SHY
iShares 1-3 Year Treasury Bond ETF
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Best Treasury bond ETF to buy right before the Fed slashes rates from 4.5% to 0%? Why isn't TLT performance inverted vs SHY this year?
If I'm going to hold a lot of cash for a few months, is keeping it in a T bill ETF like BIL a good idea?
Beating the current market by automatically DCAing into TSLA when it dips. Thoughts on this strategy
Winner or loser? Only time will tell. 2021 ends. The figure below shows the annual return rate of investors who are holding the asset all year without trading. If you have adopted an active trading strategy, but the annual return is lower than the benchmark, think about what went wrong?
Winner or loser? Only time will tell. 2021 ends. The figure below shows the annual return rate of investors who are holding the asset all year without trading. If you have adopted an active trading strategy, but the annual return is lower than the benchmark, think about what went wrong?
Good ETF to buy that is stable & safe, and offers as much interest as possible?
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If you want the money to sit for 5 years something like VGSH or SHY are pretty good, with durations a little less than 5 years. If you want something even shorter - less interest rate risk - ultrashort funds like VUSB or BIL are a good place to slightly beat out a money market fund by taking the slightest more risk. You won’t be able to beat a higher risk approach (if it even works) but you’re unlikely lose any money using short term just government bond funds.
It's quite new. It's similar to but much smaller and less liquid than SHY, which is a 1-3 year Treasury ETF by ishares. UTWO has the huge advantage right now of having started recently, when yields were much higher, so its near term yield is significantly better. I've been in SGOV lately which is a 1-3 month Treasury ETF since the Fed is still raising short-term rates. But UTWO looks attractive to me. Thanks for bringing it up.
You want short term bonds to go up (rates down). If you were going to do it with etfs, you’d want to go long SHY/short IEF (SHY is the purest exposure to 2yr US T-notes). But, you’d need to lock up a shitload of cash to make any kind of decent gains, because a “big” move in a bond etf like SHY is only a fraction of a percent. There would also be fees for shorting IEF, on top of the fact that you would have pay the dividends to whoever loaned you the shares. So I really wouldn’t recommend it. If you want to play the spread, futures is the way to go. I recommend going to the CME Group website and learning about interest rate futures, and get a broker that lets you trade them if you don’t already have one. That said, if you’re not ready for that, you can’t really go wrong with just putting your money in any bond etf right now. TLT (20+ yr bonds) and IEF should have some nice gains over the next 6-12 months once everyone is convinced we’re in a recession. I’m in TLT and want to add more, but it just had a nice run so I’m waiting for it to cool off.
The volatility and yield risk exposure is directly related to duration of the fund. These are critical considerations in allocation decisions to most people. Investors seeking safe allocation will invest in low duration, high credit funds like SHY. Investors seeking exposure to interest rate risk factor will invest in high duration funds such as ZROZ, EDV, TLT. But they will be exposed to higher volatility and drawdowns.
Bond duration matters all the time. Active funds will go short or long duration when they feel they can take advantage of the yield curve. They generally have a target duration they need to maintain by prospectus, unless they are unconstrained. Passive funds will typically maintain the duration of their stated benchmark. Longer duration will go down more when rates rise, but go up more when rates fall. ZROZ is a good proxy for ultra long duration because they are Zero Coupon bonds. Shorter duration will go down less when rates rise, but also go up less when rates fall. SHY is a decent proxy as it targets 2 years
Take a look at $SHY, bond yields didn’t move an inch after the FOMC minutes; this was either priced in or the market doesn’t care.
1. Could you please elaborate why div stocks such as SCHD are better than total market (ex. VTI) at present? Is it because inflation would eat into earnings? When would be a good exit point? 2. You seem to indicate SCHD is good for fixed income portfolio as well. Currently I am 75/25 stock/bonds and am looking for better bond investment than my SHY position (down 6 % over last 2 years). Thanks!
Does anyone know why the iShares short-term bond ETFs like $SHV and $SHY did not have any distributions during 2021? Eg. [https://www.nasdaq.com/market-activity/funds-and-etfs/shv/dividend-history](https://www.nasdaq.com/market-activity/funds-and-etfs/shv/dividend-history). Couldn't find any info on this.
Does anyone know why the iShares short-term bond ETFs like $SHV and $SHY did not have any distributions during 2021? Eg. [https://www.nasdaq.com/market-activity/funds-and-etfs/shv/dividend-history](https://www.nasdaq.com/market-activity/funds-and-etfs/shv/dividend-history). Couldn't find any info on this.
Total Market, International and then maybe a Div portfolio if you taxable(SCHD) AND YOU ARE GOOD. But not all in the same account. I have SCHD/SHY in taxable loading that baby up with options and buying back using freemiums.
>even short duration like SHY lost value this year. Eh? Just looking at the ticker price for bond etf's without taking into account their dividends is a very iffy way of deciding if it "lost value".
yep this guy is right. even short duration like SHY lost value this year. Safest is ibond then bond from TD, then gov bond ETF with short duration which should looks like Money Market do
Long bond funds like SHY, TLY, HYG with leverage is going to be an amazing trade as the extreme tightening cycle ends. Volatility on these instruments is intentionally low, so high leverage is possible.
Usually retail people would buy TLT, GOVT, SHY, etc. type ETFs not the actual bonds individually The yield is very safe, but inflation is theoretically a risk of course Yields are pretty high, seems safer than stocks right now
DONT BE SHY, SHOW YOURSELF you mf!
Many of them monthly. Don't forget HYG. I'm waiting for even a whiff of a Fed pivot. All of these bond tickers are low volatility. SHY especially.
I've seen people recommend SHV and SHY on other subs, but I haven't tried them yet
The penalty is the *greater* of the ERV of 6 months' interest, but not both combined. But yes, your calculation of the ERV is correct. Normally, fixed income assets go *down* in value when interest rates go up. Imagine if you buy a 4% 3-year CD today, and tomorrow rates go up to 5%. If there were a secondary market, the new issue CD would be worth more because it pays 1% more per year for the next 3 years. The ERV is a way for Capital One to recover that difference in value if you choose to dump your CD early. They have a good way to calculate it on this page: https://www.capitalone.com/bank/disclosures/online-banking/certificates-deposit/?v=1666051200092 That said, if you plan on needing this money sooner than 5 years, you should probably just buy a shorter-duration CD or another fixed-income vehicle with a secondary market (e.g. an ETF that holds bonds; to learn more you could look up symbols like SHY or IEF).
Easiest way is to buy an etf that hold these bonds. SGOV, VUSB, SHY, etc.
They do but bonds are down 15% YTD, worst start to the bond market in 50+ years. They're not activity managed so AGG is smashed when they could have used SHY but that's the challenge with passive management.
Honestly, most people don't understand bonds. Those that understand it even a little might have known to get out of stocks, but likely were either confused enough to buy bonds (bonds go down less than stocks, amirite??), or to buy a bond etf (thats bonds, right? no?). Very few people would feel comfortable shorting an asset class they don't understand very well. I know for a fact I sat on the sidelines even though I've been trying to work out for a few years exactly how the crash will occur. I was smart enough to get out of stocks, i put a small portion into bonds, but recognized bonds would likely get destroyed by rising rates, but I didn't even know there WERE good ways to short bonds. Now I know that buying puts on TLT or SHY or just shorting that stuff directly were options available to me but I really didn't know and anyone I asked had no answers for me, so I sat mostly in cash despite hte fact that shorting mid term bonds is the play I really wanted.
The chain on TLT seems a little wild, I haven't been watching for that long though. In contrast, SHY seems thin and dry as bones.
Smart. SHY calls will print massively if Jerome even blinks
Just short TLT or SHY shares don't overthink it. You're very late to the trade though
Guys when stuff starts breaking remember, puts will be fukd by the Fed and government panicking. Gotta get SHY calls
If your puts aren't secured by cash, then they aren't cash secured puts anymore, and you are vulnerable to the risk of whatever you're using as collateral. STIP is down 8.5% and SHY is down 5% YTD - if your puts get assigned, you lose big. There are less capital intensive strategies that allow you to write OTM puts, e.g. buying long-term ITM puts (sort of the bearish version of PMCC), but this carries risk.
SHY paying almost 4% yeild on 1-3 year treasury ETF. Relatively low rate risk at this point. Also like lithium miners, home builders component companies (some extremely low multiples), and tech security.
I think your aversion to treasuries comes from a misunderstanding of how they work. Short term treasuries are just about the last thing, even after cash, that you should be worried about holding. On vanguard, they can be bought and sold at will, and at the maturity dates you're talking about (18 months max), we're talking *maybe* swings of like 1-2 bucks per $1k treasury bill on average in the secondary market. Unlike savings bonds, they have full liquidity, but it is generally best to keep them until maturity so you can get their full value and so any market fluctuations that *do* happen to occur are essentially meaningless (since you'll be getting the full face value and any coupons by the maturity date). What you need to understand about the ETFs is when you buy the ETF, it does not mature like a bond. It simply is a fund that *holds* a lot of maturing bonds, and the price of that ETF can fluctuate as wildly as the market wants it to (but you can generally rely on it to fluctuate less the shorter term the held bonds are). Also, it bears mentioning that the comparable ETF you'd be looking at is SHY, not say TLT or VGLT -- again, due to the longer term treasuries they hold, those are significantly more volatile. But even SHY has the capacity to be more volatile, and won't guarantee any sort of "face value" on your money, when compared with say a 6 month or 1 year T bill. This is why I generally just go with the real thing. As far as money markets, that's basically going to be more or less equivalent to either a savings account or a 1 month bill. When you mentioned your time frame, you said "within" 18 months, so I don't know what that means exactly, since technically that *could* mean anywhere from 1 day to 18 months. But here's how you make the decision: If you need full access to your money all the time with absolutely zero volatility --> savings account. If you need full access to your money all the time and ok with a teeny tiny amount of volatility --> treasuries with maturity dates no longer than 18mo from now.
Didn't miss it I banked some TLT and SHY puts
Your basic understanding is correct, but some of the finner details are misunderstood. Two main things to emphasize: * **Leverage is not free, you always pay interest to borrow** * **Leverage on bonds does not increase yield (significantly or at all), it increases interest rate risk.** First let's definite the different types of leverage **Margin Loans** This is an old school cash loan and possibly the absolute *worst* way to get leverage. Usually a broker will give you 2:1 the value of your account in buying power. Meaning that for every $100 you can buy up to $300 of stocks. However, you need to maintain at least that much leverage or you will get **margin called**. In a margin call, you have a few days to bring your account back to 2:1 leverage, if not, the broker will sell all your investments to pay itself. If you lose too much money too quickly, they won't warn you, they will liquidate your account. Other key points that make it the worst type of margin: * If you lose money, your leverage exposure increases. * The big brokers will charge 10% yearly interest on any loan. Meaning that if you only make 8% per year, you are actually losing 2% in value per yesr in average. * See [VTI](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=50.0&debtAmount=0&debtInterest=10.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=VTI&allocation1_1=100) vs [1.5x VTI](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=1&leverageRatio=50&debtAmount=0&debtInterest=10.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=VTI&allocation1_1=100? * Interactive Brokers is the only broker to offer low margin interest rate. **LETFs** These are leveraged ETFS that borrow money for you to create a 1.5x, 2x, or 3x exposure to another index ETF. * You can only lose whatever you put into the these funds and no risk of margin calls. * Therefore you technically lose leverage as you lose money * They are subject to volatility drag. If a 1x drops 20%, it needs to move up 25% to be back to it's high. A 3x of the same index however would lose roughly 60% drop (you are at 40% now), the 25% X3 up movement would only bring you up 75%. This adds up over time and eats up gains specially fast in volatile environment lik Emerging Markets. * Usually carry a 0.1% expense ratio. * However the **real cost** includes paying interest rate for the extra exposure borrowed, this is usually a special rate, but for simplicity it is close to the short duration interest rate * Math example 3x ETF cost = .1 + interest x 2 = .1 + 3.25 x 2 = 7.5% * Meaning that for an average 8% return in the S&P 500, this year you would only get 1% more gain in an LETF. A flat will give you negative returns. * Example of [3x ETF UPRO](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=50.0&debtAmount=0&debtInterest=10.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=VTI&allocation1_1=300&symbol2=SHY&allocation2_1=-200&symbol3=UPRO&allocation3_2=100) * For bonds the extra interest rate and the interest rate you pay essentially cancel out completely plus negative volatility drag, so TMF only gives you ~3x exposure to interest rate risk, not extra yield. * TNX 1.5x US/Bonds (60/40) might be up your alley, but all I mentioned still applies. **Options** * Synthetic leverage, basically options allow you to control a lot of share using a fraction of the money plus a premium you pay. * These require their own posts to explain in detail because basically you can create your own leverage ratio usually anywhere from 2x to 20x. * Leverage decreases as price deceases. * Many factors including liquidity and interest rates affect the premium price you pay and math gets complex. * If you choose an option deep in the money and further out in time, you can get a good 2x to 3x leverage on a stock at a decent 2.5-3.5% interest rate on a more liquid ETF( SPY, Vanguard ETFs, Ishares ETFs. * The option contracts are set, so usually you need a minimum amount to buy option leverage in chunks. So each option contract with safe leverage is currently on the realm of $3k to $20k, so not so flexible for small accounts. * Options do not give you dividends, so Bond options only give expore to interest rate risk. **Futures** What I mentioned for options mostly applies to futures too, but the math is different for leverage as it depends on your broker margin and your reserve cash. Moreover they have a more linear increase and decrease in price, leverage: * Decreases increases your leverage and makes you open to margin calls. * Option contracts have a set price and it is usually the cheapest way to get leverage. * They also do not yield dividends. **Interest Rate Risk (for Bonds)** As you see, all leverage forms cancel out the extra bond yields and only expose you to interest rate risk, but bonds have an extra method of leveraging. You see 15 year bonds have roughly 3x the interest rate risk exposure of 5 year bond. It will only give you a modestly higher interest rate yield, not a 3x yield, but again nothing else does. So if you are not using 20+ year Treasuries already, you should just get longer terms bonds instead of even contemplating something like TMF.
Both are unfortunately untradable. BIL is just incredibly illiquid and SHY is so UNDER levered it requires far too much capital for a reasonable position. I've been through all the ETFs I can find and only TBT and to a lesser extent TLT came close to being what I would consider tradable either through options or stock
QQQ Put LEAPS + SHY Call LEAPS Np.
Barbell strategy in the Oil&Gas sector with $NOG as the high risk/high reward play and $OVV and $MTDR low risk/value (50%) You can balance that with 20% allocation in short term duration treasury bonds $SHY ( after the next meeting of the FED) just in case the worst happens (markets crash followed by an economic depression) 20% in precious metals $PHYS or a physical Platinum ETF just in case the proxy war between NATO and Russia gets totally out of control 10% in $FRO. A sure bet if the EU effectively sanctions Russian oil.
It’s a good time to be SHY, let me TLT you a story
This is the start of currency wars. US vs the world and the end state is we enter interest rates that are super sky high as no one wins WHILE countries end up defaulting on energy. Bond market is about to tank insanely hard. What this all means for the stock market is this: We are entering deflationary foreign currency wars. Consumers will have less money as money will be all around harder to get and jobs will pay less, and price stability will be gone, which means consumer goods will be going up and down. This is DEFINITELY the kind of **financial earthquake** that is coming. US Corporations that take foreign currencies and operate in foreign countries are already losing upwards of 5-15% from currency translation losses. I may slowly accumulate BOND ETFS, the 2year (SHY), the 10year (IEF) and the 20Year (TLT) if you wanna do iShares bonds, or whatever equivalent floats your boat. You can sell all the rips and this is going to be more sustainable IMO than DCA'ing into the stock market, but this is total crazy world we've entered.
Yes and no.. certainly long bonds can move with policy tightening but central banks only control the short end of the curve (in the US fed funds rate). The longer end of the yield curve usually reflects growth, inflation, etc. So there’s a lot more that impacts the curve than just stating a 40 year bond goes down as rates rise from central bank policy. For instance, if you see a risk off environment and investors flock to safety you could see that demand drive yields down on those longer dated maturities. In the US, I’d look at a curve flattening trade. Maybe go long longer dated treasuries (TLT) and short something like SHY to play the curve. If the fed pushes the economy over the ledge long bonds are actually destined to rally really hard.
It relates to duration risk, i.e. the risk associated with the sensitivity of a bond's price to a one percent change in interest rates. The higher the duration number, the more sensitive your bond investment will be to changes in interest rates. Maturity of the underlying instruments is one of the factors that determine the duration. SGOV is all less than 3 months, so it has a small duration. SHV is longer and SHY is longer still giving them greater durations and greater price sensitivity to rising interest rates.
SHY has super low IV when Jpow indicates pivots weeklies will be a 10 bagger minimum
The SHY ETF is comprised of treasuries dated 1 to 3 years. It currently has a yield of 4.24% (of course). If you hold this for more than 3 years, if yields drop again and the fund buys new treasuries, does the yield drop despite that you have a low cost basis?
The iShares 1-3 Year Treasury Bond ETF, SHY, seeks to track the investment results of an index composed of U.S. Treasury bonds with remaining maturities between one and three years.
You wont buy bonds with a small portfolio its basicly uselss getting 1% - 4% yeild, so most people just opt for bond ETF like what vanguard is offering or SHY a 1 - 3 year us bond etf but everything is shitting the bed so you would lose anyway
Remember this: The ultimate Jerome pivot play is SHY calls. When the economy eats shit and he chickens out people are going to buy 2y down to like 2.5%.
should yolo entire port into SHY itm put, did a calculation, a 0.2% drop would be 33% profit it’s literally fkin free money
short SHY 2 days before FOMC is literally free money
You could buy an etf that owns short term treasury like SHY
Almost 3.8% on that 2y! Jesus. SHY leaps once shit gets gnarly will pay
Yeah something weird has been going on with long maturity bonds the last couple of days. You’d think with recession so close in the minds of traders they’d keep driving up the yields for short duration bonds while the price of long maturity bonds rises. I’ve been playing SHY puts for the short maturity yields.
Anything somewhat short term I would stay out of the market, even bonds may be too risky to buy unless its short term where you are taking on less interest rate risk. You can use HYSA with FDIC insurance anywhere between 1.7-2% should be fine, thats probably your safest bet. I would look at tbills as well. Lastly there is SGOV/BIL that are 1-3 month Tbill etfs , SGOV is preferable due to lower expense ratio. You can look at GBIL/SHV for slightly longer duration. To me anything longer duration is taking a fair amount of interest rate risk. For example short term treasuries like SHY/VGSH are still negative for the year 3+ % in the red.
sell OTM SHY options that shit doesnt move
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Yes it’s very foolish to pay off your mortgage at 2.5%. Just put it into $SHY the extra payments, not hard.
>SHY (1) direct holding rather than indirect through a fund manager. (2) No state taxes when direct through treasury. (3) SHY would target a constant maturity around 2 years (reinvesting bonds as they expire), whereas you can just hold a single 3 yr bond all the way to maturity.
Ahh yes, the antiquated website I had the pleasure of dealing with not too long ago. How would SHY, for example, differ from purchasing through treasurydirect?
Treasuries aren't subject to state tax. Is an ETF like SHY?
shorts on SHY and TLT about to print lol
Ah, that's a fair clarification. NAV and price aren't exactly the same, although for a huge ETF holding liquid securities like SHY they should be very close (recently within 0.03%). And to clarify my post, I said NAV was down 0.67% when I was really looking at price.
Effective duration of SHY appears to be 1.86, so a bit shorter than your 2 year reference. >The etf went up 4 cents which equates to 0.6%. I'm not understanding this part. The change in price for a bond ETF will often reflect a change in interest rates, and a corresponding change in the value of the bonds inside the ETF. It appears you took the change in NAV over a month and then annualized it to include in your yield calculation. But that change in NAV is more closely tied to the change in the value of the bonds, and doesn't directly reflect the yield generated from those bonds. For example, this month the NAV is down 0.67%. If it ends the month at that level, that would represent an annualized loss of 8%. But that doesn't mean the fund's distribution yield is negative. It just means the value of the bonds went down this month.
I do a similar thing, as I also like having some cash outside my emergency funds. What I use is: * 50% High yield saving account * 32.5% Vanguard 1-3 year treasury ETF (SHY) * 10% Vanguard short term investment grade bond ETF (VCSH) * 5% Vanguard total stock market ETF (VTI) * 2.5% Gold ETF Since 2005, this has given me an annualised return of 2.3%, with the best year returning 6% and the worst year with a loss of -2%. Not investing advice.
Personally I am moving on to putting half of my emergency fund into SHY and VTIP 50/50. The 4 **week** Treasury bill yield is at roughly 2% right now. While there is still some interest rate risk, they will make up for it over the years with increased yield and will likely end up with a 2% or higher rate of return if I hold them for their average maturity rate. A bond fund does have a bit of risk if you think you'll need to pull out the money before the fund's average bond maturity, but it is slightly more liquid and the risk is still fairly low for a short duration fund. Alternatively very liquid 4 week treasuries are easily going to outpace HYSA by the next interest rate hike and already do outpace the absolute vast majority of savings accounts. Anyone still recommending HYSA and not looking into Treasury Bills is not paying attention and likely just parroting what they read online.
You can't determine the yield in advance, not with most bond ETFs. If you want a defined yield you need to buy actual bonds and hold them to maturity, not ETFs. When you buy a bond ETF, you will receive the collective yield of the component bonds, but that will change over time as the composition of the ETF changes. Bond ETFs (like SHY, for example) are constantly rotating their holdings as older bonds mature and are replaced with new offerings. This means the yield is constantly changing, though it will change more rapidly in ETFs with more turnover. All ETFs charge some administrative expenses, which gets taken out of their cash flow. This is reported as the 'expense ratio', which is expressed as a percentage of the fund's value. For example, if the expense ratio is 0.10%, then for every $1000 you invest in the bond fund, about $1 will go to pay the administrators of the fund. Note that when an ETF reports its yield & return, that data is *after* the expense ratio is factored in, so you never directly pay these expenses.
If you switch that 50% cash for 45% SHV and 5% SHY you'll almost always, more than 95% of the time, see a positive (and very small, maybe almost 2% per year, but that's 2% closer to keeping up with inflation) return on that 50% within 2 months. Any losses should be very small (less than maybe half a percent) and temporary because bonds return to the face value at the end of their life, you're only dealing with the end of their life, and treasuries will have positive return if they have positive yield, which they do. If you're feeling like a gambler you could just use SHY but you may take 9 months to recover from a loss of about 1.5% if shit really gets ugly and jpow keeps raising rates on us. Basically you will get the yield you purchase treasuries at if you hold them to expiration and these expire in 3-6 months and 1-3 years respectively so the interest rates risk is very low.
S&P was down 20% while bonds were down 12%. If you were Yolo in Jan you'd have lost more money. On top of that the bonds they use aren't just AGG which is why people recommend some bond allocation, I had people in TIPs and SHY etc. As the deviation grows, rebalancing is where you get to buy low. For young investors that can take the volatility, a 90/10 works really well and has beat S&P YTD easily.
It does make yield payments on bond coupon payments. It doesn't make yield payments on the derivatives used to provide leverage but those derivative do capture the total return of the underlying. But the big drag on returns is the cost of financing the leverage and cash drag. But I don't see how you think you're going to avoid these same costs to obtain 3x leverage. You'll end up paying retail cost of leverage which is going to be more expensive than what a fund provider can access. I pulled the data for TMF, TLT, and SHY (used to estimate the financing cost for the leverage). 3X TLT minus 2X SHY (~cost of leverage) minus about 1% per year for the difference in expense ratio is a pretty close match to TMF daily returns from 4/15/2009 to 7/15/2022. It almost exactly matches TMF volatility and max drawdown. TMF does have lower compound return than estimated from TLT and SHY though so there is some extra cost drag that I would want to understand better before putting money into it. However, I also would expect that you will pay as much or higher cost if you attempt to replicate TMF. There's not a chance you can generate 3x treasury returns with lower cost than TMF.
My power hour SPX calls worked out 11-> 18.16. Good thing i never looked or i probably would have panic sold at some point. Overall, closed up 0.79 during the final hour. Id say around 33% percentile among up trend days. Decided to buy a couple 390C to hold over the weekend. My bias is up because the market has basically decided that 100 bps is off the table despite the bad CPI and PPI prints. Other than that, still holding my October SHY puts and September BITI calls.
WRONG! Go back to EMOJI school ser. It's clearly a SHY bull asking for $395 SPY, RESPECTFULLY!
Mostly just cashed out winners today at open. Not the day with the biggest gains, but it was definitely up there (~10% of total AUM). Sold YCS calls, SPY puts, and treasury puts. All i have left open are September BITI calls and some October SHY puts Opened some XLF 8 dte strangles for earnings. If they don't print tomorrow i might hold until Monday. Unfortunately, my 0dte strangles didn't fill so no fun for me tomorrow. Longer term, I'm not sure what the market is going to do. It seems like its trying to price in a recession and fed pivot in Q4, but who knows if that will actually happen. I'm still working on developing a model for determining if 1dte strangles during power hour will be profitable, but my vacation has ironically not given me much time for data entry and number crunching.
You have balls of steel sir. Somehow we're both up on our positions (mine are SHY puts). Funny how that works.
No index positions. Bought a couple more SHY puts. No other changes really
Opening up some more SHY puts today
Short treasuries (SHY, IEF, IEI), long BITI, short yen (YCS). XLF long strangles at end of day of Thursday
Picked up some change on some strangles after the notes got released. Had me sweating for a while though. Opened up some more puts on treasuries this morning (SHY Dec 83P and IEI Oct 117P). Hoping for a bounce on treasuries tomorrow so I can add some more later this week before CPI.
I would assume TLT would go the same direction, but I think the shorter dated treasuries are where the real action is. I think 2 year yields are incorrectly priced but not as sure about 5 and 10 years. IEI (3-7) and SHY (1-3) have garbage liquidity on options though. IEF (7-10) might have better liquidity than TLT (and penny pricing!). BITI calls because BIT0 can only go to zero while BITI can theoretically go to infinity. (Imagine what would happen to each if scam lost 25% 10 days in a row)
I finally got to sell my EUO at a profit. Not only that, but it more than doubled over the weekend. God bless Murica! I bought more BITI Sep 30C at a lower cost basis and started buying puts on treasuries (IEF, IEI, and SHY).
I'm already bidding on some SHY and IEI puts
I like SHY now especially after the huge selloff
>So did everyone else, including me. We don't get to set the price really, we can just choose to buy or not. I bought and I'm still buying today, I haven't stopped buying. Over time I'm going to pay an average, reasonable price( I hope). I appreciate the response but I have a feeling that my particular situation started in such poor shape that maybe you're overestimating my and my former FA investment decisions. lol. It's difficult to get a barometer to compare against on reddit bc the anon nature of it brings out two types of comments I find: 1. " You have trouble? That's odd bc I 5x since 2020, how could you not make money in one of the best bull markets and money printing eras of all time? Sucks to be you. " 2. " You're doing it wrong. Eat crayons and go 10x on margin. This is the way" But I'll try again. (The above was not in reference to your helpful comments but rather to the more typical ones I see) Between 2020 - late 2021 I tried building a personal portfolio of stocks and ETFs to kind of see if I could outperform my FA who was severely underperforming the mkt as he managed my ROTH IRA for ~10-15 years. I never really looked much, just sent money regularly. I never lost money but growth was several points below "the market". Then COVID came, everyone now has time and money to play stock mkt investor and ya know, WSB, GME, all that stuff. So while I didn't get involved in that, I did think I could pick stocks - hard to miss when everything was Up Only. But what ended up happening is I churned. Like ALOT. Buying this or that and if it dipped, I emotionally sold, if it zoomed, I bought more. Classic case of FOMO and buy high sell low. But I improved the more I studied and things looked good for a while. But then just before Dec 2021, I bought, oof, so many tops! The coming correction was being talked about and smart money got out quietly and I bought their shares. Up only. lol. So by the time the corrections started in Jan - Feb, I had very high cost basis across the board. Dips came, I thought "cool, average down!". Nope. Didn't realize I was buying into weakness. But I still had hugely outperformed my FA and thought, ok, I can take over my ROTH, tune it up, improve the allocation and diversification. (FA was ultra conservative - as if I were 60, not 2 or 3 decades younger ). So I saw the dips in Feb -Mar as an opportunity to deploy cash sitting in my ROTH into ETFs that I had meticulously chosen to align with my allocation plan. Dips kept dipping, I had no concept of how far it would go. Just kept catching knives. FFWD to present and the ~20% total mkt avg correction almost totally put my ROTH and Taxable accts in the red bc of the high premiums I paid for individual stocks (good picks but bad prices) and the correction just putting all the current investments at a loss. Add the TLT SHY positions that the FA had me in at peak cost basis, and well, everything red. In fact, net net, I only barely beat my former FA. Granted, I only had 18 months vs his 10-15 yrs, but today I can firmly say "had I known 18 months ago what I know now...". I've learned a shit ton, but it's a fraction of what there is to know. I'm aware of my mistakes, I stopped churning so much, stopped trying to time the mkt (except for TLT, I know) , and fully accept I don't know shit and going with a 3 fund Boglehead portfolio 2 years ago would have done me better than all my futile tinkering. The problem is that I don't know really what to do from here. I'm sure a lot of ppl feel that way since there's really no safe plays ATM , at least on a shorter time horizon. Speaking of... I won't get too specific but I'm looking at let's say ~15-20 yrs when I expect to be taking some kind of draw from my invstmts. I'd like to say I won't need to, but in my situation and circumstances I will. I'm making up for many years of lost "time in the market" and hoping to hit a target that's a bit aggressive. I'm starting to think I got too used to the Up Only Money Printer of the last few years and need to accept growth is just gonna be much slower than I anticipated. Maybe TLT isn't right for my time horizon. I dunno. I'm kinda feeling stuck in that I'm bearish and think the worst is still to come for stocks and bonds and everything really and surprise, I don't really know how to navigate my bearish sentiments. I don't like buying now bc I personally think the bottom is still a ways more down, I don't like selling under water positions, and I'm undecided about de-risking in profit positions into cash to sit out a bit cuz I'll prob end up missing discounts. Phew, well I realize this became a tell-all history of my invstmts and went way off topic but somehow it helps to write this shit out to help organize my thoughts. Didn't mean to use this thread and your responses as my jumping point tho! Sorry bout that! Obvs I don't expect anyone to tell me the right thing to do cuz everyone is different with different goals and outlooks. It's just daunting the amount of info I've been absorbing and trying to make sense of. I've been studying and reading finance for the last couple years many hours a week. And it just exposes how much there is to know and why smart money is smart money. I'd be smart too if I had a team of 30 Analysts, quant crunchers and heaps of cheap capital! Suppose I need to find a balance somewhere in between blind DCAing and trying to time mkt. Both extremes are not right for me, so looking for a strategy somewhere in the middle to fit my time/capital/goal horizon. If you or anyone made it this far, hey, thanks for reading. Sorry for the novel I wrote here. Cheers
Feb 1990, inception of this strategy: PUTVM: 100, SPX 330 Present: PUTVM: 1489 (14.89 x starting value) SPX: 4040 (12.24 x starting value) PUTVM max DD: 33%, Calmar ratio: 0.264 SPX max drawdown: 55%, Calmar Ratio: 0.1463 So it kicks ass on every metric. If you are willing to take SPX levels of risk, you should be able to lever up this strategy via buying far OTM put in medium vix, larger condors positions in high vix, and either margin on SPY, or 70% SSO 30% SHY or BIL in low VIX
Thanks for the reply. Just to clarify my current allocation as far as ex US, I'm 10% VEA 10% VWO and was considering a 5-10% allocation to DGS (Wisdom Tree EM Small Cap Div ETF). So altogether it would be something like: VOO 25% Core/Lg Growth AVUV 20% US Sml Cap Value VEA 10% Developed ex-US VWO DGS 20% EM w Small Cap Val tilt TLT/SHY 10% Long/Mid Treasuries = ~85% Allocated / 15% Cash currently In your suggestion do you mean adding AVDE & AVEM to my current Int'l allocation? I'm not sure I understand "adding the global mkt cap weighting" wording though. Do you mean trying to emulate those two ETFs or actually adding them? I feel a bit over allocated Int'l wise. (?) Re:TLT Also still trying to understand why one (anyone) who holds TLT at this point like myself, would continue to hold if it's a pretty sure thing that at least 100bps hikes coming by July which would send TLT down to double digits I would think. Ofc, I've held this long, (from 140 to 109) so I've already paper absorbed the downside so idk, maybe should be adding to it. But I try not to add to a losing position. Apologies, still got a lot to learn and digest. Thx Cheers PS. Goes w/o saying that this is all just discussion and informational and ofc I DMOR and NFA :)
Currently holding BSV, SHY, and SPMB puts expiring between 6/7 and 11/18. I think they are a better risk reward play than indexes right now
I almost forgot to add in my previous comment about bad shit happening. The 10/2y is on the verge of inverting again. I think BSV/SHY puts gonna print
Has anyone been following this no bid business on MBS's? I'm no expert on it, but it sounds pretty bad. Anyone got useful info on it? ​ I've been thinking about this market action lately. I'm seeing more concerning signs right now than when the war started. Like lots of signs that we are on the edge of a real crash. This most recent drop is faster/further than anything this year. We have the eurodollar shitting, MBS no bid, high CPI print. spy 350 this week wouldn't surprise me. ​ I'm buying more IWM/AMD puts this week on bounces and adding to my BSV/SHY puts(short term treasuries). Maybe even adding some 3x short Real estate. I think the BSV/SHY puts might be the safest play here. Low OI and spreads aren't great, but I think it might be overlooked. Or just that big money is using a more efficient strategy like credit default swaps.
Netmaize indicates that is a lie. Seriously though, I think it would be safer to get puts on short duration bonds. Stocks go down on recession/interest rate fears, then you print. If stocks go risk on and pump, then they also print. I picked up puts on BSV and SHY. Maybe don't listen to me though, I'm regarded.
You can measure bond exposure in years of effective duration. It is how much the bond will fall/rise compared to an incremental change in its yield. So for example IEF holds 7-10 year treasury bonds and its website reports an effective duration of 8.68yrs, meaning a rise in yield of 0.01% would cause it to drop 0.087%. You can extend that to your whole portfolio, so for example, if you have 25% of your portfolio in IEF, you could describe your portfolio as having 2.17yrs of duration to intermediate treasury bonds. Short term bonds naturally have less duration than long term bonds. So if you want to have 2.17yrs of duration in your portfolio using only IEI (3-7 year treasury ETF), you would need 47% of your portfolio in it, and using SHY (1-3 year), you would need over 100% of your portfolio. That leaves very little room for stocks or other assets if you buy them with cash, but if you use futures you don't need to tie up much capital to get that much exposure. You could short long term bonds as well. A long short-term, short long-term bond position is called a steepener trade.
Yes, which is why higher duration bonds don't do well when rates goes up. Interest payments on lower duration bonds (1-5yr) however can eventually overcome the change in interest rates because the vast majority of their value does not change with changing interest rate. A change from 1% to 2% on a 2-yr is only a change of about 102/104, which is why SHY only went down about 1.5% when the 2 yr went from 1.6 to 2.7. Different story for 10+yr because you were paying for over 10 years of interest payments.
SHY, lower duration = less affected by interest rate changes because lower duration bonds have most of their value in the form of principal, and longer duration bonds have more of their value in the form of future interest payments.
Do you want an ETF that holds 2 year treasuries? Then SCHO, VGSH, SHY. If you want to speculate on 2 year yields, there are 2-year futures https://www.cmegroup.com/markets/interest-rates/us-treasury/2-year-us-treasury-note.html.
0% , long term portfolio always invested Short term funds for use next 2-3 years in SHY
2-3 years? 1-3 treasury ETFs , SHY/ VGSH they have average 2 year duration and 2.5% 30 day SEC yeild
SHY 1-3 years treasury etf for expenses in next 2 years
Yeah pretty much any class of bonds currently has positive 5-year returns: AGG, TLT, SHY, LQD, HYG, MBB, MUB, except for EM bonds.
Let me add to that: gold and short term treasuries (like SHY or VGSH) which presently return 2.5% but will go down some if rates rise.