids on hotlist names, I find.

    Nothing wrong w watching paint dry either w cash yields! or gardening like 2WR! or betting like Grid! Bea

    1. I’m right there with you Bea- also 47% in ‘cash yields’- mostly SGOV & Clip about 50-50 plus a little CD. Am also with Tim in his mix, but with some BDCs and CEFs for sauce.

    2. Bea, my “cash” percentage is near yours. But mostly in CDs with some in Tbills. The maturities are starting to flow hard for next months. With each maturity I will evaluate. Can’t bury everything into a 2 year CD maturity wall, so I will become a bit more creative and flexible if no deals suit my fancy. Need Panthers to win series to cap off a nice NHL betting season. Now the US Open… Only 2 crazy bets….Tiger to make the cut at plus 220 and anybody but Rory or Scheffler to win the tournament at minus 200.

  6. A quiet market is the last thing you will get at this point.

    Its either an inflating bubble or a bubble that bursts. Something fun to consider.

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