I'd have to look at actual valuations to give you a better answer but as far as what is doing well in this economy: luxury goods (avoid other retail), internet shit like PCLN (travel related), all of my industrials are killing it (CAT, IR, TRS--love this company), energy and independent power producers should be doing well but I haven't looked (NRG), and anything with Latin America exposure. Productivity numbers killed the market before they opened their mouths.
My limit order for F kicked in yesterday. I got 75 shares at $12.50 giving me a total of 100 shares. I put it in 2 weeks ago. I wasn't sure it was going to fill, but looks like $12 was in reach as well. Got to be patient. Still got an outstanding order for 50 shares of GE at $15. Already have 75 shares of GE. I also bought some JP Morgan Preferred last week. I noticed a slight dip and picked up 50 shares at $27.20. Stock stays pretty flat, so no need to limit order, but it is up .15 cents since my purchase. My first purchase of this stock, but I have a lot of Wells Fargo Preferred.
I bought BGS this week at $10.75 in my IRA. Dividend is >6% and it's safe. I'm a big fan of the mgmt team. Besides, who doesn't love Ortega and Cream of Wheat?
real good day, Alcoa up 3.3%, Ford 1.42% and Pfizer up 1.5%. AA & F are still dogs for me, PFE is up 10% though since my purchase on 07/20, keeping my little foray positive by .3% switching topics, i'm thinking about buying some SPDR Barclay's High Yield Index ETF (JNK). i've had a very nice year w/ the HY mutual in my 401k, overall it seems like the market's done well, pretty much every fund & ETF i look at though is near there 52-week high. this is probably a short - intermediate term investment, and i'm nervous about the share price dipping if people get jittery about interest rates changing. i'm also nervous about buying in indexed-HY fund, i sorta want active management when it comes to picking these sort of bonds. if anyone has an opinion on this please weigh in ... in favor of the investment would be monthly $.30ish dividends and a relatively stable share price ($35.04 - $40.24)
High yield index funds inevitably trail the index because you can't reinvest coupons as quickly is the index. Active managers face the same problem though. Last year our fund was up 56% and led the index until the last week of December but finished just behind. Despite trailing the index we were still well in the 98th percentile IIRC. Your biggest difference is going to be the fee structure of ETF's vs. funds. I'm pro active manager (as someone employed as an active manager should be) but it all depends on your choice of manager. With my own HY investments I generally buy the bonds directly.
yeah, fees are actually a big reason why i'm looking at the ETF route, $7 commission w/ a .50 expense ratio looks a lot more cost effective than front-loads/12b-1s/1% ratio/higher brokerage fees for purchases/sales ... do you have any general thoughts on the HY markets tear the last year or so? the index is up 23% 1 year from 7/31/10, is there something unique going on?
The index was up 58% in 2009. A big part of that is because the market was down 30+% in 2008. The math behind it is a par bond that is down 30% is at 70 (ignoring coupons). When it comes back to par the return is 30/70 which is more than 40% (still ignoring coupons). In a simplified manner that is what happened. In the recession liquidity left the market as funds had to delever (too much margin for hedge funds) and the market overshot. Then it recovered quickly. Don't expect a repeat of that. 8%-10% is a much more reasonable number.
Sorry I just saw this post. I have AIVSX and AWSHX, and I know nothing about it, I just follow online.
nice breakdown ... 8-10% will do what periods were they down again? AIVSX has a lot of tech, AWSHX has a lot of utilities/energy/industrial materials ... i think all those sectors have been pretty good this year ...
I don't even know what that index is. They formerly used an index from Wells? That seems weird. Not exactly the go to group for indexes or high yield. Merrill and Barclay's are the two most commonly used indexes for HY. Our fund is linked to Barclay's but I generally use Merrill because there is more functionality on Bloomberg. HYG and JNK are two others to check out. I've never spent a lot of time comparing either so I don't know the differences.
i'll have to take a closer look at the index closer. some big differences from JNK which is what i was looking at earlier. credit quality is better w/ PHG but #s of companies is way lower, 50 or so. HYG, JNK, PHG seem like the main players, i think they all track different indexes ...
My dad is a stock broker and I gave him some $ to invest last week and he bought me 600 of Ford. Take that FWIW. Up 5 cents so far.
Rabid if you are out there and feel like glancing over some stuff, these are the holdings in RAFI Index. http://www.invescopowershares.com/products/holdings.aspx?ticker=PHB also their website, not sure if you've heard anyone that works there, http://www.researchaffiliates.com/rafi/rafi.htm you da man
The portfolio is low risk by HY standards. Not much CCC paper or anything distressed. Consider it the low Beta play within HY and I'd forecast an expected return of 7%-8% in a stable slow recovery scenario (what we're currently experiencing). In a double dip you could lose money but barring something really bad it shouldn't be more than 10%
that sounds pretty good dude. i feel confident in this type of investment as an alternative to bank savings/CDs. not for my entire stash, but rates are such dog shit now that funds like these seem to be very good value propositions. at least in the current HY market (in my humble opinion) it doesn't seem like much will be changing short term. rates don't seem like they moving much, in fact if anything it seems like they're still falling. i think even the most conservative of investors will have to start looking towards higher yielding products. investment grade corp debt may not do the trick these days. ETF products like this that can offer exposure to HY instruments with relatively low risk could be a very hot market short-term IMO. even if rates on CDs & treasuries were to pop up in the next year, i don't think their lack of income will justify their safety, when compared to a bond ETF that can offer 5%+ ...
thoughts on a preferred stock ETF like PGX from PowerShares? has a current yield of 6.7%, paid a monthly $.08 dividend all year, share price is a few cents off the 52-week high @ 14.31. it's yield compares very nicely to a long term investment grade bond ETF, and i presume would be a bit more flexible in a rising interest rate market ...
decided to go with a credit suisse closed end high yield fund, symbol is CIK, if anyone wants to take a look ... what's everyone's opinion on the stock market? any technical #s out there that may be indicating which way we're headed?
I ran in to the Piper Technical analyst today. He said if the S&P hits 950 (or maybe it was 850 but I think he said 950) the Dow will hit 5000... & & :oshit:
interesting rally at the end of the day. my stuff was all over the place but ended up across the board. Ford was in a tailspin most of the day but somehow ended up ... GTFO
that's such a tough question right now long term i'll bet on the economy improving, but i started investing low in '08 so i'm tempted to get a little more conservative right now ...
Pretty good day. Joe Louis you got me thinking about some of these high yield bond funds. I've been doing some research this week.
interestingly both my credit suisse closed end (CIK) and Vanguard's HY have gone up in share value this week. still seems like cash is flowing in to the HY fund/ETF market as investors continue to seek out yields worth a shit. i would take a good look at CIK, yield's about 8.5%, but one of the few funds i could find out there where the market price = the NAV. some of the ETFs i was looking at were at a pretty big premium ... just in general, these are some themes i've picked up on wrt to the HY market (and why it may be stable for the next 1-3 years) - low amounts of defaults. corp earnings are ok, companies w/in these indexes don't seem to be huge risks to go out of business (and in cases like Citi, which a lot of these funds have, the gov't probably won't let it happen) - mentioned above, but cash flow to the ETF market has been huge. JNK, PHB, HYG have all created a bunch of new shares recently - fed's not budging on their rates, so other fixed-income products (treasuries, investment grade corps) will be paying shit for a while (again points to cash flowing to HY) - avg maturity/duration on most the HY funds is pretty low, intermediate term, 5-7 years in most cases. can probably weather a rising interest rate market better than a long term investment grade/treasuries (which still pay much less) :JMOtwocentsrabidknowsbest:
Those are some good points. I thought about the interest rate I mean the mortgage rates hit 9 historic lows in a 10 day stretch. Corporate debt seems to be where the best yields for fixed income will be for a while.
i take that to means yields for GNMAs and such are gonna suck as well? yeah corp debt seems like the only way to go. i think the risk/reward proposition between investment grade and speculative debt is in favor of the speculative stuff. to get near the yield of HY funds w/ investment grade you've gotta go long-term, and i'd be nervous about investing in long-term funds because their share price moves around so much. even if rates don't change too much, i think investor sentiment is against long-term debt big-time right now ...
Yea the mortgage rate is 4.3 for 30 year I believe and 3.8 for 15 year. I may be off some basis points but its in those neighborhoods
Now is the time to buy no doubt. I would love to get a hold of some gulf front condo's. Between the oil spill and housing market collapse these properties are at ~40% of where they were pre-crash.