In another thread, someone asked of me a question that needs no reply. Didn't you bid this board adieu not that long ago? To which, I’ll borrow Keynes’ reply when asked a similar question. “When the facts change, I change my opinion. What do you do, Sir?” For nearly three years now, I’ve been saying that the opportunities in bonds are becoming fewer. But my own buying contradicts that. In 2009, I added about 60 new positions, about the same in 2010, and double that in 2011. This year, already, I’ve added another 22 new positions (and sold 10 old ones). So, obviously, I’m still finding things to do. But that wasn’t my intention for this year. This year, rather than just talk about it, I was going to start rotating effort and money into another asset-class. But the need to maintain the portfolio I’d already built keeps dragging me back into bonds. As I mentioned in another thread, these were my 10-year results: as 12/31/11 1yr 3yr 5yr 10yr SP500 2.11% 14.11% -0.25% 2.92% (a common index of US large caps) EAFE -12.14% 7.65% -4.72% 4.67% (a common index of foreign large caps) AGG 7.84% 6.77% 6.50% 5.78% (a common index of US bonds) BRK-B -4.76% 5.88% 0.80% 4.21% (Buffet's value fund) Charliebonds 10.22% 20.80% 7.35% 8.17% (a non-public, fixed-income, value fund) A 10-year average return of 8.17% is tiny money, and it is barely half of my 27-year record, which is a more respectable, annually-compounded 16.0%, which shouldn't be surprising to anyone. The '80's and '90s were easy-money years, when throwing darts could make an investor 25%-30%. Nowadays, 8% is closer to what markets are offering. But that's still easy money that I’m unwilling to walk away from just because I was getting bored with the gig and/or had mistakenly anticipated its end. So, yes, the persona that I created has departed, and “Charliebonds” is no more. But the investor/trader/writer who created his returns is still alive, well, and pulling as much money as ever out of the bond market. So I’ll make this offer to each and everyone of you. If you can make a useful, substantive contribution to any thread I create (using whatever persona I choose), please feel free to join in on the conversation. I'm very good at what I do, and my threads on this board offer an over-the-shoulder look at the challenges (and rewards) of running a mid-sized, all-bond portfolio that invests "across the yield-curve and across the credit-spectrum" that is rare to encounter anywhere on the internet. If that narrow, investing niche is not a topic that interests you, then you shouldn't be reading it. Charlie
as 12/31/11 1yr 3yr 5yr 10yr SP500 2.11% 14.11% -0.25% 2.92% (a common index of US large caps) EAFE -12.14% 7.65% -4.72% 4.67% (a common index of foreign large caps) AGG 7.84% 6.77% 6.50% 5.78% (a common index of US bonds) BRK-B -4.76% 5.88% 0.80% 4.21% (Buffet's value fund) Charliebonds 10.22% 20.80% 7.35% 8.17% (a non-public, fixed-income, value fund)
Brewer, I reported your personal attack post and ask that it be pulled, it would be better if you ask for it to be pulled yourself.It was difficult enough to ask/suggest/redirect Charlie to stop stepping on others in this forum. Now you add gas to the embers.If you do not want to learn from Charlie, then put the Trader on ignore.But please do not piss off the prof.I do not like the way he treats those who he considers .... meek, misinformed, ill-informed ... but asking for more flame is degrading to this forum.Ti
After something of a lull, I am again facing calls. So I'm back looking at the e-Trade platform. March 1 the money comes in, so until then my time on the bond platform is looking over the landscape. Meanwhile my stocks have been rewarding me handsomely and on the whole, the bond market looks pretty awful by historic standards. Two issues paying a coupon of 7.35% are being called. Both were purchased at a discount about 8 years ago. Both companies are issuing new paper at a lower coupon, and clearly the reason for the call is that 1) they can and 2) they expect to be able to sell the new paper and reduce their interest expenses accordingly. Option premiums now are quite good, and a 10% premium on a good, fairly volatile stock for a 1 or 2 year LEAP is fairly easy. Maybe I'll put the money derived from the calls into buying a stock and selling a call option on it. To sell a covered call on a stock like AAPL, however, requires a $50000 investment--which would be too big a position for my portfolio. So, I'll be following any wisdom Charlie may choose to pass on at this point. I started out with bonds but have diversified long ago. Without question, bond yields are at historic lows. Some talking heads may think the yield on a long treasury in 6 months will be half the present paltry yield--but I sure am not going that way! Junk, maybe. I'll be shopping around on e-Trade, window shopping for the moment, but in a couple weeks we get serious. And the Puerto Rican bond this community didn't like when I bought it a couple years ago has faithfully paid its 6% coupon, and currently selling for 112. Now, prices at that credit quality are too high--I don't pay premiums which admittedly constricts the choices. Or, if you prefer, cuts the candidate list down to a workable size! Best wishes, Chris
I have extremely little patience with charlie's self-aggrandizing puffery. Even when there is actual useful information in his posts (which isn't that often), getting past the thick layer of smarmy self-love and diminution of everyone else is nearly impossible. Every time he chooses to break his arm in public by patting himself on the back so hard, I will be happy to call him on it.That said, in deference to board sensibilities, I will be a tad less blunt about it.
Chris:Do you view all the calls and reissuance at lower coupons/easier terms a hint from the market that we should tread very carefully? High yield spreads are still in the region I consider marginally attractive, but as they grind tighter and terms get looser on new issuance I find myself only too happy to back away from the bond market and fish in other waters. You see differently?
Forty years ago, my portfolio was nearly 100% bonds. Five years ago it was 70% bonds, and I was still working. Now it is 60% equities, and I've been retired for 3 years. The party line says as you age your portfolio should get less risky, and that is translated into owning more bonds, less stock. But with these crazy interest rates, in my not-so-humble opinion, bonds are more risky than stocks. But the stocks have been on a tear also. I look at returns and wonder whether it would be possible for me to make a million dollars a year? If there were no down days, yes. Ain't gonna happen...Selling covered calls on stocks is a mildly bullish position. You've sold your top. If the stock runs away to the upside, it will be called, or you'll spend a bunch buying your call back. If the stock crashes, the premium doesn't compensate for your loss on the stock. If you select your strike well, either the stock just misses getting called or it gets called, you make money on the position and can either buy the stock back at a reasonable price or you go buy another stock. So buy/write positions did well in 2011. So yes, for the past year or so I've been mostly fishing in different waters...in the past 2 years a lot of my bonds have been called. I bought new, energy-efficient windows for my house, and a bunch of stocks, which have done well. Fish in different waters? Absolutely! But with a bunch of money coming in I will keep in touch with the bond market also. Charlie's finding stuff worth buying, it must be out there, but it sure as heck isn't treasuries, and I haven't seen anything in munis worth buying, either. Charlie's idea was to pay attention when names appear on the lists of bonds available that aren't usually there--good point. And I know the e-Trade lists well enough to recognize such, if I happen to be looking when it appears.
""If the stock runs away to the upside, it will be called, or you'll spend a bunch buying your call back. If the stock crashes, the premium doesn't compensate for your loss on the stock. If you select your strike well, either the stock just misses getting called or it gets called"" I do like to do this with dividend paying stocks, and love it when the option expires. I just sold my second call on HNP without losing the postion. Check out the chart if it interests you. I belive the dividend is about 4 1/2% "but it sure as heck isn't treasuries"...I sold off all my zero coupon treasuries (STRIPS), but that article by Shilling? that someone posted has me intrigued. I think I was right on the lithium shortage...or maybe the pharmacies are all closed on Sundays.
oops..maybe for Saturdays also
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