I understand why YOU are not investing in bonds, but what about people who are much older? Even in retirement? Should they risk a downturn in the stock market if they get high yields for much saver bonds? Especially if they have enough savings to live of the returns ( estimated withdrawal rate 3-4%) I know the statistics say: stock market crashes only last 2 to 3 years, but didn't it take more than a decade from 2000 onwards to recover?
The Buffett bit was an eye-opener. Did not realize he's just letting his money sit & sit & sit in treasuries this much, and strike massively when he has an opportunity of sees a fire-sale. Ultra-defensive and more importantly, not stupid.
That's a bit misleading, as it doesn't account for the businesses they own entirely. Probably a better picture is cash % of market cap. Also, they need cash for insurance, as you don't want to be a forced seller of stocks at a bad time. So... Take youtubers with a grain of salt, I follow Sven for years and he's never been bullish on the market as a whole.
This is very missleading in my opinion showing the Cash Position of Warren. Bershere has a huge insurance Business and they Need to have a big Cash Position if they are on the hook he even said that in his Anual shareholder Meeting. Still nice video 👍
In US, vanguard pays 5.3% on cash. Fidelity 5% I also buy treasury auction bonds on both platforms In US, US treasury bonds, only have to pay federal taxes, no state and local taxes.
Sven, good video like always. I also use IB. Just a note, this 4.8 % is not actually 4.8 %. For the first 10k it is 0%. Because of that for me it is better to buy T-Bills ;)
Maybe one thing to add for newer investors who watch this video. Warren has so much capital that his spectrum for investable companies is very limited, as smaller purchases wouldn't move the needle. Thus, parking the money like Sven mentioned might be his only option for now as most large caps are currently rather expensive. If you consider the capital combined with the often mentioned circle of competence there are not many companies left and he has no choice but to wait for the right price. Our universe is much larger.
I understand that treasury sales are getting tough, as there are relatively fewer takers for the new offerings, so if the gov't wants to be able to sell, they must offer attractive yields, and that places an upward pressure on interest rates.
You can also get 4% with European Money Market ETFs which are replicating ECB deposit interests by investing in ultra short bonds. I prefer that instead of longterm german bonds
@@elsemuller2460 it depends on the conditions and your personal risk profil, especially on how long the offer of the broker/ bank is valid. Often half a year and then it is reduced to 2% etc. Also, often the amount of money you can park at some brokers is limited and insured "only" up to 100k€. In such money market ETFs it is basically unlimited and it doesn't matter if your bank/broker goes bankrupt as these ETFs are special assets just like stocks.
Looking back 2 years stocks are now mostly unchanged (SP500) , but T-bills are up ~7%. I know I cherrypicked the time period, but a lot of people are surprised when I note this. I wouldn't be surprised if stocks continue to go up and down with no net direction for a while longer as earnings catch up to prices. Like you mentioned , short term bonds aren't a bad place now to "hang out and wait". Like Buffet.
There is also a lot of value in corporate bonds. Non-ESG companies making plenty of cash, like petrol and gas and shipping companies that do not have good access to money because they are dirty, offer really high yields for 2-3 years bonds. Prosus for example, have attractive bonds, and they could sell their shares to pay back bondholders. You can get a 7-10% yield, it's really nice. The only disadvantage is that most of the time, the nominal value is $10k/$100k for a bond.
@@Value-Investing Prosus N.V. 4,85% with maturity in 2027, according to the current price, is yielding 6.26%. Yes, it's not stellar, but it's good considering the low risk. The minimum investment amount is 200k €, though!
@@RafitoMembrozaBetting with a large amount of money on one company instead of being diversified is n e v e r low risk. Even if Sven Carlin doesn't like ETFs he recommended them here.
@@elsemuller2460 If you move a couple of millions, then $100k for a bond is not being concentrated. The risk also depends on the assets they have and how liquid they are
I hold 70 % in 4, 8, 26 week t-bills. What most don’t know is you can select ( check) the reinvestment box and automatically roll over the short term bills. So my 4 week bill becomes 26 week bill, at a higher rate. If I need to I can take off the roll at any time. Sweet!
Thanks! I never "invested" in bonds and I'm not even sure how to do it. I just try to keep invested in the best asset ever: stocks. And have some dry powder just in case, most of them are quite overvalued right now! But there are always opportunities somewhere...
Great video Sven. Just like you mentioned, bonds are also good for speculation. I remember a couple of years ago buying 2 ETFs on $corporate bonds and $HY bonds, and my gains were only due to conversion rate. I learnee my lesson, but not before cashing in some gains 🤑.
In Belgium the government sold a 5 yr at 1.83% net and an 8 yr at 2.03% net last december. They did this to encourage banks to increase their interest rates on savings deposits. 22 Billion EUR went from the banks to the goverment. Especially the wealthy took advantage of the 15% withholdingstax compared to the normal 30% on dividends. the average investor bought in for 34000 EUR. So knowing most normal people only bought for a couple thousand you know rich people saw an opportunity to park their money and dodge some taxes.
Thank you Sven! I was wondering: at 9:00 you showed the fixed income market dynamics. Why an increase of 1% in interest rates could cause a positive total return in Convertibles, U.S. HY or Leveraged Loans? I was thinking about negative convexity, but I don't think so.
In 2022 to 2023, it is logical to buy short-term Tbills if you are expecting higher interest rates in the future. This is to prevent you from locking in the low yields of long-term bonds and indirectly preventing a paper loss in the bond values when new bond are yielding higher. In 2024, how should you be positioning? I would think it would be to buy long term bond yields if you are expecting interest rate to trend down significantly over the next 2 years.
My 401k does only allow me to invest in short term bonds, long term bonds, S&P500 and international stock fund…. So no choice for me than invest in short term bonds at current prices 😢
Great video! I hold some cash on a MMF and in a shorterm (accumulating) T bill ETF (ETF is in $ unfortunately). I bought some LVMH shares with excess cash. Can you maybe make a video about LVMH? 20 pe and 20% CAGR of profit growth that is what Peter Lynch would call a bargain.
I am in Canada, and I wonder if now is a good time to cash some of the equties gains and put them in individual bonds, or Bonds funds / ETFs. I am of the view to buy a mid to long-term bond fund , so if the yields drop over the next couple of years, the valuation will improve and result in capital gains. Does it make sense?
The way I see it is that if The U.S Government was a company, would I invest in it? Would I invest in corruption, mismanagement, money printing and woke ideology? No, I wouldn't. There are better businesses out there. Thanks for the video Sven.
You didn’t give high yield bonds justice. The quality of companies by coverage ratios and earnings is great vs history, with 8-9% yield on average next 12 months has a 92% chance of being positive with a median return of 10.6%. The chart you showed didn’t include distributions. In 2023 high yield bonds returned 12-15%. I have been buying high yield and expect to hold 2-5 years and average 8-10% return. I work at a major bank and the economists as well as other banks believe the same thing.
Junk bonds are a safer investment than the Russell 2000 index. Most small-cap companies are already either unprofitable or deeply in debt. At least with junk bonds, you are more likely to get your money back. I will take a junk bond over a junk stock every time.
I just want some asset to park my liquidity short term while looking for a new stock investment opportunity, perhaps 3-6 months, with a decent yield as my trading account doesnt offer any interest and i'm not able to move money in and out without creating a lot of tax. Is this a good way to use US T-bonds or am i lost?
False - Berkshire's 30% is not in T-bills. They also manage 700B of wholly owned businesses. That puts the % of T-bills as 12% of Berkshire's portfolio. That is close to their high end of historic cash pile but not all time high. Yes market is overvalued, but not overly so. The top 10 companies are still making profit and earnings are improving. This is not some 2000 bubble where the top 10 companies are unprofitable clown companies.
if you know what your doing you can get a Treasury at 7.625%... you can buy Occidental like buffet with 8.8% coupon.... there are others that are good upto 10%.... whats wrong with making money
Hihi, what is your opinion on EUR Hedged ETFs on short term US-Treasuies ? I Have not found a 0-1yr hedged ETF but 1-3year comparison for example. Overall, whats your take on hedged ETF investments?
@Value-Investing At least the iShares USD Treasury Bond 1-3yr UCITS ETF EUR Hedged (Acc) ETF (IE00BDFK1573) shows total expence ratios of 0,1% , while having an effective effective interest yield of 4,31% , the real payed coupon of 2,37% for average maturity of ~2years. So still rather limited interest rate risk. Not the meantioned 5% in the Us, but still more than the overnight rate of 3,9% (e.g. Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C) you could achive within the EUR- Room
Just a remark that the first $10'000 in IBKR earns no interest. So it is better that you invest it. Easiest way is to not buy bonds directly, but via and ETF e.g. BIL for short term bills.
1. US Fed SETS its own interest rate 2. US Fed is sovereign currency issuer is not exposed to interest rate risk 3. All interest rates are premiums on central bank rates. Please emphasize to your watchers that central bank watchers are right and nobody can understand the public money system without understanding that govt spending creates all the $ in your accounts and govt has no limit on spending except the need to discipline markets by jacking interest rates.
Sven, everyone knows stocks are where to be. How many know gold has outperformed stocks for the past 23 years by 100%. Stocks are up 300%, gold is up 600%, roughly. In other words, holding money, cash, gold, has outperformed stocks. Measuring back to 1801 is disingenuous because gold was fixed until 1971. From 1971, gold has performed quite well, on par with stocks, up from $35 per ounce to $2,000 per ounce. Also from 1999 low for gold at $255 to $2,000 shows gold outperforms today. Dollars are not money, gold is. money. Dollars are one day bonds paying zero per cent interest. Not a good idea to hold.
Only measured in dollars. There is no real gain measured in gold, honest money. Stocks have not increased in almost 100 years measured in honest gold dollars. The gains are purely due to currency debasement. @@notnoternexto
For Value Investments, Check My Research Platform: sven-carlin-research-platform.teachable.com/p/stock-market-research-platform
I understand why YOU are not investing in bonds, but what about people who are much older? Even in retirement? Should they risk a downturn in the stock market if they get high yields for much saver bonds? Especially if they have enough savings to live of the returns ( estimated withdrawal rate 3-4%)
I know the statistics say: stock market crashes only last 2 to 3 years, but didn't it take more than a decade from 2000 onwards to recover?
The Buffett bit was an eye-opener. Did not realize he's just letting his money sit & sit & sit in treasuries this much, and strike massively when he has an opportunity of sees a fire-sale. Ultra-defensive and more importantly, not stupid.
he is all about long-term protection
That's a bit misleading, as it doesn't account for the businesses they own entirely. Probably a better picture is cash % of market cap. Also, they need cash for insurance, as you don't want to be a forced seller of stocks at a bad time. So... Take youtubers with a grain of salt, I follow Sven for years and he's never been bullish on the market as a whole.
They asked him why he didn't invest the 20% uninvested part in the S&P500 and he answered. :)
This is very missleading in my opinion showing the Cash Position of Warren. Bershere has a huge insurance Business and they Need to have a big Cash Position if they are on the hook he even said that in his Anual shareholder Meeting.
Still nice video 👍
He owns an insurance company
In US, vanguard pays 5.3% on cash. Fidelity 5%
I also buy treasury auction bonds on both platforms
In US, US treasury bonds, only have to pay federal taxes, no state and local taxes.
thanks for sharing!
One thing to keep in mind is that Berkshire is practically limited to investing in large and mega cap companies
that is correct!!!
Sven, good video like always. I also use IB. Just a note, this 4.8 % is not actually 4.8 %. For the first 10k it is 0%. Because of that for me it is better to buy T-Bills ;)
thanks for sharing!!!
Maybe one thing to add for newer investors who watch this video. Warren has so much capital that his spectrum for investable companies is very limited, as smaller purchases wouldn't move the needle. Thus, parking the money like Sven mentioned might be his only option for now as most large caps are currently rather expensive.
If you consider the capital combined with the often mentioned circle of competence there are not many companies left and he has no choice but to wait for the right price. Our universe is much larger.
absolutely, thanks for sharing!
I understand that treasury sales are getting tough, as there are relatively fewer takers for the new offerings, so if the gov't wants to be able to sell, they must offer attractive yields, and that places an upward pressure on interest rates.
that is correct!
Yup, i saw a couple youtube videos on this and i'm definitely wondering what kind of rates we will see in 2024 on the bonds
You can also get 4% with European Money Market ETFs which are replicating ECB deposit interests by investing in ultra short bonds. I prefer that instead of longterm german bonds
good idea, thanks for sharing!
Would you also prefer money market fond if you can get 4% from your broker or bank? If so can you explain why?
@@elsemuller2460 it depends on the conditions and your personal risk profil, especially on how long the offer of the broker/ bank is valid. Often half a year and then it is reduced to 2% etc. Also, often the amount of money you can park at some brokers is limited and insured "only" up to 100k€. In such money market ETFs it is basically unlimited and it doesn't matter if your bank/broker goes bankrupt as these ETFs are special assets just like stocks.
Looking back 2 years stocks are now mostly unchanged (SP500) , but T-bills are up ~7%. I know I cherrypicked the time period, but a lot of people are surprised when I note this. I wouldn't be surprised if stocks continue to go up and down with no net direction for a while longer as earnings catch up to prices. Like you mentioned , short term bonds aren't a bad place now to "hang out and wait". Like Buffet.
the most likely outlook for stocks is zero for a very long time, so T-bills should beat them onward by far...
coming back from the war in Gaza and relaxing to one of your videos is a real treat, thanks!
good to hear but sorry about the war
@@Value-InvestingHe bought Gaza oil and Gas stock 😅😅
There is also a lot of value in corporate bonds. Non-ESG companies making plenty of cash, like petrol and gas and shipping companies that do not have good access to money because they are dirty, offer really high yields for 2-3 years bonds. Prosus for example, have attractive bonds, and they could sell their shares to pay back bondholders. You can get a 7-10% yield, it's really nice. The only disadvantage is that most of the time, the nominal value is $10k/$100k for a bond.
I see the yield at Prosus at 5.7%, which is not bad, but also not stellar...
@@Value-Investing Prosus N.V. 4,85% with maturity in 2027, according to the current price, is yielding 6.26%. Yes, it's not stellar, but it's good considering the low risk. The minimum investment amount is 200k €, though!
@@RafitoMembrozaBetting with a large amount of money on one company instead of being diversified is n e v e r low risk. Even if Sven Carlin doesn't like ETFs he recommended them here.
@@elsemuller2460 If you move a couple of millions, then $100k for a bond is not being concentrated. The risk also depends on the assets they have and how liquid they are
I hold 70 % in 4, 8, 26 week t-bills. What most don’t know is you can select ( check) the reinvestment box and automatically roll over the short term bills. So my 4 week bill becomes 26 week bill, at a higher rate. If I need to I can take off the roll at any time. Sweet!
This is looong expecting explanation. Thank you Sven.
Great to hear!!
Thanks! I never "invested" in bonds and I'm not even sure how to do it. I just try to keep invested in the best asset ever: stocks. And have some dry powder just in case, most of them are quite overvalued right now! But there are always opportunities somewhere...
thanks!
Great video Sven. Just like you mentioned, bonds are also good for speculation. I remember a couple of years ago buying 2 ETFs on $corporate bonds and $HY bonds, and my gains were only due to conversion rate. I learnee my lesson, but not before cashing in some gains 🤑.
Thanks for sharing!
Hi Sven, thanks for the video! I find myself looking at bonds. What do you think about Corporate Bonds ETFs like the VCIT?
In Belgium the government sold a 5 yr at 1.83% net and an 8 yr at 2.03% net last december. They did this to encourage banks to increase their interest rates on savings deposits. 22 Billion EUR went from the banks to the goverment. Especially the wealthy took advantage of the 15% withholdingstax compared to the normal 30% on dividends. the average investor bought in for 34000 EUR. So knowing most normal people only bought for a couple thousand you know rich people saw an opportunity to park their money and dodge some taxes.
thanks for sharing!
Thank you for sharing the wise view of thinking that you have
Thanks for listening
Is it good strategy to buy TLT now and sell after few fed rate cuts?
if the rate cuts happen faster than expected, and if those happen
Thanks! Highly appreciate lecture!
Glad it was helpful!
Thank you Sven! I was wondering: at 9:00 you showed the fixed income market dynamics. Why an increase of 1% in interest rates could cause a positive total return in Convertibles, U.S. HY or Leveraged Loans? I was thinking about negative convexity, but I don't think so.
did I say something wrong? An increase would cause a decrease in returns and vice versa
In 2022 to 2023, it is logical to buy short-term Tbills if you are expecting higher interest rates in the future. This is to prevent you from locking in the low yields of long-term bonds and indirectly preventing a paper loss in the bond values when new bond are yielding higher. In 2024, how should you be positioning? I would think it would be to buy long term bond yields if you are expecting interest rate to trend down significantly over the next 2 years.
I am not understanding why anyone would expect interest rates to trend down significantly.
Thank you Sven as always!
thank you!
My 401k does only allow me to invest in short term bonds, long term bonds, S&P500 and international stock fund…. So no choice for me than invest in short term bonds at current prices 😢
it is what it is!
Great video! I hold some cash on a MMF and in a shorterm (accumulating) T bill ETF (ETF is in $ unfortunately). I bought some LVMH shares with excess cash. Can you maybe make a video about LVMH? 20 pe and 20% CAGR of profit growth that is what Peter Lynch would call a bargain.
fashion and luxury is not my circle of competence :-(
I am in Canada, and I wonder if now is a good time to cash some of the equties gains and put them in individual bonds, or Bonds funds / ETFs. I am of the view to buy a mid to long-term bond fund , so if the yields drop over the next couple of years, the valuation will improve and result in capital gains. Does it make sense?
The way I see it is that if The U.S Government was a company, would I invest in it? Would I invest in corruption, mismanagement, money printing and woke ideology? No, I wouldn't. There are better businesses out there.
Thanks for the video Sven.
:-)))
That's how I view it too. Might as well be investing money in the mafia, because it's the same thing.
@@oldhickory4686 100%
You didn’t give high yield bonds justice. The quality of companies by coverage ratios and earnings is great vs history, with 8-9% yield on average next 12 months has a 92% chance of being positive with a median return of 10.6%. The chart you showed didn’t include distributions. In 2023 high yield bonds returned 12-15%. I have been buying high yield and expect to hold 2-5 years and average 8-10% return. I work at a major bank and the economists as well as other banks believe the same thing.
thanks for sharing
Junk bonds are a safer investment than the Russell 2000 index. Most small-cap companies are already either unprofitable or deeply in debt. At least with junk bonds, you are more likely to get your money back. I will take a junk bond over a junk stock every time.
thank for sharing
UFB is paying 5.25%. Any reason not to park money there?
I just want some asset to park my liquidity short term while looking for a new stock investment opportunity, perhaps 3-6 months, with a decent yield as my trading account doesnt offer any interest and i'm not able to move money in and out without creating a lot of tax. Is this a good way to use US T-bonds or am i lost?
What about Emerging market bonds?
False - Berkshire's 30% is not in T-bills. They also manage 700B of wholly owned businesses. That puts the % of T-bills as 12% of Berkshire's portfolio. That is close to their high end of historic cash pile but not all time high. Yes market is overvalued, but not overly so. The top 10 companies are still making profit and earnings are improving. This is not some 2000 bubble where the top 10 companies are unprofitable clown companies.
thanks for sharing, here I discussed just the cash and stocks part, not businesses.
😂 "I was one year old,I didnt look at US bond back there"😂
Any thoughts on U.S. agency bonds e.g. TVA?
check the risk of going bankrupt, but it seems stable, thus inflation is the key thing to watch!
Sven please, make an analysis of Daqo New Energy. It’s right now egregiously undervalued. 3B net cash and 1.5B market cap
thanks for suggesting!
hi sven, could you do the same for the euro area?
Thanks for sharing. What are your thoughts on TLT - ishares 20 year treasury bond etf?
if rates go down, you make money, if not, you don't make much with inflation - long term, you will likely lose purchasing power
Sven, what do you think about Money market ETF?
It is all cash alike things! Nothing wrong, but nothing spectacular
Thank you!
Grazie Sven!
if you know what your doing you can get a Treasury at 7.625%... you can buy Occidental like buffet with 8.8% coupon.... there are others that are good upto 10%.... whats wrong with making money
Thanks!
thanks!!!
30/70 portfolio :D
:-)
Hi Sven have you got any thought about MDC and the acquisition from the Japanese??
don't know, not following
Thanks yall.
:-)
Sounds like you have a cold. Get well soon!
already much better thanks!
Hihi, what is your opinion on EUR Hedged ETFs on short term US-Treasuies ?
I Have not found a 0-1yr hedged ETF but 1-3year comparison for example.
Overall, whats your take on hedged ETF investments?
I don't know, likely the fees are there too for the offering, thus to me it doesn't pay to play with such instruments for a 100 basis point difference
@Value-Investing At least the iShares USD Treasury Bond 1-3yr UCITS ETF EUR Hedged (Acc) ETF (IE00BDFK1573) shows total expence ratios of 0,1% , while having an effective effective interest yield of 4,31% , the real payed coupon of 2,37% for average maturity of ~2years. So still rather limited interest rate risk.
Not the meantioned 5% in the Us, but still more than the overnight rate of 3,9% (e.g. Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C) you could achive within the EUR- Room
Is that a B stock or C stock? Berkshire hathawayz?
there is A and B, 1 A is 1500 B
which ETF for short term bond
just search, the shortest have the highest yield but that can change
Great video! What is your opinion on leveraged long term treasury TMF ETF for this year?
those are daily plays, thus play only if you can predict where will rates go... on a daily basis
Just a remark that the first $10'000 in IBKR earns no interest. So it is better that you invest it. Easiest way is to not buy bonds directly, but via and ETF e.g. BIL for short term bills.
thanks for sharing!
What are your favorite treasury bill ETF, ?
As said, I don't invest in bonds!
If interest rates on the long bond rose you lose, plus fees and commissions. Treasury direct doesn’t allow you trade long bonds before maturity.
1. US Fed SETS its own interest rate
2. US Fed is sovereign currency issuer is not exposed to interest rate risk
3. All interest rates are premiums on central bank rates.
Please emphasize to your watchers that central bank watchers are right and nobody can understand the public money system without understanding that govt spending creates all the $ in your accounts and govt has no limit on spending except the need to discipline markets by jacking interest rates.
Yes, as long as it works, unfortunately it never did last
Sven, everyone knows stocks are where to be. How many know gold has outperformed stocks for the past 23 years by 100%. Stocks are up 300%, gold is up 600%, roughly. In other words, holding money, cash, gold, has outperformed stocks. Measuring back to 1801 is disingenuous because gold was fixed until 1971. From 1971, gold has performed quite well, on par with stocks, up from $35 per ounce to $2,000 per ounce. Also from 1999 low for gold at $255 to $2,000 shows gold outperforms today. Dollars are not money, gold is. money. Dollars are one day bonds paying zero per cent interest. Not a good idea to hold.
thanks for sharing Jack!
Jack you are cherry picking data. Stocks have outperformed gold more often than the other way around
Only measured in dollars. There is no real gain measured in gold, honest money. Stocks have not increased in almost 100 years measured in honest gold dollars. The gains are purely due to currency debasement. @@notnoternexto
Sven what about Ali baba
everything is down in China, so is BABA
Grazie Sven!
grazie!