The Market 2021

[BigRedRage]

It's insane but I don't really have a choice. Wife and I are going through a divorce and I'm absolutely not going to pay apartment rental prices. I'm hoping I can find some seller who's empathetic to my situation, otherwise I'm gonna have to rob a bank.

understandable. the market has been overbought for a while now and could start correcting any time. A year in an apartment or a rental home vs a mortgage you cannot get out of when the market crashes might not be the worst thing but I totally get where you are coming from.

 

[iLLmatiC]

understandable. the market has been overbought for a while now and could start correcting any time. A year in an apartment or a rental home vs a mortgage you cannot get out of when the market crashes might not be the worst thing but I totally get where you are coming from.

Well the thought process also is that interest rates aren't going to continue to be sitting at 3% which will slow the market down a little bit. Do I want to wait it out where the interest rates go back to 4-5% and in the meantime pay $1700 for an apartment? Grim times.

 

[elindholm]

Out of curiosity those of you that have non-retirement brokerage accounts, who do you use?

Fidelity for mutual funds, eTrade for individual stocks and ETFs. I've been loyal to Fidelity for a long time, and their customer service has been good to me, even though I find their interface a little clunky. eTrade makes it very easy to get all of the information I want. But I do only basic trades, no options or margins, because that stuff is wacko.

 

[BigRedRage]

Well the thought process also is that interest rates aren't going to continue to be sitting at 3% which will slow the market down a little bit. Do I want to wait it out where the interest rates go back to 4-5% and in the meantime pay $1700 for an apartment? Grim times.

Valid point. I think I would take 4% on 250k over 3% on 350k though.

houses should be getable for 2k or less monthly for rent, maybe rent a room out, etc.

 

[Zeno]

Fidelity for mutual funds, eTrade for individual stocks and ETFs. I've been loyal to Fidelity for a long time, and their customer service has been good to me, even though I find their interface a little clunky. eTrade makes it very easy to get all of the information I want. But I do only basic trades, no options or margins, because that stuff is wacko.

I am right there with you regarding basic trades. I don't fully understand options or margins--and I've read a lot but I won't risk money on something I don't completely grasp.

I am mostly trying to use my Merrill account to build a dividend paying portfolio for retirement--ideally I'd make enough in dividends to pay for me and my wife's long term care insurance in retirement ($3000-$4000 a year).

 

[iLLmatiC]

Valid point. I think I would take 4% on 250k over 3% on 350k though.

houses should be getable for 2k or less monthly for rent, maybe rent a room out, etc.

Renting a room out isn't a bad idea, I have a 2 and 4 year old that I have to be worried about so that can't happen for me in this situation.

 

[iLLmatiC]

I am right there with you regarding basic trades. I don't fully understand options or margins--and I've read a lot but I won't risk money on something I don't completely grasp.

I am mostly trying to use my Merrill account to build a dividend paying portfolio for retirement--ideally I'd make enough in dividends to pay for me and my wife's long term care insurance in retirement ($3000-$4000 a year).

Margins and options are a crap shoot. Since I purchase securities for my retirement accounts I'm not going to gamble. Once I have some free funds to throw around I might play with them in my brokerage account.

I'm a fellow dividend growth investor as well. I'm up to $4700 annually in dividend accruement.

 

[BigRedRage]

Renting a room out isn't a bad idea, I have a 2 and 4 year old that I have to be worried about so that can't happen for me in this situation.

yeah I was the same. Only roommate option was a friend and friends who need to rent a room are usually friends I dont want to rent a room to LOL

 

[Devilmaycare]

Yeah...ive been waiting some time for a correction. No way I buy at these prices. My first home I bought for 170 would sell for 375 right now.

Same here. I've been renting the last couple years because I've been thinking we need a correction. The prices are nuts. Right now on my street there are three houses for sale for about $650k and they're the smaller models then the one I'm in. For the build quality and everything on the house I'm in I'd only be a buyer if it was at like the $350k range. So for now I'm building up my down payment more waiting for the pop.

At this point I'm also waiting to see what happens with our WFH policy. If I can stay remote, at least most of the time, I have a different options since the commute won't be a factor.

 

[BigRedRage]

Same here. I've been renting the last couple years because I've been thinking we need a correction. The prices are nuts. Right now on my street there are three houses for sale for about $650k and they're the smaller models then the one I'm in. For the build quality and everything on the house I'm in I'd only be a buyer if it was at like the $350k range. So for now I'm building up my down payment more waiting for the pop.

At this point I'm also waiting to see what happens with our WFH policy. If I can stay remote, at least most of the time, I have a different options since the commute won't be a factor.

Same. Ive been saving for years and am in a great position and will continue to grow the position while I wait. Now with WFH, more opportunity is on the horizon and might change things too. It's weird to be waiting on a flood of houses into the market, which means a wave of foreclosures, I do not will ill on others and just try to focus that I am seeking a market correction and ignore the reality that I am waiting for a lot of people to lose their homes.

The market priced out a rental investor years ago. If you buy a house to rent out right now, you cannot make enough on the rent to pay for the home. That was the first major signal that the market is overinflated but it was years ago. All the other stuff is slowly catching up too.

 

[Ouchie-Z-Clown]

I wish we could somehow limit out of towners in Phoenix from buying real estate. Californians are flooding the real estate market and making it impossible to buy a home unless you have $400K cash in hand.

Lol that’s because they cant buy out here unless you have $700K cash in hand.

 

[iLLmatiC]

Lol that’s because they cant buy out here unless you have $700K cash in hand.

It's out of control.

 

[iLLmatiC]

yeah I was the same. Only roommate option was a friend and friends who need to rent a room are usually friends I dont want to rent a room to LOL

I'm looking at 5 homes tomorrow, I have my fingers crossed one will convey. Things are getting interesting at home lol.

 

[Zeno]

Margins and options are a crap shoot. Since I purchase securities for my retirement accounts I'm not going to gamble. Once I have some free funds to throw around I might play with them in my brokerage account.

I'm a fellow dividend growth investor as well. I'm up to $4700 annually in dividend accruement.

That $4700 is a good start for sure. My taxable account is fairly new to me and I have a ways to go, I plan to reinvest all the dividends until I hit 62 then start collecting at that point. I am trying to have a solid foundation of dividend aristocrats and build from there.

 

[BigRedRage]

congressional hearings with Keith Gill and robinhood have been pretty epic today. "I'm not a cat"

 

[iLLmatiC]

All those homes yesterday were sold by the time we went to look at them. I looked at a two bedroom condo since my kids are still young so that might work for me for a few years, price point is what I'm comfortable with and I think I have a pretty good chance at getting an offer accepted.

 

[BigRedRage]

All those homes yesterday were sold by the time we went to look at them. I looked at a two bedroom condo since my kids are still young so that might work for me for a few years, price point is what I'm comfortable with and I think I have a pretty good chance at getting an offer accepted.

not a bad idea, especially in a decent area. My original strategy, years back while waiting for a correction, was to buy up condos and rent them out.

 

[iLLmatiC]

not a bad idea, especially in a decent area. My original strategy, years back while waiting for a correction, was to buy up condos and rent them out.

Yeah I can either cash out of it in a few years when the market quits climbing or use it as a rental. My mortgage would be about 1100, I could easily rent it out for over 1100.

 

[iLLmatiC]

That $4700 is a good start for sure. My taxable account is fairly new to me and I have a ways to go, I plan to reinvest all the dividends until I hit 62 then start collecting at that point. I am trying to have a solid foundation of dividend aristocrats and build from there.

I'd love to be out of the game by 59 1/2 but I may have to wait until Social Security kicks in at 63.

 

[Folster]

Where are you guys parking cash/emergency funds right now in this low yield environment?

I've typically parked cash in an ultra short term etf like GSY from Invesco. It is not FDIC insured so it can lose value. It is comprised of very short term corporate bonds, securitized debt like mortgages, and cash equivalents. It has a duration less than 1 year so it's not very sensitive to interest rate movement.

Here is some recent performance.

You must be registered for see images attach

As you can see very modest, yet stable returns you could expect from CDs and money markets when interest rates weren't in the toilet.

With interest rates dropping to basically nothing I've moved about 20-25% of my GSY funds to a market index ETF like VTI or something comparable to give my savings a little kick.

 

[Devilmaycare]

Where are you guys parking cash/emergency funds right now in this low yield environment?

I've typically parked cash in an ultra short term etf like GSY from Invesco. It is not FDIC insured so it can lose value. It is comprised of very short term corporate bonds, securitized debt like mortgages, and cash equivalents. It has a duration less than 1 year so it's not very sensitive to interest rate movement.

Here is some recent performance.

You must be registered for see images attach

As you can see very modest, yet stable returns you could expect from CDs and money markets when interest rates weren't in the toilet.

With interest rates dropping to basically nothing I've moved about 20-25% of my GSY funds to a market index ETF like VTI or something comparable to give my savings a little kick.

I've honestly been bad lately and have just had it parked in my savings account at WellsFargo. I had been using the Vanguard Federal Money Market fund for it but since covid hit I've been keeping my cash reserve out of it. I was getting tempted to trade with it when the market started coming back from the crash. Even though it's only a click away it's a different mental state for me when it's not listed in "available funds" on my summary page. I should probably looks to do something that gives a little better return but still keeps me liquid in case of a layoff or something bad.

 

[dscher]

Where are you guys parking cash/emergency funds right now in this low yield environment?

I've typically parked cash in an ultra short term etf like GSY from Invesco. It is not FDIC insured so it can lose value. It is comprised of very short term corporate bonds, securitized debt like mortgages, and cash equivalents. It has a duration less than 1 year so it's not very sensitive to interest rate movement.

Here is some recent performance.

You must be registered for see images attach

As you can see very modest, yet stable returns you could expect from CDs and money markets when interest rates weren't in the toilet.

With interest rates dropping to basically nothing I've moved about 20-25% of my GSY funds to a market index ETF like VTI or something comparable to give my savings a little kick.

Going into anything other than our (eventual,imo) collapsing fiat currency is a solid move imo. I'm personally long tlt( treasury long bond) and stable bond funds like bnd in 401ks. I always put cash to work with hedging strategies based on my trading criteria.

 

[elindholm]

My largest defensive holding is OPTAX, which has a 4.25% front-end load that's waived through Fidelity (otherwise forget it). High-yield municipal bonds, so some risk, but it earned 7.5% last year which is pretty darn good. Proceeds are (partially?) tax-free but I haven't analyzed those details.

 

[Folster]

My largest defensive holding is OPTAX, which has a 4.25% front-end load that's waived through Fidelity (otherwise forget it). High-yield municipal bonds, so some risk, but it earned 7.5% last year which is pretty darn good. Proceeds are (partially?) tax-free but I haven't analyzed those details.

Going into anything other than our (eventual,imo) collapsing fiat currency is a solid move imo. I'm personally long tlt( treasury long bond) and stable bond funds like bnd in 401ks. I always put cash to work with hedging strategies based on my trading criteria.

Both of you are in funds that are holding long term bonds with high durations which are great when rates fall like they did during the Corona crash.

Rates really don't have any further to fall and expected inflation could force the fed to raise rates.

OPTAX has a duration of 8 years while TLT has a duration of 19 years. The supposed rule of thumb is with every one percent increase in interest rates, you can expect a loss equal to your duration.

How long do you guys plan on sticking with long term bonds?

 

[dscher]

Both of you are in funds that are holding long term bonds with high durations which are great when rates fall like they did during the Corona crash.

Rates really don't have any further to fall and expected inflation could force the fed to raise rates.

OPTAX has a duration of 8 years while TLT has a duration of 19 years. The supposed rule of thumb is with every one percent increase in interest rates, you can expect a loss equal to your duration.

How long do you guys plan on sticking with long term bonds?

I actually expect us to go negative rates like Japan in the 90s. Which will set the stage for deflation or stagflation that will ultimately hyperinflate the dollar and weigh on equities. Higher rates are not really a possibility with our current economic activity for quite some time ..and the fed knows this. That's a big reason some are concerned about the 10 yr yield right now moving too fast to the upside. Not necessarily the greatest sign of economic health when we cant get above 1.3% without panicking the markets. imo.

Long story, short. I see a coming secular bear market for the broad stock market and a secular bull for the bond market(5-8 years).. Specifically treasuries(long/intermediate).. not corporate/high yield/mbs.