Wikinvest Wire
Friday, September 26, 2008
Bailout Devolves
I might call this whole (maybe hole is more correct?) thing a cluster you-know-what but this is a family oriented blog.
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14 comments:
We should drop a bomb on DC and we would all be better off. The more government does, the more screwed up it gets.
I'll just stick with consternation and criticism.
Hey Roger,
What's your opinion on the safety of "Stable Value Funds" that reside in many 401(k)'s?
Thanks!
Tim, there will be far more scares than actual problems. I obviously have no idea about a given fund but most of them, the vast majoirty will get through to other side even if the ride is a little bumpier than it should be.
I'm glad to see your reply to Tim's question. I've gotten very worried about the stable value fund (Invesco) that I have a lot of my 401K money in. It is hard to get much info about it, and according to what I've been able to find it owns a lot of MBS.
The stable value fund that I was in was guaranteed by Cigna...
and yes, it was full of mortgage
backed securities. I rolled my
401K over to Fidelity in May.
They have brokerage CDs that pay
monthly...am slowly dollar cost averaging into equities with the interest on dips. I'm having fun
with the 100 free trades that FIDO
gives you! Too old to take big
chances.
I heard there is now an exit tax
on net worth if you move out of
the USA...at least they planned
ahead for something. Now I know
why there hasn't been another
terrorist attack...they're watching us self destruct;-)
Reagan was a better actor...but
I've seen this movie before.
To anonymous:
My Stable Value Fund is from New York Life and like you, it is very difficult finding info on the fund. My fund seems to be full of MBS so I was also worried. And in light of AIG, how much can you trust that these funds are truly backed by an insurance umbrella as they claim. I don't claim to know much about these funds, thus my question.
In many ways, we are trapped in our 401(k)'s due to early withdrawal penalties and taxes. I sure wish we had more options.
Roger, sorry for changing topics here.
I moved my portfolio into the Stable value Fund last year at Vanguard and asked the administrators that same question. Within 24 hours a 5 minute video with a presentation was forthcoming from Vanguard explaining the position in Lehman and AIG( less than 1%) and claiming that the market value of the fund was at .995 to the buck. They also stated quickly but clearly that the fund was not guaranteed by Vanguard. I of course have no way to independently verify their statements.
Sam
roger - what are your thoughts on LQD? This is supposed to be my stable investment grade fund in my portfolio and the thing is bouncing all over the place. You think it will bounce back once the credit markets free up?
i don't know LQD but it owns corporates, weighted 36% in financials with a duration of 6.33 years.
when you hear about credit spreads blowing out this is exactly the part of the market that feels it.
the bond market is not permanently broken (well, i don't think so) but it is not working normally now. I certainly would expect it to recover at least a little when things start to normalize but the nuts and bolts of the product make a poor choice for stable value proxy.
My mother in law is apparently freaking out about losing money in her IRA. I need to eval her portfolio before her son persuades her to withdraw all her cash and follow the whims of HIS financial advisor.
Is there a popular calculator on the web for taking lump sums and calculating capital growth while withdrawing varying percentages per year?
The damn advisor has already lied to me about some mortgage bonds in the portfolio.
SD,
i don't have a calculator to point you to, not really what i do.
i would think this would be a very simple task for any CFP near you.
It is a cluster.
anon 5:26
i owned lqd for a few months. lqd currently holds 101 positions (but that includes multiple positions from a single issuer) in the corp bond market (no treasuries.) unfortunately, three positions are in lehman debt; furthermore, while these positions now constitute around 0.5% of the port, as of two weeks ago they constituted a lot more (i saw something over 3%, but can't find that reference now), so lqd dropped over the past two weeks primarily due to the leh bankruptcy. nevertheless, the etf currently sells at a discount (at $90) to its net asset value (of $91.58); you can check the nav at ishares.com under "fixed income" and "credit".
you can also check the current holdings and determine if you want to assume the risk of the portfolio. to save you some work, lqd currently holds two positions in morgan stanley that constitute just over 1.5% of the port, a position in aig that equals 0.6%, 2 positions in merrill that combine to 1.9%, three positions in wachovia that amount to 2.32% of the port, three positions in goldman sachs that combine to 2.68% of the port, and a position in countrywide that is 0.97% of the portfolio (and that is a holding of countrywide--i haven't heard what b of a plans to do about countrywide debt--fyi, they also hold about 2% in b of a paper).
--gjg49
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