Investment Thread

[elvis14]

There are a couple of financial experts here but my understanding is that you would need to split that $20K into two $10K investments for different people (say, you and a SO or child) --- OR, you could purchase another one for yourself when the period resets in January.

The I-Bond is fixed + a variable interest rate that adjusts based on inflation (which is why it is so high right now) and gets recalculated semi-annually. SO, that 7.12% is locked until the next recalculation period in Spring.

It is safe, you can't lose the principle and its fully backed by the US government.

Thanks, that makes sense. Since the new year starts in a few days, investing in one now and one in Jan would work well.

You must spread some Comments around before commenting on bundabergdevil again.

[Jeffrey]

There are a couple of financial experts here but my understanding is…..

Give yourself more credit…. You’ve got game!

[Jeffrey]

What stock(s) do you own which you believe are currently undervalued? Why?

[bundabergdevil]

What stock(s) do you own which you believe are currently undervalued? Why?

Isn’t the perpetual answer to this, “the ones I own”?!?

[YmoBeThere]

PNW is going through some things with it's regulator that I believe will correct over time.

[Jeffrey]

Isn’t the perpetual answer to this, “the ones I own”?!?

Which are?

[Jeffrey]

PNW is going through some things with it's regulator that I believe will correct over time.

Thanks!

[YmoBeThere]

Trade I regret this year. Selling Abbott Labs(ABT) and going with Medtronic (MDT). That did not work out well.

[bundabergdevil]

We might close the year on a very high note. Color me surprised.

[YmoBeThere]

Another trade I regret - The Anderson's ANDE This company makes fertilizers, etc. I use several of their products on my yard. Bought in the low 27s and sold just short of 30. Now trading for 38.95 So, nice 10% gain in a couple months but should have held for a 43% gain...

[YmoBeThere]

Thoughts on 401(k) versus Roth 401(k)? As I don't know future tax policy but am willing to bet that they will be higher in the future I'm leaning to putting money in the Roth version for the first time.

[Bluedog]

Thoughts on 401(k) versus Roth 401(k)? As I don't know future tax policy but am willing to bet that they will be higher in the future I'm leaning to putting money in the Roth version for the first time.

Part of the decision-making on this is certainly your current tax bracket...I think there's something to be said for "tax diversification." That is, if you have a Roth IRA, maybe stick with standard 401k. If your 401k balance dwarfs your Roth IRA, maybe put some into a Roth 401k. Personally, earlier in my career I did some Roth 401k and now that I'm in "prime earning years" theoretically, I've stuck with standard 401k + backdoor Roth IRA (which was supposedly on the chopping block next year, but Congress' bill hasn't passed yet).

[Section 15]

Thoughts on 401(k) versus Roth 401(k)? As I don't know future tax policy but am willing to bet that they will be higher in the future I'm leaning to putting money in the Roth version for the first time.

Not sure if this fits your situation, but in 2010 I converted five different retirement accounts (IRA, IRA rollover, KEOGH, TIAA/CREF, and 401K) into a Roth IRA. This was a unique situation created by a change in the tax code that year that allowed you to pay the resulting tax liability for the conversion over two years.

In addition to simplifying my finances, it had other benefits: As with all Roth accounts any withdrawals are tax free, and there are no required withdrawals starting at age 70.5. If you don't need or want the money, you can let the account to grow with essentially tax free income.

The downside was that I had to pay tax on the amount of the pre-tax money contributed to the various retirement accounts. It was painful coming up with the cash to cover the taxes, but that is now in the past. And, the increased value of the Roth account since the conversion has more than made up for the taxes.

I'm very enthusiastic about Roths.

Section 15

[YmoBeThere]

Part of the decision-making on this is certainly your current tax bracket...I think there's something to be said for "tax diversification." That is, if you have a Roth IRA, maybe stick with standard 401k. If your 401k balance dwarfs your Roth IRA, maybe put some into a Roth 401k. Personally, earlier in my career I did some Roth 401k and now that I'm in "prime earning years" theoretically, I've stuck with standard 401k + backdoor Roth IRA (which was supposedly on the chopping block next year, but Congress' bill hasn't passed yet).

Not sure if this fits your situation, but in 2010 I converted five different retirement accounts (IRA, IRA rollover, KEOGH, TIAA/CREF, and 401K) into a Roth IRA. This was a unique situation created by a change in the tax code that year that allowed you to pay the resulting tax liability for the conversion over two years.

In addition to simplifying my finances, it had other benefits: As with all Roth accounts any withdrawals are tax free, and there are no required withdrawals starting at age 70.5. If you don't need or want the money, you can let the account to grow with essentially tax free income.

The downside was that I had to pay tax on the amount of the pre-tax money contributed to the various retirement accounts. It was painful coming up with the cash to cover the taxes, but that is now in the past. And, the increased value of the Roth account since the conversion has more than made up for the taxes.

I'm very enthusiastic about Roths.

Section 15

Thank you both for your replies.

I've been doing the backdoor Roth IRA for the last few years but I'm expecting that to be closed some time next year, so in a way I'm prepping for that(actually had the retirement plan administrator cut a check today for all the after tax dollars currently in my 401(k) for one final move of funds). I was limited on how many after tax dollars I could actually put into my account because of two things(an extremely generous match that got halved this year) and a percentage cap on after tax dollars contributions. I haven't done a Roth 401(k) yet and my total assets in Roth IRAs isn't a whole lot relative to the whole pie. I'm now eligible to do catch up contributions so was thinking of putting that amount into the Roth 401(k). I'm definitely trying to bolster my funds in Roth accounts. With that said, I'm reluctant to convert a traditional to a Roth IRA as I'm reluctant to part with the taxable cash. As you note, Section 15, it is painful and financially, I've always tried to defer the pain...I'm going to have to read about conversions a bit more. Complicating the whole mess is that I changed jobs quite a bit early in my career and I've got significant funds in my rollover IRAs(pre-tax dollars).

[Dr. Rosenrosen]

What stock(s) do you own which you believe are currently undervalued? Why?

So, your question caught my attention because I’ve been massively frustrated about what’s happening to Signify Health (SGFY). I no longer work for the company (left in 2020) but was lucky enough to vest shares before it went public earlier this year. Signify is in a really interesting spot in healthcare with essentially two pieces to its business. They build and run value-based care programs with payers and providers focused on episodes of care - one of the few federal VBC initiatives that have ever saved money for Medicare. And they have a huge business focused on providing in-home healthcare services. They were even represented on stage back when the former President marched out leaders of Fortune 500 companies that were expected to play a key role in battling the emergence of Covid. And without getting into minutiae, their financials are quite good.

SGFY launched like a rocket from $24 to $40 and then came back down to earth and settled for a while in the highs 20s. Then something happened. That something seems to be Cathie Wood and her ARK investment fund. There are a handful of large institutional investors holding a ton of SGFY shares. ARK took a large position early after the IPO and then began steadily increasing their investment across the summer and fall. And the SGFY price started to fall. And fall some more. And then some more after that. Cathie kept pouring into it (she now owns more than 11% of Signify) and the price just kept tumbling. For one brief moment after Signify announced very strong Q3 earnings the stock price got a jolt. But within a couple days it had retreated. As of today SGFY sits below 14, not much above its ATL.

As I’ve looked deeper at this, it would appear that there is a purposeful effort aimed at ARK to sabotage the performance of their funds, notably the ARKK fund. There’s even a new ETF that’s designed to profit on the basis of ARK failure. And SGFY seems to be caught in the middle. It would seem someone is out there relentlessly shorting SGFY. You can see it in the options activity over the last several months. (Probably see something similar if I were to look at other ARKK holdings.) If you look at the SGFY chart and compare to ARKK, the performance is so symmetrical (not a good way) that it’s just astounding. And SGFY is just not big enough and doesn’t have enough volume to offset what is happening to ARKK more broadly.

Signify is a good company with good leadership doing cool stuff in healthcare. Financials are really good (already profitable less than a year after IPO!) and forecast growth is very strong. And the CFO recently bought a substantial number of shares with his own funds, likely an effort to demonstrate his confidence to the market. The SGFY stock chart makes absolutely no sense. There’s no way this is a $14 company. Totally illogical.

So, my questions are many… How the heck does SGFY decouple its stock price performance from ARKK? When will the shorts run out of gas and finally have to cover and get out? How is it legal to set up an ETF that benefits directly from the failure of another and essentially encourages stock price manipulation? Why doesn’t this bother the SEC? Where are the Reddit short squeezers!?!?

[cspan37421]

Anyone notice Vanguard's third-party problems of late (since 12/23)? Message on login today (12/28) is:

"Due to a third-party service provider interruption, certain
statements, confirmations, and tax forms are currently unavailable via
our website and mobile application. Transaction history is up to date
and can be used to confirm the status of your transactions, deposits,
or other account details. Certain mailings and requests for checks by
mail may also be delayed. Our teams are actively working to resolve
this issue and we apologize for the inconvenience."

Again, this has been apparently been going on since Thursday (!!). There's a thread on it over at Bogleheads forum.

[YmoBeThere]

So, your question caught my attention because I’ve been massively frustrated about what’s happening to Signify Health (SGFY). I no longer work for the company (left in 2020) but was lucky enough to vest shares before it went public earlier this year. Signify is in a really interesting spot in healthcare with essentially two pieces to its business. They build and run value-based care programs with payers and providers focused on episodes of care - one of the few federal VBC initiatives that have ever saved money for Medicare. And they have a huge business focused on providing in-home healthcare services. They were even represented on stage back when the former President marched out leaders of Fortune 500 companies that were expected to play a key role in battling the emergence of Covid. And without getting into minutiae, their financials are quite good.

SGFY launched like a rocket from $24 to $40 and then came back down to earth and settled for a while in the highs 20s. Then something happened. That something seems to be Cathie Wood and her ARK investment fund. There are a handful of large institutional investors holding a ton of SGFY shares. ARK took a large position early after the IPO and then began steadily increasing their investment across the summer and fall. And the SGFY price started to fall. And fall some more. And then some more after that. Cathie kept pouring into it (she now owns more than 11% of Signify) and the price just kept tumbling. For one brief moment after Signify announced very strong Q3 earnings the stock price got a jolt. But within a couple days it had retreated. As of today SGFY sits below 14, not much above its ATL.

As I’ve looked deeper at this, it would appear that there is a purposeful effort aimed at ARK to sabotage the performance of their funds, notably the ARKK fund. There’s even a new ETF that’s designed to profit on the basis of ARK failure. And SGFY seems to be caught in the middle. It would seem someone is out there relentlessly shorting SGFY. You can see it in the options activity over the last several months. (Probably see something similar if I were to look at other ARKK holdings.) If you look at the SGFY chart and compare to ARKK, the performance is so symmetrical (not a good way) that it’s just astounding. And SGFY is just not big enough and doesn’t have enough volume to offset what is happening to ARKK more broadly.

Signify is a good company with good leadership doing cool stuff in healthcare. Financials are really good (already profitable less than a year after IPO!) and forecast growth is very strong. And the CFO recently bought a substantial number of shares with his own funds, likely an effort to demonstrate his confidence to the market. The SGFY stock chart makes absolutely no sense. There’s no way this is a $14 company. Totally illogical.

So, my questions are many… How the heck does SGFY decouple its stock price performance from ARKK? When will the shorts run out of gas and finally have to cover and get out? How is it legal to set up an ETF that benefits directly from the failure of another and essentially encourages stock price manipulation? Why doesn’t this bother the SEC? Where are the Reddit short squeezers!?!?

FWIW, many of the IPOs of recent vintage are busts to be quite honest. I follow the fintech space as they are my competitors (ROOT and LMND) and the other a friend used to work for (RELY). All of these are YTD. The contrast to your story is that none of them are profitable as I type. With that said, these companies do have value in the cash market. I can't say much more than that; the trouble you run into is getting earlier investors to sell. When I did look up SGFY, this was the first article that popped up at Yahoo! Finance:
Release Update: U.S. FEDERAL JUDGE KEEPS SIGNIFY HEALTH EXECUTIVE SIDELINED AS CORPORATE ESPIONAGE CASE HEADS TO TRIAL

Screenshot 2021-12-29 093940.jpg

[Dr. Rosenrosen]

FWIW, many of the IPOs of recent vintage are busts to be quite honest. I follow the fintech space as they are my competitors (ROOT and LMND) and the other a friend used to work for (RELY). All of these are YTD. The contrast to your story is that none of them are profitable as I type. With that said, these companies do have value in the cash market. I can't say much more than that; the trouble you run into is getting earlier investors to sell. When I did look up SGFY, this was the first article that popped up at Yahoo! Finance:
Release Update: U.S. FEDERAL JUDGE KEEPS SIGNIFY HEALTH EXECUTIVE SIDELINED AS CORPORATE ESPIONAGE CASE HEADS TO TRIAL

Screenshot 2021-12-29 093940.jpg

That court case is recently announced and had no impact on performance trend. The downward slide started months and months ago. I just wish I understood how an entire ETF can be successfully targeted and manipulated the way that the ARK ETFs (and therefore the stocks held in the ETF) appear to be.

[WillJ]

Thank you both for your replies.

I've been doing the backdoor Roth IRA for the last few years but I'm expecting that to be closed some time next year, so in a way I'm prepping for that(actually had the retirement plan administrator cut a check today for all the after tax dollars currently in my 401(k) for one final move of funds). I was limited on how many after tax dollars I could actually put into my account because of two things(an extremely generous match that got halved this year) and a percentage cap on after tax dollars contributions. I haven't done a Roth 401(k) yet and my total assets in Roth IRAs isn't a whole lot relative to the whole pie. I'm now eligible to do catch up contributions so was thinking of putting that amount into the Roth 401(k). I'm definitely trying to bolster my funds in Roth accounts. With that said, I'm reluctant to convert a traditional to a Roth IRA as I'm reluctant to part with the taxable cash. As you note, Section 15, it is painful and financially, I've always tried to defer the pain...I'm going to have to read about conversions a bit more. Complicating the whole mess is that I changed jobs quite a bit early in my career and I've got significant funds in my rollover IRAs(pre-tax dollars).

If you expect the tax rate to be the same, then Roth and conventional are equivalent for any dollar invested. To see this, let x = dollars invested, r = interest rate, t = tax rate, and n = # of years before withdrawal.
For a conventional, you deposit x, let it accumulate at rate r for n years, before paying a tax rate of t at withdrawal, so what you ultimately get is x * (1+r)^n * (1-t).
If you do a Roth, then you just pay the tax upfront, so that what you get after n years is x * (1-t) * (1+r)^n...which is the same thing after rearranging terms
If you think the tax rate will be different in the future, then you should shift towards Roth if your tax rate is currently relative low...and vice versa.
One advantage of Roth is that the effective contribution limit per year is higher than for conventional IRAs....basically, you put in money to Roth post-tax so that, for a given limit, say $20,000, you put in 1/(1-t) times as much into a Roth...of course, this is only valuable if you're already capped out on your conventional IRA>

[bundabergdevil]

Anyone notice Vanguard's third-party problems of late (since 12/23)? Message on login today (12/28) is:



Again, this has been apparently been going on since Thursday (!!). There's a thread on it over at Bogleheads forum.

The Philly Inquirer has a story up which you should be able to access for free. An unusually long outage.

https://www.inquirer.com/news/vanguard-website-down-outage-five-days-20211229.html


I’m wary of this sort of thing. I knew the chief security officer at UPS a while back and she told me that companies often knew - and were alerted by white hat hackers - that there’d been a breach on in their security but a lot of companies wouldn’t immediately go public (and would try to avoid going public at all).