Investment Thread

[Kdogg]

They adjust in May. The VARIABLE rate (good for six months) will crater, but the FIXED rate (good for the entire duration of the bond, up to 30 years) is likely to increase a reasonable amount. One can wait until mid-April to see what the rates will look like, and then purchase before end of April to lock-in the current rates, or wait until after May to make the purchase (if you're so inclined).

Many people that bought last year did so to take advantage of the high rate. They are going to have a decision to make. If the combined rate craters it might be better to sell and take the 3 month penalty. Then one can invest in something else, maybe a one or two year CD or bonds. People should make the calculation every time the rate reset.

[Bluedog]

Many people that bought last year did so to take advantage of the high rate. They are going to have a decision to make. If the combined rate craters it might be better to sell and take the 3 month penalty. Then one can invest in something else, maybe a one or two year CD or bonds. People should make the calculation every time the rate reset.

Yep...I will join in that bucket (i.e. will see how things shake out to make a decision) It was an unusual circumstance where we have a lot of short-term I Bond investors. Usually it's long-term But remember that the 3-month penalty is the LAST 3 months, so if you're investing in I Bonds and want to take your money out prior to 5 years, you should wait for the low rate to start on your bonds (which varies, depending on the purchase month), and then hold for 3 more months so as to reduce your penalty amount. You don't want the penalty to be when you were earning a high rate. (You probably know all this, but posting for the rest of the internet to see ).

[YmoBeThere]

They adjust in May. The VARIABLE rate (good for six months) will crater, but the FIXED rate (good for the entire duration of the bond, up to 30 years) is likely to increase a reasonable amount. One can wait until mid-April to see what the rates will look like, and then purchase before end of April to lock-in the current rates, or wait until after May to make the purchase (if you're so inclined).

Thanks for the correction on the date. The variable rate will adjust again in May based on the 6 month annualized change in the CPI as of March. So, everyone will have a couple months* to think about it if they pay attention to the data. Given how the change in the index has dropped significantly, since the fixed rate is set by the Treasury and they haven't ever gone above 3.6%, my guess is that the fixed rate will go up but the total rate for the next 6 months will be underwhelming relative to the payout of the last year. Just a guess, but I'd be surprised at any fixed rate that started with a number higher than 1.

*And really 5/6 months to act since as you point out in a subsequent post that they will want to wait until they've been under the new lower rate for 3 month. I'm a gambling man and I'm willing to bet that some online savings accounts are likely to pay out more than an I bond at that point based on the Fed's intention to keep rates higher for longer in order to prevent inflation from resurfacing. If not, then I will remain in the I Bonds for another 6 months.

[YmoBeThere]

Yeah, they sold their stake in the MGM Grand and Mandalay Bay to free up cash and help with liquidity. I'm wondering if this is a canary in the coal mine thing.

If real estate does start to struggle, it's entirely possible. I also wonder if the lack of liquidity this month at BREIT will encourage more investors to sell. Could become a vicious spiral. Should be interesting to watch.

Paywalled, so I can't see the details but here is the headline.

https://www.bloomberg.com/news/artic...uverify%20wall

Investors Seek to Pull $20 Billion From Core Real Estate Funds

JPMorgan and Morgan Stanley are among fund managers facing withdrawal requests as property values decline.

[budwom]

I read about the huge vacancy rates for commercial real estate in San Francisco...that market went red hot, now companies realize workers can work from their living rooms, no need to pay big bucks for glitzy offices...at the very least there will be some major casualties here...

[Kdogg]

Paywalled, so I can't see the details but here is the headline.

https://www.bloomberg.com/news/artic...uverify%20wall

Investors Seek to Pull $20 Billion From Core Real Estate Funds

JPMorgan and Morgan Stanley are among fund managers facing withdrawal requests as property values decline.

It seems this is a bit more complicated that people jumping off a sinking ship because of rising interest rates (that is big part of it though). Looks like some if it is portfolio re-balancing and over requesting with the assumption that only a portion of the request will be meet. Still, when the big money is reducing exposure it's important to take notice.

From the article:

"Institutional investors sought to cut their exposure to some of the biggest funds at managers including JPMorgan Chase & Co., Morgan Stanley and Prudential Financial Inc."

"The UBS Trumbull Property Fund had a $7.2 billion queue for withdrawals — 40% of its value — as of the third quarter of 2022, according to a December presentation by Callan, a pension consultant. "

"But ODCE funds move more slowly, valuing properties based on comparable sales — and those have become scarce recently, with few sellers willing or forced to take a loss. That’s why the ODCE index posted a 7.5% gain for all of 2022, according to preliminary data released Jan. 13 by the National Council of Real Estate Investment Fiduciaries. The first sign of a pullback came in the fourth quarter, when the index dropped 5%."

"For institutional investors, the exit queue is at least partly a response to what’s known as the denominator effect. Investment managers often have certain targets for how much they want to have invested in stocks, bonds, real estate and other assets. As markets slumped last year, their stock and bond holdings shrunk in size while real estate held up better, meaning it often constituted a bigger slice of their portfolios than they initially intended."

"The outflow backlog can quickly flip to a waiting line for investors wanting to get back in, as happened briefly in 2020 and more dramatically after the 2008 global financial crisis when stocks recovered and the investing pie grew. "

[bundabergdevil]

BuzzFeed is all the buzz today, popped 200% on an AI press release.

[bundabergdevil]

Rip, bbb?

[YmoBeThere]

Rip, bbb?

You left out the y...and the why.

[CrazyNotCrazie]

Rip, bbb?

Very sad - the original location was very close to where I grew up - I remember going there as a kid to get things for camp when it was just Bed n Bath. Many were hoping this would be revived as another meme stock but no such luck for them.

I am curious to see how this resolves.

[Bluedog]

Bbb stores have an insane amount of inventory compared to a typical retail establishment. I wonder if they could have better cashed in on the "drive up" orders of the pandemic by providing more in that regard. My Target orders have skyrocketed because of this...

Retail is a tough business these days.

[Jeffrey]

Retail is a tough business these days.

IMO, retail has always been a tough business!

For many years, Sears dominated retail with their catalog (a.k.a. “The Consumers' Bible") in most homes in America. Sears was once one of the largest USA employers with more than 350,000 employees. For many years, The Sears Tower was the world’s tallest building and a Chicago landmark. Then, some Arkansas hillbillies mucked up Sears whole world.

[YmoBeThere]

Bordering on public policy territory, so please delete if I've stepped over the line...

Chevron announces increase to capital spending budget of $1.3 billion to $17 billion annually, also announces share buyback of $75 billion.

[bundabergdevil]

Bordering on public policy territory, so please delete if I've stepped over the line...

Chevron announces increase to capital spending budget of $1.3 billion to $17 billion annually, also announces share buyback of $75 billion.

You forgot the record 36.5B profit.

[Bluedog]

IMO, retail has always been a tough business!

For many years, Sears dominated retail with their catalog (a.k.a. “The Consumers' Bible") in most homes in America. Sears was once one of the largest USA employers with more than 350,000 employees. For many years, The Sears Tower was the world’s tallest building and a Chicago landmark. Then, some Arkansas hillbillies mucked up Sears whole world.

As a Chicagoan, it's still a Chicago landmark and will ALWAYS be the Sears Tower (true Chicagoans don't call it "Willis"...).

But yeah, it was the world's tallest building for 25 years, quite a long time.

Hot tip for Chicago tourists: the view from the Hancock's signature room is far superior to that of the Sears Tower Skydeck. Plus, you can get a cocktail in a lounge as part of the deal (overpriced yes, but elevator ride is free!).

And the "Hancock's" name has ALSO officially changed to 875 N Michigan Ave.

[Section 15]

Bordering on public policy territory, so please delete if I've stepped over the line...

Chevron announces increase to capital spending budget of $1.3 billion to $17 billion annually, also announces share buyback of $75 billion.

And profit taking in CVX is rampant today. What's the saying - "Buy on the rumor and sell on the news"?

[budwom]

As a Chicagoan, it's still a Chicago landmark and will ALWAYS be the Sears Tower (true Chicagoans don't call it "Willis"...).

But yeah, it was the world's tallest building for 25 years, quite a long time.

Hot tip for Chicago tourists: the view from the Hancock's signature room is far superior to that of the Sears Tower Skydeck. Plus, you can get a cocktail in a lounge as part of the deal (overpriced yes, but elevator ride is free!).

And the "Hancock's" name has ALSO officially changed to 875 N Michigan Ave.

apropos to not much, for looking at Chicago's great buildings along the river (and they ARE great) the Architectural River Tour is absolutely splendiferous...I'm not a guided tour kind of guy, but that was so good I've done it twice. Great history.

[acdevil]

apropos to not much, for looking at Chicago's great buildings along the river (and they ARE great) the Architectural River Tour is absolutely splendiferous...I'm not a guided tour kind of guy, but that was so good I've done it twice. Great history.

Just watch out for DMB tour buses (if you don’t know, look it up. You won’t be sorry).

[MartyClark]

apropos to not much, for looking at Chicago's great buildings along the river (and they ARE great) the Architectural River Tour is absolutely splendiferous...I'm not a guided tour kind of guy, but that was so good I've done it twice. Great history.

I officed at 221 N. LaSalle, corner of LaSalle and Wacker right across from the Chicago River, in the early 1980's before moving to Denver. When I go back to Chicago, I'm amazed at how nice everything is along the river.

The river was quite dirty back in the day. There was a standing reference to Chicago River whitefish which was the local term for used condoms floating in the river. The river and it's adjacent buildings are really cool these days.

Very interesting, at least to me, is that the Chicago River used to flow into Lake Michigan and more than a 100 years ago the flow of the river was reversed. It now flows into the Illinois River which, I think, flows into the Mississippi

[budwom]

I officed at 221 N. LaSalle, corner of LaSalle and Wacker right across from the Chicago River, in the early 1980's before moving to Denver. When I go back to Chicago, I'm amazed at how nice everything is along the river.

The river was quite dirty back in the day. There was a standing reference to Chicago River whitefish which was the local term for used condoms floating in the river. The river and it's adjacent buildings are really cool these days.

Very interesting, at least to me, is that the Chicago River used to flow into Lake Michigan and more than a 100 years ago the flow of the river was reversed. It now flows into the Illinois River which, I think, flows into the Mississippi

I love Chicago, and the river, but have never given the slightest thought of dipping my toe into that water...looks not unlike the stuff in my septic tank.