patrick.net

@stfu
Actually, the inherited IRA was smaller than 300K and I inherited it in 2017; it was already invested for some capital appreciation so it grew in those few years.
I have saved and invested my entire life expecting not to receive much from my parents.
My father was not an astute investor; in fact he made some mistakes but he earned enough to eventually have money when he needed it.
My father's ancestor was a founder of Wachovia Bank; he had inherited shares. I told him "Go up to the Fidelity store on Broadway and sell it and buy a couple of stock mutual funds; it's better to be diversified than keep one stock."
He didn't follow my advice and in 2008 lost about $650,000 when Wachovia went bust and he got a few shares of Wells Fargo in exchange.

I previously got an inheritance from my mother and I rolled the dice with it and bought shares of AAPL; I have a large capital gain from this gamble.

I'm not bitter about the guys I know who won't save their money; I'm a little pissed off at my friends who get public pensions who pay no California tax on them. I'm also a bit pissed off at people who don't save a dime and get govt. money because they have some bastard children.

I have a frugal nature and have made arrangements to save even more money; it's just my habit and I can't quit.
I changed my state residence to Florida; next year I will depart Florida and be in Baja Sur, saving more since I won't be owning or renting in Florida for a decade or so.
Interestingly, others from up North (Canada, California, Washington, Oregon, etc.) are doing the same, so Baja housing prices are rising, but are still very reasonable.

At the rate I'm going, I'm never going to spend my money; it's a large enough nest egg that even if I spend 4X what I spend today, it will never run out.

My only frivolous spending it eating out but then the fun is finding places which are good but not expensive.

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The CAGR for the S&P 500 is about 3.7% (each year) from 1 January 2000 to 31 December 2022. It is inflation adjusted and accounts for dividends.

Historically the CAGR is around 6.5%. The last 22 years has been a dismal extended period for the S&P 500.

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https://www.fool.com/investing/2023/12/10/where-will-amazon-stock-be-in-3-years/

Amazon is slowly making its way back toward the 6% profit-margin record it set a few years ago. That's better than traditional retailer rivals like Costco Wholesale can manage but is far below the over-40%-profit rate that growth-stock investors can get from a company like Microsoft.

There's a good chance that Amazon's margins will reach double-digits over the next few years, though. Operating income is already soaring, compared to last year, for example. The company generated $24 billion in profits in the past three quarters, up from $10 billion a year earlier.

Management projects profits as high as $11 billion in the holiday quarter, too, compared to $3 billion in late 2022. Amazon is targeting more balance between growth and profits today, and this approach should continue improving its finances over the next several years.

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Account for inflation, the S&P 500 is only about 1.5% above its November 2021 high. So the S&P 500's real return has been flat for the last 2.5 years.

https://www.multpl.com/inflation-adjusted-s-p-500

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And if you examine since summer of 1999, the S&P 500's inflation adjusted or real gain in only 100%.

The S&P 500 only has increased about 3% annually since summer of 1999 when accounting for inflation.

Warren Buffet and Bill Gates are selling off stocks. Should I be worried?

rocketjoe79 says

Warren Buffet and Bill Gates are selling off stocks. Should I be worried?

Buffet sold some AAPL but bought an ins co stock. Gates - IDK.

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The S&P 500's total real (aka: inflation adjusted return) for the last 2.5 years has been at most 1.5% 😕

Source: https://www.multpl.com/inflation-adjusted-s-p-500

If the S&P 500 drops 10% from current level and remains there to this November, that means the real return for the S&P 500 will be 0% from the start to the end of Biden's first term.

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since a lot of 401K's (especially for those 401K account owners who are going to retire within 10 years) have at least 30% in investment-grade bonds
below is for a benchmark as far as bond market performance

bond performance will at least improve moderately over next few years because annual inflation for the most part has steadied between 2% and 4%

https://finance.yahoo.com/quote/BND/

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I sold off my underwater bond funds and instead am investing in 13 week UST’s. Will use the loss to decrease my income taxes.

Al_Sharpton_for_President says

I sold off my underwater bond funds and instead am investing in 13 week UST’s. Will use the loss to decrease my income taxes.

From August 2021 to October 2023, Vanguard Total Bond Market Fund decreased about 25% in price from around $90 to $68.

Its been likely one of the worst extended period for investment grade bonds within the last 40 years.

That is why I think the worse is behind for the Vanguard Total Bond Market Fund as annual inflation has steadied around 3.25%.

Keep eye on the 31 May 2024 report for Personal Consumption Expenditures (PCE), which the Federal Reserve uses to set the Federal Reserve Funds rate based on inflation.

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Don't expect capital appreciation from a bond fund.
Conversely, a falling NAV of a bond fund should not bother you; the purpose of the fund is income.
If or when interest rates are decreased, the average bond fund NAV should go up.
Over long time periods, the return of a bond fund is just the interest income it pays out.

clambo says

Don't expect capital appreciation from a bond fund.
Conversely, a falling NAV of a bond fund should not bother you; the purpose of the fund is income.
If or when interest rates are decreased, the average bond fund NAV should go up.
Over long time periods, the return of a bond fund is just the interest income it pays out.

I agree as a NAV does not show the annual return from the yield.

Right now the yield for Vanguard's Total Bond Market Fund (BND) is 4.7% which is expected given what Treasuries (1 year to 10 year duration) are at now

But I agree as far as the long term for a bond, as far as holding for at least 10 years, hopefully in a couple of years the 10-Year average annual return for BND is at least 1% above annual inflation, as BND recovers

I was just pointing out from summer of 2021 to fall of 2023 how the net asset value (NAV) dropped that much for the ticker BND (as expected because of inflation increasing around start of summer of 2021).

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I do remember hearing on financial news shows that for every 1% increase in interest rates there is generally a 1% drop in price of a bond for every year of duration.

The host of these shows were trying to relate interest rate increases to the value (price or NAV) of the bond.

Quite a few “experts” have been recommending longer duration UST’s, not so much for their yield, but for capital gains after interest rates fall. Of course they have been recommending this for quite a while, while rates remain higher for longer.

Al_Sharpton_for_President says

Quite a few “experts” have been recommending longer duration UST’s, not so much for their yield, but for capital gains after interest rates fall. Of course they have been recommending this for quite a while, while rates remain higher for longer.

Good point, as I figure the worst is behind bond funds until the Fed increases rates in the next inflationary cycle or period.

So the worse is behind bond funds like Vanguard's Total Stock Market Bond Fund for this cycle and likely the next stage is a recession as far as stocks crashing +20% and inflation decreases as well (based on no stagflation conditions). My best guess is all of this will be held off until right after the November election.

Even with the way Vanguard manages its bond funds like the Vanguard Total Stock Market Bond Fund with its bond-ladder-strategy, there will be at least some or a little capital appreciation or gains with bond prices increasing due to interest rates decreasing.

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The stock market is erasing a lot of the COVID pandemic gains.

On one of several websites that track the stock market metrics, I saw that the inflation-adjusted S&P 500 is at the same level it was in October 2021 and only about 13.5% above its January 2021 level.

https://www.multpl.com/inflation-adjusted-s-p-500

This equates to an average annualized real gain of about 3.7% from January 2021.

I suspect it may drop from 3.7% to below 2% by this September as evidenced by recent major earnings disappointments such as today by SalesForce.

Historically the S&P 500's real annual gain or return is at least 7%.

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https://www.crestmontresearch.com/docs/i-rate-10-yr-yield.pdf

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As far as the above post, I was expecting once interest rates decrease a little more and then steady, then the Vanguard Total Bond Market fund (ticker: BND) will steady also.

It was $90 in July 2020 and bottomed to $68 last October, when the 10 year Treasury peaked to 5% (which is now at 4.2%). BND is now $73.

BND average annual return is 2.9% since its creation in April 2007.

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AD says

https://www.crestmontresearch.com/docs/i-rate-10-yr-yield.pdf

Excellent chart, thank you.

The 13-week T bill yield is losing gas.

Eman says

richwicks says

Eman says

DD214 says

As much as some don’t like to admit, this is partially true.

I guess Sam Bankman Fried, Bernie Madoff, Ghislane Maxwell, Jeffrey Epstein, Nancy Pelosi, Joe Biden, Jeff Zuckerberg, Jeff Bezos, Bill Gates, etc are just really good people doing quite well. It's not like they are just criminals or something...

That was why I said it’s partially true as there will always be some exceptions. However, it’s generally true in most cases. 😂

I think real report card comes from god and soul, perhaps the world we leave behind in some ways, and footsteps we followed. i’ve seen poor and people with no opportunity in life never making it, and i’ve seen people who succeeded financially despite hardships. it’s all over the place. I’m sure you’ve seen it all too. at the end we are just dust in the wind.

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As far as bonds, stocks and economy, notice everytime the 10 Yr minus 2 Yr is no more than Zero, within a year there is a recession.

Look at the 2024 values, and if this trend or pattern is true, then expect a recession within 6 to 9 months.

https://fred.stlouisfed.org/series/T10Y2Y

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