LQD
iShares iBoxx $ Investment Grade Corporate Bond ETF
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2023-02-02 Wrinkle-brain Plays (Mathematically derived options plays)
DEEP DIVE: Major Points From JPM's 2023 Equity Derivatives Outlook-Kolanovic on Volatility & Trading
DEEP DIVE: Major Points From JPM's 2023 Equity Derivatives Outlook-Kolanovic on Volatility & Trading
DEEP DIVE: Major Points From JPM's 2023 Equity Derivatives Outlook-Kolanovic on Volatility & Trading
DEEP DIVE: Major Points From JPM's 2023 Equity Derivatives Outlook-Kolanovic on Volatility & Trading
DEEP DIVE: Major Points From JPM's 2023 Equity Derivatives Outlook-Kolanovic on Volatility & Trading
DEEP DIVE: Major Points From JPM's 2023 Equity Derivatives Outlook-Kolanovic on Volatility & Trading
DEEP DIVE: Major Points From JPM's 2023 Equity Derivatives Outlook-Kolanovic on Volatility & Trading
2022-11-21 Wrinkle-brain Plays (Mathematically derived options plays)
JEPI (JPMorgan Equity Premium Income ETF ) 10% yield...seems too good to be true.
TLT, HYG, JNK, & LQD: Bond Market Sell Off & Fed Reaction/ Discussion
Why is Investment Grade lower vs High Yield YTD in this environmenet?
Someone made a large bet on Investment grade bond meltdown by mid-Oct
This is a major problem for $QQQ
Schwab Mutual Fund Builder vs Weathfront Robo $90k to invest.
I have $85k to invest for 10 years or more..what do you think of these options?
Buy or sell LQD? (“Bloomberg Markets” feb/mar vol30 issue) Also There is some article in this same mag, it talks about a risk parity strategy, is this possible to achieve using robinhood or webull?
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looking at XLF, /10y and HYG/LQD ratio, I'd think it's a risk on day. Something is afoot
Given the volatlity of bonds right now (at least government ones), I would move slowly and just shift some stocks to bonds every month or year as you sell winners or rebalance. Corporate might be safer and higher yielding right now. Treasuries might be volatile due to EU countries sellin them now. But having some bonds is a good idea as you get old, maybe also look at AGG, BND, LQD, and other bond etfs or CEFs.
How the fuck is TLT and LQD providing the same yield? According to the Fed, the credit spread should be about 0.8% [https://fred.stlouisfed.org/series/BAMLC0A0CM](https://fred.stlouisfed.org/series/BAMLC0A0CM)
You may be able to get your Fidelity rep to get their bond person to create a government or coporate bond ladder that will give you a nice, very low cost, exposure to bonds. Schwab does that if you want. But you can also just buy some etfs like AGG, LQD, treasuries, or such. There are even bond funds that end on a set year, so you can ladder them easily. Just depends on how much exposure you want to bonds, going up to 20-30% over time would be great as you get older or retire, to help protect you during a downturn. Having bonds durinng covid was great, as I sold some at a large gain and moved it into S&P500 when it was down 40%. So while they are not going to do as well as NVDA some good years, they won't likely fall as much in bad years. Good luck.
Need to buy puts on LQD tmrw
In Spring 2020 I was able to sell some of my bond etfs for a 30% gain, which I then put into the S&P500, which had dropped almost 40% at the time. So not only did I not lose due to Covid, I made a 60%+ increase in part of my savings. So that is why bonds are good to have in case the market does poorly one year. If you have enough money, you could save a smaller amount (5-10% of your assets) in SGOV, LQD, AGG, or such, and likely still have more than enough to weather any market drop. The key is that many people don;t have enough savings to risk losing 40% in one year due to a poor market year (2000, 2008, 2020, etc, rare but it happens.).
If you're talking about something like HYG/LQD, it's actually UP for the year which would not support your thesis here, just like everything else so far. I don't know why you're so dismissive when I just want to learn.
Options aren't magic. They’re just tools to slice risk and reward into separate components. If you sell a call, yeah, you get the premium — but you’re also capping your upside. And sometimes, one big move can erase 10 months of small gains. That’s the hidden danger. So for me, unless there’s a **clear edge** — like selling options where implied volatility is consistently overpriced vs actual movement — it’s not sustainable long-term. LQD is one example where implied vol tends to run higher than realized vol, so covered calls can work there. But that’s rare. And still not a guaranteed edge. Just my take — verticals are solid tools, but they’re not free lunch.
Solid. I keep bonds simple—mostly ETFs. Like 70% treasuries (BND or IEF), 30% corporate (LQD). Treasuries for safety, corps for a lil’ extra yield. All intermediate-term—don’t wanna get smoked by rate swings. You mix yours up more or keep it chill too?
Best to start with a few diversified ETF funds like S&P500, QQQ, AGG, LQD, etc, then as you get more money, you can further diversify into REITS, bonds, commodies, foreighn stock/bonds and such, mostly via ETFs or funds. If you then want to add specific companies to that mix, you might want to, but manypeople limit their individual stocks to only a small bit of their portfolio, like 1-2% per stock, with 70-90% in broad funds.
I have the same question as you. But I've been investing in IRAs for 40 years and I still don't have the answer. Supposedly bonds pay a fixed rate of around 2-5% depending on the risk you are willing to take, with US treasuries and investment grade corporate bonds like LQD pay 2%, and other high yield bonds pay 4-75 like JNK. But why not put that money into a CD ladder that expires in 1,3,5,10, 15 years? A financial planner told me to not get into any inflation protected fund for some reason I can't even remember. PM me and let's help each other.
Tips etf (SCHP) 30% High quality corp bond etf (LQD) 20% A small amount of total us market etf (VTI) 10% European market etf (VWO) 20% Emerging market etf (VEA) 10% Bitcoin etf (IBIT) 10% Possibly reallocate to specific sectors like consumer staples, semis, etc if they begin to look attractive. As we start to bottom, begin positioning back into the us market.
LQD (Corpo bonds) is also selling off.
Quick analysis points to long duration treasuries (TLT, EDV), corporate bond etfs (LQD VCIT) or gold etfs
If the Fed intervenes to suppress yields, long-term Treasuries could see price appreciation as rates decline (ETFs like TLT or interest-rate-hedged bond funds like AGIHX & BNDX). Pair with corporate bonds (LQD) to capture credit spreads… Or Inflation-Protected Assets if they print? Like TIPS (ETFs like TIP) and (GLD, DBB) and energy/agriculture stocks (XOM, MOS) as real-asset hedges?
About even. I moved my 401K to 50% cash at the start of the year and my brokerage into mostly GLD, some hedging puts and LQD. Nearly half of my income is paid in GOOG RSUs so that has been fun to watch drop, but it hasn't been as severe as I expected, honestly
I have been in the market for about 40 years, via 401K, then adding IRA Roth, and then a brokerage account. I never have used a real broker, mostly just low cost simple investment brokerages, like Fidelity, Schwab (and Scottrade and TD Ameritrade), and I just mostly used funds, now mostly index ETFs to invest my money, only after 20 years of saving did I start buying any single stocks or complex ETFs (REITS, dividend ETFs, etc). If you go 40-60% in VTI or IVV, IMH IJH, then about 10% in REITS, 20% in international, a small but gorwing amount in bonds/fixed income (10-20% and growing with your age, AGG, LQD, SGOV, etc). that will do fine and diversify you some. As you age, you can see if there are areas that you better want to add to, like Gold, Cryto (I mostly avoid it), and other alternatives. So far it was worked well for me, and got me near retirment early. Good luck. I have friends with fancy (expensive) brokers almost all of whom have done worse than I have, and I am not beating the S & P most years, but coming very close with much less volitility.
There is money to be made in intermediate term straddles, too. Check HYG and LQD. Also, of course, commodities.
For some reason psychologically I want SPY to shit, but it doesn't really affect me. I just want it to fucking shrivel up. I make money from TSLA, tlt, gsk, DIS shitting and I like my odds. Also hyg and LQD.
The simple and short answer, global credit crunch. I find the spike in yields (no, it's not only China dumping US bonds) worldwide telling, the blown up credit spreads or the swift decline in HYG, LQD show the same thing. It's the time markets start to show cracks in unexpected places or where no-one is looking yet. While retail is still worrying about the next buyable dip, trading desks and other leveraged parties are scrambling to force close their least damaging trades. Sell bonds, "keep stocks, they might turn around soon" (and not taking a loss on these positions). These yield spikes appear often before big sell-offs for good reasons. We've seen this play out in similar ways before big market failures in 2000, 2008 and 2020, things are about to get a lot uglier the coming weeks.
So a while back my stock app told me I should buy HYG straddles for a few months out, they expire 5/16 at 80. I'm regarded so I barely even know what the fuck it is, but I'm up quite a bit on them. So it told me again a few days ago to buy 7/18 77's. Up on those too. Same with some LQD bullshit I don't know what the fuck it is. I'm a poster boy for a WSB regard who just willy nilly buys shit and sometimes it works out, usually it doesn't.
Oh, I'm mostly cash but I'm up on my GSK straddles, my HYG straddles, my TSLS calls, my LQD straddles. I'm mostly waiting for the crash to buy back in, but I did buy some 2 month HYG straddles. I'm up like 6K today. But should be way more.
Lol so I have some LQD straddles for 6/20 I bought like a month ago. 109 straddles. Somehow the call side is up 104% and the put side is up 19%. Yeah.. pretty sure you're not normally going to make money on both sides of a straddle. This market may be fucked.
It wasn't the buying stocks that was the problem—it was the "and chill". The market signaled to get out of stocks (well, the index, at least) as early as July 2007. *Certainly* by November 2007. The stock market took over 5 years to recover to pre-GFC levels. Bonds (e.g., LQD) a) didn't drop all through 2008 like stocks did, and b) only took 2 *months* to recover to pre-GFC levels. It actually took stocks *8 years* to catch back up with bonds if you had switched in late summer 2007. Now, had you been paying attention, you could've rotated *back* to stocks in, say, summer of 2009, once it was clear the recovery was in full swing, and ridden that whole bull run. The 2018 correction? Avoidable. The 2020 covid dip? Avoidable. The 2022 bull market? Avoidable. You just have to watch some things other than the stock indices themselves. You have to watch the relative momentum compared to defensive assets like gold, consumer staples, and low volatility stocks. Will I panic if I have no job and need money to survive? Yeah, maybe, but *not* because of what the stock market is doing.
You can also consider paying a flat fee (typically $1-2000) for a one time financial plan, and then implement it yourself, at Fidelity, Schwab, Vanguard or such and then \\check on it every few years. I set up a plan for my wifes IRA and it has done great, just buying 5-20% each of a few ETFs, (IVV, small cap, med cap, international stocks etf and bond etf, dividend ETFS, AGG, LQD, REITS, and then added other ETFs as I found them. It has come very close to matching the S& P 500, but with less volatility and higher dividends. You can set that up and then only worry about it once a month or every 6 months. Make sure that your cash is parked in a high yield ETF or MMF, that means that any caash makes 4-5% right now.
LQD and JNK bonds going up during this downturn tells me one thing. Investors want guaranteed returns and Venture Capital like investments. The market is over leveraged on Mag 7 and AI. Investors want something new like Quantum computing or new AI markets.
It has its places, perhaps you could use it as a task list to dive deeper into rates at their relative sources. Extra work, I know but oh so worth it. Maybe it will let me post a distilled list you can research further. Best of luck! # Low-Risk Options (Short-Term & Liquid) * Treasury Bills (T-Bills) * Treasury Notes & Bonds * I Bonds * High-Yield Savings Accounts (HYSA) * Money Market Accounts (MMA) * Money Market Mutual Funds * Brokered CDs # Moderate-Risk Options (Yield + Some Growth) * Municipal Bonds * Corporate Bonds * Bond ETFs (e.g., BND, LQD) * Dividend-Paying Stocks & ETFs (e.g., VYM, SCHD) * Preferred Stocks # Higher-Risk, Long-Term Growth Options * REITs * Covered Call ETFs (e.g., JEPI, QYLD, XYLD) * TIPS (Treasury Inflation-Protected Securities) * Private Credit & Alternative Lending (e.g., Fundrise, Yieldstreet, LendingClub)
Tax-deferred: 85/15 with 60+% in US large-ish growth and tech specific ETFs, 10% in SCHD, and 15% in IXUS (nice little dividend). Probably need to rebalance the growth to dividends and non-US. 15% bonds in 5% LQD and 10% EDV. Will be looking to buy low on these for the foreseeable. Regular? Cash
bond funds. BIL and SGOV etc. or if you think we will get deflation then you could get into something like $LQD that has similar yield and some appreciation potential. small percent into gold and maybe silver.
BSV, SCHO, STIP, VCSH, and LQD. See my edit for why but idk anything so, you know, NFA.
Going to be hard to get intelligent conversations here. But here is my take on your question as well as some other consideration. During a market correction or drawdown, the performance of different asset classes varies based on the nature of the correction, interest rate environment, and economic backdrop. Here’s how some common options—utility ETFs, real estate ETFs, and bonds—typically behave and which provide better protection: 1. Utility ETFs Performance During Drawdowns: Utility ETFs (e.g., XLU - Utilities Select Sector SPDR) are considered defensive due to their stable cash flows and essential services (electricity, water, etc.). Advantages: Generally less volatile than the broader market. Dividend-paying, providing income during periods of uncertainty. Drawbacks: May still decline during corrections, especially if interest rates rise, as utilities are sensitive to bond yields. Effectiveness: Moderate protection. Utilities tend to outperform during corrections but may lag if the selloff is due to rising interest rates. 2. Real Estate ETFs Performance During Drawdowns: Real estate ETFs (e.g., VNQ - Vanguard Real Estate ETF) are less consistent in providing protection because their performance is tied to economic conditions and interest rates. Advantages: Real estate often serves as a hedge against inflation in a low-rate environment. Provides income through REIT dividends. Drawbacks: Sensitive to rising interest rates, as higher borrowing costs hurt real estate profits. Can underperform in recessions or economic downturns. Effectiveness: Low-to-moderate protection. Real estate ETFs may not perform well if the correction is driven by recession fears or rising rates. 3. Bonds Bonds are traditionally seen as a safe haven during market corrections, but their effectiveness depends on the type of bonds and the interest rate environment. Treasury Bonds: Long-Term Bonds (e.g., TLT - iShares 20+ Year Treasury Bond ETF): Provide strong protection during equity market selloffs, especially if rates fall as investors seek safety. Highly sensitive to interest rate changes. Short-Term Bonds (e.g., SHY - iShares 1-3 Year Treasury Bond ETF): Provide more stability during rate changes but offer lower returns. Good for preserving capital during volatile periods. Corporate Bonds: Investment-Grade Bonds (e.g., LQD - iShares Investment Grade Corporate Bond ETF): Provide moderate protection but can be affected by credit risk in severe downturns. High-Yield Bonds (e.g., HYG - iShares High Yield Corporate Bond ETF): Poor protection during corrections due to higher default risk. Effectiveness: Treasury bonds (particularly long-term) offer the best protection during corrections, especially when interest rates are declining. Conclusion: Best for Protection 1. Treasury Bonds (Long-Term): Historically the most reliable hedge during equity market corrections. Best choice if the correction coincides with falling interest rates or economic uncertainty. 2. Utility ETFs: Defensive but may be less effective if corrections are caused by rising rates. 3. Real Estate ETFs: Provide moderate protection but are vulnerable in rate-driven corrections or economic I did not include gold ETFs but it provides pretty good protection. I realize this is beyond the scope of your questions. Just a sidebar.
Sorry, you are just moving the goalposts to another fallacious argument. >“yeah well in both cases, LQD recovered nicely”. But that’s not really the point That's exactly the point. The purpose of bonds is to provide a stable long term income stream. Corporates did exactly that during those periods, with minimal credit loss. A four month excursion in prices do to panic increasing the corporate to treasury spread is something to be ridden out. >reasons for having an allocation to bonds is for portfolio stability which it most certainly produces. Given that bonds can be held to maturity, short term pricing swings are simply irrelevant. > opportunistically rebalance during periods of market panic. That's just wrong. Claiming that you are going to tactically trade out of your bonds into stocks is a game for a day trader, not for a long term investor. Nobody is going to be able to bottom tick a stock market bottoms; you have no way of knowing if that 20% drop you are buying into is about to turn into a 50% drop. Rebalancing is something to be done during periods of relative calm to keep your overall allocations at target levels. The point is that corporates give a yield premium that more than compensates for the credit risk.
Yeah, just not true when you look at the data. In 2008, LQD (iShares intermediate term investment grade corporate bond ETF) lost 14% from July 31st to October 31st. So -14% in three months. IEF (iShares intermediate term treasury ETF), during those same three months, lost 0.45%. During COVID, from March 6th to March 20th, LQD lost a staggering 20.5%. IEF lost 1.05%. Interestingly, LQD lost almost as much as SPY (23.05%). You might say “yeah well in both cases, LQD recovered nicely”. But that’s not really the point. The primary reasons for having an allocation to bonds is for portfolio stability (reducing volatility), and for the ability to opportunistically rebalance during periods of market panic. If your bond fund is down 20%, it is not reducing volatility and it’s not giving you the opportunity to rebalance into stocks when they’re down. Treasuries, depending on duration, will be somewhere between flat and up during these periods of market panic. They do reduce volatility, and they do give you the opportunity to use your bond allocation to buy stocks when they’re cheap. So losing the two most important characteristics of bonds and bond funds for 1% additional yield doesn’t really make any sense.
If I'm going to buy a hundred shares of something, I like to have a warm fuzzy feeling that the shares are going to increase in value. Makes sense, right? You wouldn't buy a stock blindly and just hope it goes up, and you sure wouldn't want it to go down. So don't lose sight of the underlying as you're selling CCs for that juicy premium. I 'get' the SPY/QQQ/IWM recommendations, but buying those is just betting on their historical tendency to rise. What if you looked at some ETF charts and found one or two that were currently going up? Momentum persists, so you buy one of those, and there's a decent chance it continues to go up for a while. Then sell Calls against that at whatever delta or profit target you like. And if the ETF price hits your sold strike, *let it go!* You made max profit on that trade. Re-buy that ETF or find a better one. Look for the XLx family of 'sector' ETFs. And there are some other sector ETFs you can find, like XHB, FXI (if you want to consider China a sector), LQD, IEF, etc.
Maybe stick to an ETF like LQD or FALN. If you desire higher returns, then sell covered calls against your shares.
I hold bond ETFs throughout the entire rate cycle as part of my overall investment strategy. As you can imagine, it hasn't worked out very well, but no massive losses or fund liquidations. So, this is a bad strategy, but it does provide some security and dividends. I don't hold individual bonds as an ETF allows me to spread the risk across many companies or countries/municipalities. US Treasuries are the sole exception as a US government default is unlikely and perhaps impossible. I also hold bank CDs. I hold bond ETFs like PZA LQD NMZ PICB HYG
On cash account I always set the contracts to lapse but not final decision if 0DTE. That way the broker doesn’t liquidate them in final 2 hours - and if they spike quickly sell them. If they expire worthless, doesn’t matter. The amount of times I’ve made a killing buying calls 1300-1400 market time, they drop and I set them to lapse so not LQD, then they rip and sell for profit. 😬
Let the data speak - backtest from 2002 to present - need to utilize the “oldest” dated bond ETF $LQD that gives comparable performance to $BND but not identical due to its structure more volatility Keep and open mind and do your research - 60/40 still performing well for its purpose - stable growth, low drawdown and volatility https://testfol.io/?d=eJytkFFPwjAUhf8KuQ88bdo1A2QJ8UE0MUFlagzEkOW6dqNa2q2rEEP23%2B1YFF4kPtCn9p57z3dut5BL%2FYZyigZXFURbqCwamzC0HCIIhsOhTwZ%2BcAEecMV%2B6pTQcFcfuHo7sUYJUY80xwNk74lQmUQrtIIoQ1lxD1KslpnUG4jI%2FpFkhpfO8k4ru5Rfzs9oKYXKk41QrGkOaO1BoY3NtBTahXzdgsJVk%2BOpO%2B04phsSas0rOxZrwVxO12TNp0Ma7pZDlfKbljLnaHYQK9IPblqz9t7YFY1UcJNyZR2YkHrhATOYu8i194vtk%2FPwZNCX59tDKN2B9pGm8yNqHMdH1Ek8PlTDP7a5x4pheap14rL81x%2B21A6dnQr8OH%2B4ml1ORrR7PfKDsz7tHcmxqL8BkKz27Q%3D%3D
They are quite similar. VEA+VWO = VXUS VTI + VXUS = VT I disagree with EMB and LQD. Corporate bonds may have higher yields, but theyre worse diversifiers. EDV (long dated US treasy bonds) have a much more advantageous negative correlation to the market in choppy times, benefitting a rebalancing approach. If youre not rebalancing annually or quarterly (and youre a long term buy and hold investor) you might as well ditch the bonds and go 100% equities. Sell VNQ, right now, put it in anything else. https://testfol.io/?d=eJytj0FLA0EMhf9LznNYLz3MWQpepIIIUsoSd7JrdJppM%2BkWWfa%2Fm7pIxYMnc0p4yfteJhhyecG8QcV9hThBNVRrExpBBAhAkn5MizpihnjTeAXA9Nay9BmNi0A0PVGADutrn8sZYnMd2l7p6DbPhJo%2F3ExLzixDe2ZJl91VMwc4FLW%2BZC6eZjuB4P6Cfrp%2F8AOWkard8sjJY9VvmpJ%2FgNLR%2BhfAuHsnXYyW3tVRji4dSDsS%2B3pj3gVIioOnncMV%2BXj3b0jjP5C7%2BRPtcYNc
Well there is a pretty big gap between SGOV and VTI/VOO in terms of risk here but generally I would say something like BND or LQD or JNK BND being the safest then LQD being safer and JNK being more risky but still less risky then VOO/VTI
So just to get some wording strait because your wording is confusing saying bonds are safer than ETFs or MF ETF or Mutual funds are funds that hold other things, they are as safe or risky as their holdings They can hold very safe things like short term treasuries (SGOV) , or they can hold risky things like small cap foreign stock (SCHC) So you cannot really say ETFs are more risky than bonds , SGOV an ETF will be safer then some long duration junk bond. That said with bonds there are sort of two axis points duration (generally length to maturity ) and credit risk The shorter the duration and lower the credit risk the safer the bond, the longer the duration or the higher credit risk the riskier the bond Meaning on one end we have short term treasuries , low duration , low credit risk On the other end you have long dated , higher credit risk junk rated bonds Now there is also everything "in between", you can buy a 30 year government bond, low credit risk but long duration or even a short term junk bond. So something in between might be LQD what invest in mid term corporate bonds (investment grade) ; then there is also JNK what invest in mid term junk bonds that is higher risk. Generally, both will still be "safer" then stocks However as u/wild_b_cat said an easy answer is just allocate a bit to both using broad market index funds For example, 60% VTI (Total USA stock ) / 40% BND (Total USA bond ) and adjust the allocation as you see fit. The higher the bonds allocation, the "safer" the portfolio
I did this a lot as a bond trader on the street, and I'd recommend much great caution. Borrow is unstable, transaction costs very high (unless you are talking about USTs), and you will be subject to margin most likely (as oppose to repo as professionals access). If you want to be short bonds, I'd just short bond ETFs - TLT, AGG, IEF, LQD, HYG etc.
LOL corridor is a range for the FF target rate whereas the floor was an absolute level that the Fed would defend. Ample reserves were put in place after 2008 and soon after the IOER facility was stood up. Through accounting entries, but more practically speaking thru purchases of government securities, namely treasuries and mbs. They unveiled a number of facilities in the midst of the covid collapse, most notably for the first time in history the Fed began purchasing corporate debt (through a slimy set up with blackrock using its LQD product)
I own some LQD for clients and it’s had a horrible 2-3 years. Recognizing its duration is around 8 years it’s definitely true that people are sitting on some unrealized losses. Whether that evens out is another question. LQD has a low turnover rate under 20% so maybe the fund didn’t lock those losses in, but the category average turnover is ~70%, so inside the funds many of those loses were realized, meaning it’s it’s not a timing game to wait and let’s the underlying bonds mature. If their advisor agreed to a mid-long duration portfolio when rates were historically low, that bad advising. If they were diversified in different durations with an equity component, they’re up more than 5.5% total return.
Tricky, depends on the time they will take to mature, what kind of bond they are, and other factors You can always get a bond ETF, $LQD is paying 5.4% currently
NXP for municipals LQD for corporates BLV for long term treasuries VWOB for emerging market bonds SHY for 1-3 year treasuries BIL if you want short term liquidity I lean more towards municipals to avoid income taxes but NXP is one of the better funds that has been consistent for decades.
Just buy VOO or SPY ETFs, as they are cheaper than mutual funds ad more flexible. Put $7000 (might be higher this year) into a Roth or regular IRA and then $7000 into a brokerage account. You don't need complex plan, just do like Warren says and put most into simple S&P 500 or total stock index ETF and some into bond ETF like AGG or LQD. At 52, there is no need to get fancy. I did that and am almost ready to retire with about 4 times what I started with 14 years ago, due to just letting it keep compounding.
I didn't realize that TFLO was a bond fund, so that's right. I have held HYG and LQD in the past and all of those dividends were unqualified as well.
Stick for bonds until stocks correct and be patient while you gain some experience learning about market cycles. Look at the bond market right now - it crashed during all of 2023 while stocks have reached new ath’s. Now that bonds are bidding at a discount while stocks are overvalued, and while retail flows into stocks are at new highs as well, fund managers and pensions are taking profits in stocks and loading up on bonds. Meaning smart money is dumping stocks to retail investors who are selling their bond allocations at the bottom while buying overvalued stocks chasing the fomo stock rally. The fed has raised rates and as of now they are pausing. This could change and this is the risk you need to be researching. Historically, stocks see a correction after the first rate cut. All the media and news touting bullish rally and rate cuts will send markets up another 20% whatever is complete nonsense. Look into bond etfs - many pay dividends monthly and bonds are discounted rn which financial networks are completely ignoring. Investment & junk grade. LQD, HYG, JNK, AGG, ANGL, SPHY, VCLT, BND, BNDX (emerging market bonds), etc. Given the current economic data, global conflicts, and worldwide elections in 2024, this is not the year to dump all your money into stocks, especially heading into the US presidential election with stocks absurdly overvalued and chipmakers going vertical because of government subsidies fueling competition for global dominance in semiconductors. Keep your cash in a money market fund for the next year and slowly begin accumulating bond etfs routinely based on your risk tolerance. Preserve capital. Wait for a crash/correction. Buy assets when they’re discounted not overvalued. Cheers!
I wish I knew. I’d do a year, the reason it’s lower is because it won’t be possible to get 5% once rates get lowered. I did it that way for that reason anyways In my equities I did a few things, I did VTI & LQD funds then I grabbed a handful of closed end funds because they have high dividends. Those aside, I’m actively picking individual stocks for the first time in a long time. I feel like the overall market is frothy and I want to find some value so I’m putting some money into individual stocks - it’s been a few years since I did this.. I grabbed some Pfizer when they dipped the other day for example.
I rolled puts for a year on LQD at the $100 strike until it bottomed out in '22 made the most consistent money of my trading career. Friends of mine that trade TLT opt for vertical spreads but all I can say about TLT is that their options chain consistently has more volume than LQD. LQD is Corporate bonds across all maturities and TLT is treasury bonds with remaining maturities of 20+ years.
Don't focus only on TLT. That's the far end of the yield curve and, so far, the yield curve is still inverted. True, that does mean there may be more upside potential in the far end as the curve rights itself, but that also means you miss out on potentially more volatile and faster action on the near end or in other sectors. Besides TLT, take a look at IEF, HYG, and LQD for other bond sectors that might be interesting. You could even throw in EMB for emerging market debt.
Look at bonds - bonds are currently rallying off the lows after a substantial bear run and people who were short bonds have closed their shorts and gone long bonds. Stock indexes have basically chopped sideways for 2 years after a decade-long bull market from the GR lows followed by insane QE which is now slowly being reeled in by QT. If you’re worried about stocks correcting, the bond market is looking much more appealing. AGG, HYG, LQD, JNK, VCLT, TLT, SPHY, ANGL And understand the relationship between bond yields and bond prices.
What tickers do I buy puts on regarding this debt bubble? IWM? HYG? LQD? Look for companies with high debt in a stock screener?
Note this is a very interesting question and there was a lot written about in during the covid crash of 2020 Bond ETFs like LQD seemingly did trade at a wide discount from the underlying bonds So the question was sort of like a chicken or an egg questions. Some people saw this as somewhat a failure of ETFs saying the price of an ETF can in fact diverge from the underlying assets Others pointed out the underlying assets were just so non liquid that in fact the ETF was pricing the assets right and the price of the underlying assets were wrong However the chaos really only happened for a few days then the price of the ETF and underlying assets did converge and the price difference really only happened for a short couple of days
The bull call will just be in tech/crypto (general risk on). The credit situation didn't suddenly get better with an inflation print. New housing starts didn't suddenly accelerate. LQD isn't suddenly gonna turn around. Banks haven't suddenly eased credit conditions. When I see chemical/intermediate backlog explode higher, I'll call bull run. We ain't there yet.
That would be a 2008-level event; so buy cheap OTM puts on "safe" products like LQD, short regional banks as we've seen how vulnerable they are already, and be long the dollar (UUP maybe?)
They package and sell those loans in Asset Backed Securities (ABS), can be bonds and ETFs with asset bonds packaged in them Here are a few bond ETFs that typically include asset-backed securities: 1. iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD): This ETF focuses on investment-grade corporate bonds, which may include asset-backed securities among its holdings. 2. iShares iBoxx $ High Yield Corporate Bond ETF (HYG): While primarily focusing on high-yield corporate bonds, HYG may also have exposure to high-yield asset-backed securities, which could include subprime auto ABS. 3. Invesco Senior Loan ETF (BKLN): This ETF invests in senior secured floating-rate bank loans, which may include collateralized loan obligations (CLOs), some of which contain auto loan ABS. 4. iShares iBoxx $ Investment Grade ex-Financials Corporate Bond ETF (LQDI): LQDI excludes financial sector bonds, but it may still hold non-financial asset-backed securities, including automotive ABS.
All is flows. Record treasury issuance takes money away from stocks and sucks it into bonds. Made worse by foreign dumping of treasuries. The rest of the world can’t hike fast enough to keep up with Jerome and resorts to FX manipulation to prevent total currency collapse. Student loans suck more money from young professional 401ks into thin air. LQD yields depress, and should halt blue chip levered buybacks. Commodities secular bull takes spec/vc money from tech. Every time somebody buys a new house and doesn’t pay all cash thats even more money going from retirement accounts to mortgage payments. Buyers can’t wait forever. All is flows. SPY 400 by EOY TLT 80
I have heard that there has been a general market shift away from stock and I to the bond market. I'm looking at a few ETF. AGG, BND, LQD. They all seem to follow the same pattern as TLT which is on everyone's shit list currently. Confused.
I think a person’s age is what % allocation they should have in bonds but I gather I’m more risk averse in that regard then most Reddit posters. So I’d advise 27% bonds for you and you are close but you are in 25% Corp bonds LQD and 8% emerging market bonds EMB. So even as a risk averse person who loves bonds i would say you are overweight bonds but also heavily overweight in your bond allocation to very specific niche areas (Corp & EM). I think both of those can be part of a bond allocation strategy but no reason think those should be such a huge share and the only bonds you have. Look into short/intermediate/long term treasuries, inflation protected treasuries, high yield corporate bonds, international (developed) bonds and maybe diversify a bit while lowering your allocation to bonds weight. If I were you I would probably be like 16% treasuries 11% corporate bonds.
My gut is in knots just trying to think about this. Tell me, how much time are you spending on Seeking Alpha? Try playing around with this [portfolio visualizer model](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=2004&firstMonth=1&endYear=2023&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=300000&annualOperation=3&annualAdjustment=0&inflationAdjusted=true&annualPercentage=10.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=true&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=IYR&allocation1_1=20&symbol2=QQQ&allocation2_1=20&symbol3=SPY&allocation3_1=20&symbol4=ARCC&allocation4_1=20&symbol5=LQD&allocation5_1=20). Not sure what it will let you do in terms of changes but it's my favorite portfolio modeling app. I roughed in near 20 years (ARCC set the limit on how far back I could go). On the surface, it looks like you may have survived (if you could have gotten through the 20naughts, but these are not the best assumptions. Anyway see what you can do with it
Have a look at LQD. IMHO, it's a good entry point right now, but I'm fingers crossed for the FED to stop rate hike now. Maybe another meeting and break for a long time.
I use an allocation strategy service (Allocate Smartly) to provide tactical asset allocation recommendations. They're based on the strategies that you choose/ combine into your own allocation strategy. Plus they do the calculations (since most of the strategies are based on rolling 180 day prices). Right now, my recommendations (which I don't always follow) are BWX, EFA, GLD, IEF, IWD and LQD. Pre-Covid I was consistently outpacing the market. Right now I'm actually keeping my money in various MMFs - earning 4.75 - 5%
SPY has ignored a major divergence on HYG and LQD, rising dollar, dropping copper all month, the fact that only a few major tech companies have been driving the pump, and so on. I don’t think 🌽 drilling is going to have any effect on this BS. The only thing that can turn this around is a hawkish JPOW tomorrow or the US defaulting.
HYG and LQD in a downtrend, DXY is up, Copper down on the month, continued rate hike odds increasing, market breadth is horrible, and so on and so forth. SPY has a 1.5%+ day. This better be a false break because of VIX contract expirations. There’s no way we’re actually trusting the government to get this deal done by Sunday or that Powell’s not going to come in super hawkish on Friday.
LQD and HYG not participating in the rebound is the only hope I have that this reverses tomorrow.
Dollar up, copper down, HYG and LQD breaking down… this market is being held up by thoughts and prayers.
That’s an interesting looking head and shoulders we got there on the month chart, plus downtrends on HYG and LQD, also a rhyming scheme for the month of May. These are all the things I’m telling myself to feel better about my massive bearish position I didn’t hedge at all.
Corporate bonds, especially unsecured will get you that. Etfs like HYG or LQD depending on what youre after.
You're not exactly wrong on anything that i can see, but your magnitudes of risk and reward are off in different directions and that makes it seem like an impossibly bad thing. Take SPSB for example. Short duration investment grade bonds. Paying 5.25% (30 day sec yield) at the time being. Low credit risk, low duration risk. Last year it was down a few percent, but rates jumped by the most in the shortest period of time since the early 70s so it's not like last year was a normal year. And despite that crazy anomalous year you would not be too worse for wear in SPSB. In fact, if we had a replay of that then you'd likely have a positive return because the dividends would likely paper over capital losses. You take it all the way to an extreme like a full blown credit freeze disaster and there is an implicit idea that in extreme events where this thing could be touched the fed might even step up and directly buy bonds to support markets in acute disasters (COVID and buying LQD and HYG i believe) which means even less implied volatility. So low vol, 5.25% yield, and if we go to a grind it out recession this sort of fixed income product returning a fixed rate will perform better than a sideways chop in equities or sitting in cash waiting for the waves to die down. It's getting paid to wait essentially. And as others have come to the same conclusion, demand for short investment grade has increased and rates bottomed, the fund is holding those bonds with losses that then are approaching maturity, and thus erasing their capital losses daily as they approach that date. So you then see a gain in the shares from peak rate speculation in Oct. That ~2% cap gain feels good for a holding that is going to pay 5.25% going forward with little volitility in the meantime. Market crashes>implied safety Market goes down slowly>pays 5.25 Market chops sideways>pays 5.25 Market goes up 5.25>wash w/o vol Market goes up more than 5.25>approaching even risk/reward Market moons>well, underperform maybe but many investors don't care to miss out on this top tier return for all of the other possible outcomes
If his intention was to say it's correlated movement, he would be correct. I just checked right now, a beta of almost 90% between OTR CDX IG and LQD.
I'm not going to miss the LQD trade this time around. I'm going to lose a lot of money, but I'm not going to miss it again
[The real hint was Cramer saying it was it was "overly punished" a month ago a ~$320](https://v.redd.it/w8d2fa35kwma1) ... Loaded up on a bunch of LQD puts 3-6months out for $0.01-0.03.. just in case we have a repeat of history, a few hundred bucks could cover a real nightmare.
Just bought some cheap OTM puts on LQD. If banks really kaboomed here no way LQD trades at 100
LQD been weak all day. Vix been high. This drop was obvious
Question for hardy, what do you think about the LQD put spread that was mentioned Friday. Huge positions from $105 strik down to $100? Is the thesis based on powel's talk causing a big move down?
That's what Webull is showing. LQD and HYG are always like this. Could be closing contracts.
LQD (investment grade corporate bonds) always has more puts than calls. Today, 462,000 puts vs 105 calls lol.
That's exactly why I like it. For the record, I am doing the following: \- Selling cash secured puts in TLT (and other bond funds LQD, SPIB, and SHY). I sell deltas around 10-15, usually 40-55 days out. \- Most don't fill. If they do, I have the cash. I set DRIP on as the yields are great. \- I sell an out of the money call, usually shorter dated, to catch extra income. I do sometimes roll if it moves up quick. It's half art, half science, but so far getting me a nice monthly income, and I have little worry that bonds will do poorly over time. I'm getting paid to wait and eventually the economy will have an issue and rates will fall along with stocks. I'll then sell the bonds and reallocate to equities.
I am 100% stocks (ETFs and Index) in both retirement and non retirement accounts as I don’t understand bonds yields. I look up BND, VTEB, LQD and see them in red on their 5y charts and I am like “No way, Jose, I am adding them to my portfolio” 😊
Those dividend payments are going up over time as old bonds expire and new bonds are purchased. LQD has a forward yield of about 5%, but it's investment grade corporate bonds which are riskier than treasuries.
HYG, LQD, JNK all up 0.2% today while SPY 1%. Big ooof
If you think stocks are expensive and will likely have low future returns, another way generate returns is through corporate bonds, which are safer and also trade based on the risk free rate. If the risk free rate is high, corporate bond returns also need to be high. Right now, stocks seem to be pricing in a soft landing and probably a reduction in risk free rate, but corporate bonds aren't there yet, they are still priced based on 4%+ risk free. If you want to be safe, LQD is the benchmark, if you want higher returns, ANGL, if you want leverage because you think inflation has definitely peaked and risk free will definitely fall, PDI.
IMO - SCHD is a good choice - VOOG is meh, I'm not a big fan of growth stocks. large growth stocks tend to be mediocre performers over the long-term. professionals and amateur retail investors both tend to over-pay pretty dramatically for growth stocks relative to what you get long-term. I'm old enough to (barely) remember the dot com bubble and when the S&P 500 went flat from 2000-2012 so I've seen the downside risk of large growth stocks. - RWL is another good choice. Never seen anyone here mention this ETF but I like the strategy because it avoids too much concentration in the usual Apple-Amazon-Microsoft-Tesla stocks. this ETF sort of represents the economy more than representing the stock market. - ANGL is 'fallen angel' bonds, companies whose bonds have been recently reduced in their credit rating. these are the highest bracket of 'junk bonds' which is why the yield is so high. this is an OK option for what it is, but it's not representative of the overall bond market. junk bonds also tend to move more like stocks, so this is a good one for income but will not add much stability. for that you'd want short-term bonds or a diversified, investment grade bond ETF like BND, LQD, FBND, TOTL or CGCP - you're right on consumer staples and downturns at least historically, and this sector also tends to perform well over the long-haul. but consumer staples is also verging on overvalued so returns might be disappointing over the next 5-10-15 years. IYK has a p/e ratio of 19/20 and it's very concentrated with 16% in Tesla (!) and 15% in P&G with several other stocks at 11% of the portfolio. - you need international holdings and maybe US smaller companies as well.
AGG is down 4.5+ million usd presently. All my bonds are down and LQD is down the most.
The credit spreads on corporate debt (HYG yield/LQD yield) seem to be widening compared to 2022 by my tabulation.
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I assume by cash ETF you are talking about some short term bond ETF like SGOV or BIL? Both of these examples hold short dated treasuries what are super liquid and I guess if short term treasuries ever were not liquid there would be major issues going on all over the markets and economy . There has been some concerns over corporate bond ETFs because lots of corporate debt doesn't trade that often and if it doesn't trade often its hard to price. If there is some corporate bond maturing in 10 years, and the last time anyone bought or sold it was 3 months ago how do you price it? Do you just price it at the last price it sold for even though its 3 months old? Do you try to estimate it based off changes in time/interest rates? Do you find some similar bond that has traded more recently and use that price? In the march 2020 covid panic there is a lot of debate over this, for example LQD ETF that only holds corporate debt, traded at a full 5% discount to its official NAV. One side says this can happen and it ran into a liquidity crisis and if an investor wanted to get out they had to take a 5% discount. Well you could also make a good argument this didn't happen, the official calculated NAV was just wrong because of the issues I mentioned above, the NAV was simply wrong and the price of the ETF was just calculating it correctly
Treasury I series bonds only until you start hitting the $10k/year cap on maximum allocation, so that should keep you busy for a few years. I series offers best risk-reward as it's full faith and credit plus a fixed rate (currently 0.4%) plus an inflation-linked rate that is adjusted every six months. It's paying 6.89% at the moment, compounded semi-annually, although that rate will fall at the start of May if inflation continues to come down. I series has paid between 6.48-10.2% p/a since 1999—it's not possible to match that return without taking much more risk. No state taxes. No federal taxes if you cash the bond to pay for higher education, either your own student debt from college, if any, or your kid's college tuition in future. Otherwise, you can elect to defer taxes on the income until you cash the bond or, if the bond is in your kid's name, recognize their income and count it towards their annual personal income tax exemption. Minimum holding period is 1 year; maximum 30 years. Penalty of 3 months interest if cashed within 5 years. Then you can think about adding exposure to Treasuries (GOVT), international government bonds (IGOV), EM government bonds, and later investment grade (LQD) and high-yield (HYG) US corporate debt. It's better for most people to use ETFs rather than trying to pick individual bonds.
Ideally you would fill more of your account with SPY or similar so that you don't need as much financing through futures. Equity index futures will have an embedded financing rate that's higher than the risk free rate, and you are paying that spread on the amount you keep in cash. With LQD, you would be increasing your beta since it holds corporate bonds and has some exposure to credit spreads, correlated with the stock market. That beta would help make up for the lost spread in expected returns, but you are paying for it in risk instead. How much you leave in your sweep account depends on how often you want to manage it. Cash sweep accounts at most brokers don't have competitive interest rates, especially now that rates are well above zero again, but if you keep too little, you will have to keep checking on it and adjusting. Not a big risk financially, assuming the rest of your portfolio is liquid and safe enough, just a hassle. Rather than dollar exposures like 200/60, I prefer to view my portfolio in terms of (A) beta to the stock market plus (B) duration exposure to the level of the yield curve. Plus potentially more risk factors like idiosyncratic single stock risk, alternatives, etc. if they are significant. Beta is useful because assets other than stocks have beta, and some types of stocks have more beta than others. Duration is useful because some types of bonds have way more duration than others. It doesn't make sense to equate 2 year notes with 30 year bonds.
Help me understand a few things about managing an SP500 futures account. Let's say SPX is at 4000 and I have $100K. I want 2X exposure. I buy one ES contract at $4000. ($4000 * 50 = $200K) My account now has $200K in exposure, and a NLV of $100K. Effectively I've hit desired exposure. However, I'm now left with about $60K in excess liquidity, after margin requirements. What should I do with it? Leave it as cash? Throw most/all of it into a corporate bond ETF (like LQD) and try to beat the financing cost? If the latter, how much cash buffer should I retain to avoid liquidation in the event my excess liquidity goes negative outside trading hours? Also when calculating the leverage, would it still be 2X SP500, or have I effectively changed it to a 2.6X 75/25 portfolio, since my net exposure is $200K SP500 and $60K bonds?
Robinhood pays 3.75 on cash, I also have a vanguard money market fund paying 3.6. I'm a trader though, so I like the liquidity. I'm sure the big money is fine being locked in longer term bonds paying more. That money simply isn't going to rush back into the market. Bond etfs aren't really for me, but I will sometimes trade options on TLT. I think BND and LQD are okay.
Could consider a barbell treasury portfolio for now like SHY (1-3 yr) and TLT (20+ yr). Then if recession comes next year, could look to add more corporates like LQD at even high yield like HYG.