What Did You Buy Today?

[Otter]

(04-09-2020, 04:54 PM)fenders53 Wrote:

(04-09-2020, 04:44 PM)Otter Wrote:

(04-09-2020, 04:39 PM)fenders53 Wrote:

(04-09-2020, 04:13 PM)peachday Wrote:

(04-09-2020, 11:15 AM)stockguru Wrote: I bought a big position in SHV. It almost like a money market fund but this one had a nice yield and and you get a nice .16-.18 cents each month. This thing basically trades in a $1 range. I thought it was a nice place to hide and put money over the next 2-3 years. Collect those dividends lol

Does anyone else know this one or invest in it?

I Shares Short Treasury Bond ETF (SHV)

Significant portion of my net worth is equally split in SHV and BIL for diversification purpose but both are very equally safe since they only hold US government treasuries.

They are certainly some of the safest cash alternatives available but the yield doesn't even beat the inflation. Every time I see their tiny dividends (especially compare to my other dividend stocks) I have to keep reminding myself that their primary objective is safety and not the return . Without risk, some thing is better than nothing I guess.

Those thoughts cross my mind in a sustained bull market.  In a market like this I tell myself it's safely earning 2%, while I wait for a Div stock yielding 4% to go on sale for 20%+ off, and ex-Div next week.  There are also a lot of preferred stock ETFs on sale now that pay huge dividends due to price correction. It's been pretty easy to skim a little extra income with a small part of your cash position and you are still almost as safe overall.  Last year is when it was tough with about everything quality at dangerous valuations.   What's crazy is trying to get 4-5% with a corporate bond fund that holds some weak paper to boost the overall yield.  A discounted high quality aristocrat is a much safer IMO.  I feel sorry for retired folks that don't really understand the markets.  For decades they could just put it all in bonds and enjoy their remaining years.  I'm sure some were forced into stocks the past few years and didn't really know the risk we are seeing now.

Junk bonds now have the backing of the Federal Reserve, so there's that. Those purchases are on the secondary market though, and not original issues. So, when the underlying junk bonds go into default, does the Federal Reserve also give dollars to the defaulting subprime companies to pay off the junk bonds?

A couple of those funds I posted on the spec thread a couple days ago all carry at least a a few shaky notes to boost the Div yield.  Normally safe enough but this is a special time.  Thanks FED, those funds are on fire this week.  I guess I might as well enjoy some of my tax dollars.  To your question, I think it is probably just an attempt to keep the overall low quality bonds market from imploding when a few default.  They'd all get steamrolled including the ones that are in no real danger.  That panic thing.

Just for fun, I decided to go check out the iShares fund page for HYG, one of the largest junk bond funds:

https://www.ishares.com/us/products/2395...e-bond-etf

There, you can scroll down to the "holdings" portion of the page and search for various underlying holdings.  There's fun stuff in there, like over $3.5 million notional value of Whiting Petroleum bonds.

$6.4 million notional value of Chesapeake Energy Corp. bonds.

Some really high quality stuff to jump into.