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On 5/25/2023 at 12:03 AM, Fez said:

Yesterday I moved everything I had in the stock market to cash in preparation for a debt ceiling-related crash. Fortunately, the tax implications of that will be pretty minor for me. If I'm wrong, I'll sheepishly buy some new index funds in a couple weeks. And if I'm right, at least I'll be able to "buy the dip" while the economic chaos unfolds.

I have wondered myself on how to handle a possible debt ceiling disaster in the equities markets. In my one-page investment manifesto I do make reference to avoiding single-issue investments (i.e. don't invest in a biotech company that is dependent on one drug being approved) which is what this debt ceiling feels like. 

My largest positions are in (roughly equally) cash, gold miner, telco and a Vanguard Global fund. Apart from the global ETF, the others are quite resilient in a default disaster, and I am comfortable holding onto the ETF as it's always been a long-term buy with no intended exit point.

What I'm a bit more worried about are my middle-weight positions in BHP (diversified iron/copper miner), a lithium miner, a rare earths miner, and bank. All of those are susceptible to a market crash.

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Will be interesting to see how the debt ceiling deal affects the markets. I suspect it's only going to be a light and short-lived bounce, if any, given that there hadn't really been any major market drops in the past few weeks. It seems everyone was expecting a deal, so I think a couple of days of exuberance before resumption of normal service in the equities markets?

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Just received notice TIAA will be shifting my traditional IRA account from their TIAA (FSB) entity to a newly-created TIAA National Trust Bank. Should I be concerned about this move? Is TIAA (NTB) gonna burn my retirement money on blow and dogecoin? Will the new SCOTUS wipe out the OCC along with the whole Chevron Doctrine, leaving National Trust Banks without legal basis?

Actual notification reads like this:

Quote

As announced on November 3, 2022, TIAA entered into a definitive agreement to sell TIAA Bank which operates
through TIAA, FSB. In connection with this transaction, TIAA is restructuring how it offers fiduciary and custody
services for IRAs by transferring these activities currently conducted by TIAA, FSB to a new TIAA subsidiary, TIAA
Trust, N.A., a national trust bank.

 

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On 5/24/2023 at 10:03 AM, Fez said:

Yesterday I moved everything I had in the stock market to cash in preparation for a debt ceiling-related crash. Fortunately, the tax implications of that will be pretty minor for me. If I'm wrong, I'll sheepishly buy some new index funds in a couple weeks. And if I'm right, at least I'll be able to "buy the dip" while the economic chaos unfolds.

Happy to sheepishly be wrong and I have bought some new investments instead. And in the case of my Roth IRA, I literally just rebought some of my old positions that I had previously been happy with. All in all, since it had such minor tax implications, it actually was a decent opportunity to rebalance my portfolio anyway, and I think things really were dicey a couple weeks ago, I have no regrets.

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3 hours ago, Fez said:

Happy to sheepishly be wrong and I have bought some new investments instead. And in the case of my Roth IRA, I literally just rebought some of my old positions that I had previously been happy with. All in all, since it had such minor tax implications, it actually was a decent opportunity to rebalance my portfolio anyway, and I think things really were dicey a couple weeks ago, I have no regrets.

I still moved about 40% to cash in the last month (not consciously because of the debt ceiling, but a couple of my stocks had started to enter a downtrend and triggered my stops). Now looking to redeploy it. I'm still relatively cautious but now looking into an Asian ETF as I don't have any exposure there and in the long run they might not be a bad investment, even though lately they haven't been travelling well. I don't think the Chinese economy is going to be going all that well in the future but some of the other Southeast Asian economies are looking better.

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  • 1 month later...

Resurrecting this...so it looks like inflation is coming down globally without too much damage to the economy. Maybe the soft landing is here after all!

I think there will still be some trouble brewing ahead but maybe not in a cataclysmic sense. There is still a lot of debt being carried out there and some of that will come home to roost.

I feel like our next financial crisis will likely come from an external factor (e.g. a hot war, or another US government issue) than from financial factors.

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My spouse handles most of our investments.  He enjoys it, which is really necessary if you're doing your own thing.  He's quite a conservative investor and risk-averse.  We have good positions in a lot of large cap stocks (Apple, J&J, Oracle, Home Depot, etc.,) and have been doing dividend reinvestment on the dividend paying ones.  It's shocking how things grow over the years!  I've wanted to take some profits, but he stays the course, and in the end I'm glad we did. 

We're semi-retired currently so he decided to dabble in some tax-free municipal bonds, which pay us at various times during the year, along with a couple of annuities we bought decades ago which are currently paying our long-term care insurance.  

Once in a while he says he wishes he'd have enjoyed himself a bit more along the way and not worried about saving so much.  

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7 hours ago, Tears of Lys said:

Once in a while he says he wishes he'd have enjoyed himself a bit more along the way and not worried about saving so much.  

No time like the present, if you're secure enough now.  It's human nature to think the grass may have been greener elsewise, but if you're in a solid place now because you followed your values and better judgement, then enjoy the blessings.  

A large portion of investing success comes down to timing, which is basically luck.  Not talking about day trading, but just that someone retiring in 1999 or 2006 thinking they were set for life based on the standard rules of thumb got punched in their equity.  If you didn't have to weather the worst, then did you really save too much?  I'd argue no.

Cheers either way!

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13 hours ago, mcbigski said:

No time like the present, if you're secure enough now.  It's human nature to think the grass may have been greener elsewise, but if you're in a solid place now because you followed your values and better judgement, then enjoy the blessings.  

A large portion of investing success comes down to timing, which is basically luck.  Not talking about day trading, but just that someone retiring in 1999 or 2006 thinking they were set for life based on the standard rules of thumb got punched in their equity.  If you didn't have to weather the worst, then did you really save too much?  I'd argue no.

Cheers either way!

I always say, If you have the time, you don't have the money; if you have the money, usually you don't have the time.  I could add another one:  If you have the time AND the money, sometimes you don't have your health, and that's the case with my husband.  He's had six - SIX - back operations, and traveling very far is off the table.  Sigh.  

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On 7/22/2023 at 1:18 PM, Tears of Lys said:

 traveling very far is off the table.  Sigh.  

Sorry to hear that's the sticking point.  I misunderstood and thought your post wasn't about health at all, just working longer than needed building wealth.

All the best to you both.

 

 

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Just bought another CD yesterday, mostly to get the money out of a dormant checking account in a regional bank ("We're fine! Everything is fine!!"). I can't make sense of the yield spreads on these things, tho. It's a 6-month CD at 4.75% APY; the same credit union's 1- and 2-year CDs are offering, like, 1.25%. :wacko: And their basic savings accounts (had to open one at $5, to join the credit union and purchase the CD) continue at 0.25%.

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  • 4 weeks later...

Global markets look like they are at a fork in the road here. China's unexpected weakness (and the authorities' unwillingness to provide any major stimulus) is causing a few jitters. Evergrande declaring bankruptcy and Country Garden teetering is bad news for consumer confidence in China.

This isn't good news for the Australian share market (where the three iron ore majors make up a huge component of the index) though other markets might be a bit more isolated given a lot of Chinese debt is held internally.

But with the big run up in stocks this year, it does feel like it won't take much for some of the air to come out of the balloon. I think the rest of the calendar year is going to be a bit choppy though it might turn around again in December when the market decides the Fed really is done with rate rises.

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  • 4 weeks later...

Bump...!

Rocky couple of months but the real economy is still bumbling its way along. Global interest rates look like they're roughly at their peaks but cuts are probably still a long way away. Personally I'm a bit torn; I have a bit of cash sitting on the sidelines but I'm just not convinced now is a great time to put it to work. I may regret that in a few months' time...

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  • 3 weeks later...

Markets are at another turning point. Lots of comparisons to 2007 GFC with bond yields soaring, rate cuts looking less likely and everyone holding their breath to see if something breaks. The US government shutdown will possibly come into it too if it goes on longer than a couple of weeks - apparently the military won't get paid.

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My post from April has aged pretty well, though cash was probably the better bet than bonds:

Quote

I’m still sticking with my hypothesis from January - bounce to start the year and then hopes of a soft landing dissipating. Market P/Es aren’t looking that attractive right now. Cash/bonds look good (especially if in a tax-free or concessional position).

I don't buy into the 2007 hypothesis but I still wouldn't be surprised to see a recession and a stagnant period of earnings (bad for equities).

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It's a bit confusing to me to see how cash is doing well given the high rates of inflation, especially outside the US. Is the hypothesis that it's simply doing better than being in the market at all? 

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On 10/6/2023 at 8:52 AM, Kalnak the Magnificent said:

It's a bit confusing to me to see how cash is doing well given the high rates of inflation, especially outside the US. Is the hypothesis that it's simply doing better than being in the market at all? 

Yes, ordinarily cash would be a bad investment during a period of inflation. But when equities are vulnerable, property (particularly commercial property) is also weak, and bonds are tanking, I guess it's the best of a bad lot.

On 10/6/2023 at 7:26 AM, Paxter said:

My post from April has aged pretty well, though cash was probably the better bet than bonds:

I don't buy into the 2007 hypothesis but I still wouldn't be surprised to see a recession and a stagnant period of earnings (bad for equities).

Well picked, @Paxter!

There are definitely some headwinds coming up. The odds of a US government shutdown are still very high given the Speaker shenanigans, we now have more geopolitical instability (Middle East) and with bonds going down the toilet, I wouldn't be half surprised if there's another banking failure or financial crisis around the corner.

Currently my share portfolio is very conservative and I don't intend on changing it too much in the coming months. 40% in cash (bearing 5% interest), 20% in a global ETF. The remaining 40% is split evenly between a telco, oil/gas, bank and major rare earths miner. I'm comfortable with the first two companies, though I'm watching the bank and the mining company carefully.

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I’ve decided it’s time to sell my holdings of the TBT ETF (a double short exposure to long-dated US Tsy Bonds).  Yields could definitely go higher yet but it would only take some growth anxiety to pull yields back down again.  Also the daily reset mechanic of those leveraged ETFs makes it better to sell rather than hold after a period of strong momentum.

Otherwise my long term assets are all in stocks and my short term holdings have been all in cash this year.

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3 hours ago, Iskaral Pust said:

I’ve decided it’s time to sell my holdings of the TBT ETF (a double short exposure to long-dated US Tsy Bonds).  Yields could definitely go higher yet but it would only take some growth anxiety to pull yields back down again.  Also the daily reset mechanic of those leveraged ETFs makes it better to sell rather than hold after a period of strong momentum.

Otherwise my long term assets are all in stocks and my short term holdings have been all in cash this year.

Short long-dated bonds? Trade of the year contender. 

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