Investment Thread

[CrazyNotCrazie]

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

I did not know that story but just looked it up - wow. Sorry I can't spork you.

I used to go to Chicago for business several times a year and on one trip took a variation of the architectural boat tour for business purposes. It was perfect weather so I had a lovely day cruising the city. I very much miss those types of boondoggles, which I do not get in my current job.

[budwom]

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

Ouch, I did not know that. Had the waste not landed on the boat, and only in the river, no one would have noticed (which I'm sure was the plan). d'oh!

[Skydog]

A bit of a tangent but in the 90’s I went with a gf to the Taste of Chicago. We got caught up in a walking crowd where the pressure of people pushing got so high we literally lost all control of where we were going. We were only 5 feet from the edge but we still couldn’t exit the throng. After being carried along for maybe 100 feet we finally escaped. Scary as hell. Weird thing was no one we saw was doing anything wrong - just too many people. All of those little pushes added up.

[YmoBeThere]

A strong month for the averages. Value continued to outperform growth as many of the big tech stocks announced layoffs this month.

With 2022 over and value clearly trouncing growth, shifting to a year to date performance.

The market of large cap US stocks (S&P 500) since the end of December, 2022: (as of 1/31/2023)

iShares Core S&P U.S. Value ETF (IUSV) price at close 12/30/2022: 70.63
Total Dividends to Date: 0.00
Annual Dividend Yield: Current 2.22%
Adjusted cost basis: 70.63
Close 1/31: 75.77
2023 YTD Return: 7.3%

iShares Core S&P U.S. Growth ETF (IUSG) price at close 12/30/2022: 81.52
Total Dividends: 0.00
Annual Dividend Yield: Current 1.03%
Adjusted cost basis: 81.52
Close 1/31: 86.10
2023 YTD Return: 5.6%

iShares Core S&P 500 ETF (IVV) price at close 11/30/2021: 384.21
Total Dividends: 0.00
Annual Dividend Yield: Current 1.66%
Adjusted cost basis: 384.21
Close 1/31: 408.31
2023 YTD Return: 6.3%

[Section 15]

Seems like Mr. Market liked the Fed's 1/4 point increase in the interest rate. I thought that the decrease in the increase was pretty well telegraphed over the last week, so I'm surprised at the abrupt change in sentiment from earlier in the day.

Anyone have a better understanding of this than my admittedly meager one?

[Bluedog]

Seems like Mr. Market liked the Fed's 1/4 point increase in the interest rate. I thought that the decrease in the increase was pretty well telegraphed over the last week, so I'm surprised at the abrupt change in sentiment from earlier in the day.

Anyone have a better understanding of this than my admittedly meager one?

No, doesn't make much sense. Everyone was expecting a 1/4 point increase so it theoretically should have already been "priced in." Furthermore, the fed did NOT indicate that they are done with increases, but seem to indicate it'd be at a slower rate than we saw last year, which AGAIN, is what everyone expects. Why did the market increase? Sometimes there isn't really logic. People always like to try to explain things as cause and effect, but sometimes Mr. market does what it feels like. Still, not complaining...Maybe the explanation is that the Fed didn't surprise everyone ? Hahahaha. And people like "predictability" from the Fed...

I entered a long-bond & US equity leveraged position (~2x) for a chunk of my Roth last month, so am starting to ride that as a long-term hold. The equivalent strategy got crushed 40% last year...so I thought was a good entry point. We shall see.

[budwom]

No, doesn't make much sense. Everyone was expecting a 1/4 point increase so it theoretically should have already been "priced in." Furthermore, the fed did NOT indicate that they are done with increases, but seem to indicate it'd be at a slower rate than we saw last year, which AGAIN, is what everyone expects. Why did the market increase? Sometimes there isn't really logic. People always like to try to explain things as cause and effect, but sometimes Mr. market does what it feels like. Still, not complaining...Maybe the explanation is that the Fed didn't surprise everyone ? Hahahaha. And people like "predictability" from the Fed...

I entered a long-bond & US equity leveraged position (~2x) for a chunk of my Roth last month, so am starting to ride that as a long-term hold. The equivalent strategy got crushed 40% last year...so I thought was a good entry point. We shall see.

All good questions. I still think there have been so many people trying to foment recession fear that people are actually surprised to hear positive developments.

[AGDukesky]

I really need to visit this thread more often- thank you to all who contribute!

[OldPhiKap]

Seems like Mr. Market liked the Fed's 1/4 point increase in the interest rate. I thought that the decrease in the increase was pretty well telegraphed over the last week, so I'm surprised at the abrupt change in sentiment from earlier in the day.

Anyone have a better understanding of this than my admittedly meager one?

I think it has more to do with the less hawkish language in the statement, and Powell’s Q&A which was less strident than his last pronouncements. The statement for example removed COVID and Ukraine as factors influencing further inflation.

The end of tightening is near — or at least that’s the messsge and the lesson drawn. “Data-dependent” of course.

[Section 15]

I think it has more to do with the less hawkish language in the statement, and Powell’s Q&A which was less strident than his last pronouncements. The statement for example removed COVID and Ukraine as factors influencing further inflation.

The end of tightening is near — or at least that’s the messsge and the lesson drawn. “Data-dependent” of course.

or "annec-data" - thanks to Budwom and his word of the week!

[bundabergdevil]

My wife works for a small/medium-sized non-profit with a part-time HR person who recently left (and who hasn't been much help to-date). They have access to a Simple IRA through Merrill but she cannot self-direct investment of any of the funds in the mymerrill platform. Every investment request has to go through a local ML financial advisor associated with the account. There is not even an automatic investment option so that her contributions get allocated to the funds of her choice each month. She literally has to call this lady. She can't even set the dividend reinvestment decision in the platform, it directs her to call her advisor to make changes.

I'm used to large corporate 401(k) plans and so the above seems nuts to me. Is that just the consequence of the small non-profit not having access to better plans --- or making a bad decision for their employees?

[Bluedog]

My wife works for a small/medium-sized non-profit with a part-time HR person who recently left (and who hasn't been much help to-date). They have access to a Simple IRA through Merrill but she cannot self-direct investment of any of the funds in the mymerrill platform. Every investment request has to go through a local ML financial advisor associated with the account. There is not even an automatic investment option so that her contributions get allocated to the funds of her choice each month. She literally has to call this lady. She can't even set the dividend reinvestment decision in the platform, it directs her to call her advisor to make changes.

I'm used to large corporate 401(k) plans and so the above seems nuts to me. Is that just the consequence of the small non-profit not having access to better plans --- or making a bad decision for their employees?

Bad decision for employees. That sounds totally crazy in this day and age that frankly it's hard to believe (the calling someone piece). There are plenty of low cost offerings for small companies.

I get annoyed that my 500ish person company charges 0.25% quarterly...they claim they need an outside steward that charges that for insurance purposes or some rubbish.

[YmoBeThere]

My wife works for a small/medium-sized non-profit with a part-time HR person who recently left (and who hasn't been much help to-date). They have access to a Simple IRA through Merrill but she cannot self-direct investment of any of the funds in the mymerrill platform. Every investment request has to go through a local ML financial advisor associated with the account. There is not even an automatic investment option so that her contributions get allocated to the funds of her choice each month. She literally has to call this lady. She can't even set the dividend reinvestment decision in the platform, it directs her to call her advisor to make changes.

I'm used to large corporate 401(k) plans and so the above seems nuts to me. Is that just the consequence of the small non-profit not having access to better plans --- or making a bad decision for their employees?

Sounds like an old decision made years ago that hasn't been revisited in years. And given the ways in which those services have improved over the years, is long overdue for a rebidding of the contract/service. Now, the size of the business may be a factor, but new HR should probably undertake the task.

[YmoBeThere]

The end of tightening is near — or at least that’s the messsge and the lesson drawn. “Data-dependent” of course.

This is also a sign that my overweight value stance has run its course. At least the amount I was overweight.

[Jeffrey]

My wife works for a small/medium-sized non-profit with a part-time HR person who recently left (and who hasn't been much help to-date). They have access to a Simple IRA through Merrill but she cannot self-direct investment of any of the funds in the mymerrill platform. Every investment request has to go through a local ML financial advisor associated with the account. There is not even an automatic investment option so that her contributions get allocated to the funds of her choice each month. She literally has to call this lady. She can't even set the dividend reinvestment decision in the platform, it directs her to call her advisor to make changes.

I'm used to large corporate 401(k) plans and so the above seems nuts to me. Is that just the consequence of the small non-profit not having access to better plans --- or making a bad decision for their employees?

What’s her company match for the SIMPLE IRA?

Does your wife also max out a Roth or Traditional IRA?

[bundabergdevil]

Bad decision for employees. That sounds totally crazy in this day and age that frankly it's hard to believe (the calling someone piece). There are plenty of low cost offerings for small companies.

I get annoyed that my 500ish person company charges 0.25% quarterly...they claim they need an outside steward that charges that for insurance purposes or some rubbish.

Sounds like an old decision made years ago that hasn't been revisited in years. And given the ways in which those services have improved over the years, is long overdue for a rebidding of the contract/service. Now, the size of the business may be a factor, but new HR should probably undertake the task.

What’s her company match for the SIMPLE IRA?

Does your wife also max out a Roth or Traditional IRA?

Thanks for the responses. We talked a bit about it last night and I think she is going to raise the idea of the org rebidding the plan to the exec director and board. It's only a 30 person operation and my guess is only a third to a half take advantage of the IRA. There's a 3% match from the org.

I think what we are going to do is open up an a la carte Roth or traditional IRA and divert any contributions above the 3% match into one of those funds for her. It's just ridiculously cumbersome and outdated.

Any recs for off-the-shelf Roths or IRA products?

[Bluedog]

Thanks for the responses. We talked a bit about it last night and I think she is going to raise the idea of the org rebidding the plan to the exec director and board. It's only a 30 person operation and my guess is only a third to a half take advantage of the IRA. There's a 3% match from the org.

I think what we are going to do is open up an a la carte Roth or traditional IRA and divert any contributions above the 3% match into one of those funds for her. It's just ridiculously cumbersome and outdated.

Any recs for off-the-shelf Roths or IRA products?

Do you mean brokerage?

Vanguard, Schwab, or Fidelity would do the trick.

[YmoBeThere]

Any recs for off-the-shelf Roths or IRA products?

I've used the online platforms like Etrade and TDAmeritrade. I also have used MerrillEdge and the mutual fund company T Rowe Price.

[Jeffrey]

There's a 3% match from the org.

I think what we are going to do is open up an a la carte Roth or traditional IRA and divert any contributions above the 3% match into one of those funds for her. It's just ridiculously cumbersome and outdated.

Any recs for off-the-shelf Roths or IRA products?

Great, that was going to be the start of my recommendation.

Are you two under 50? I suspect so, and strongly recommend funding a Roth IRA instead of a Traditional. There’s only one logical direction for future tax rates.

To keep it simple, I’d open the Roth IRA at Vanguard and invest all the contributions in Vanguard’s “Total Stock Market Fund”.

Thoughts?

[Bluedog]

Great, that was going to be the start of my recommendation.

Are you two under 50? I suspect so, and strongly recommend funding a Roth IRA instead of a Traditional. There’s only one logical direction for future tax rates.

To keep it simple, I’d open the Roth IRA at Vanguard and invest all the contributions in Vanguard’s “Total Stock Market Fund”.

Good suggestions.

I probably agree with the Roth IRA recommendation but will play devil's advocate a bit that even if future tax rates go up as you suggest, someone in retirement should have a lower income and can strategically choose which retirement vehicle to tap in what order. You then tap your tax-deferred first in the low tax brackets (maybe up to 15%) and then Roth (after tax) after those. Or something like that. That's why I think "Tax diversification" is a sound strategy to mitigate future tax rates/unknown future income, although retirees can control future income to an extent (RMDs notwithstanding although the age of those has been increased recently). So, if you have a "traditional" 401k, probably having a Roth makes a lot of sense. BUT if someone is in a very high tax bracket now and expects to maybe retire early in life and have lower income, getting that deduction NOW could be a better path. Now, if you get NO deduction on a Traditional IRA due to income, then yeah, Roth IRA (or backdoor Roth IRA) is a no-brainer.