Financial advisors ??

[JeffJ]

For everyone saying "it depends" answer yes or no.

We all knew(95+% sure) the FED was going to raise rates a lot in 2022 since they flat out told us they would last December and they will raise them a lot more this year (90+% sure)?

When rates rise bond funds drop in price? I know there may be a few specialty super short term funds or other but we're talking most bond funds.

Investing and financial planning is not a black and white tv(yes or no) world. It’s a color tv world that a “yes or no” is rarely applicable.

[Txhunter3000]

I've done quite well managing my own ****. I trust no one with the money I earned. Kinda like giving a gambler a blank check. No thanks.

[RiverRat1]

Investing and financial planning is not a black and white tv(yes or no) world. It’s a color tv world that a “yes or no” is rarely applicable.

Maybe, but the two questions I asked should be yes/no answers pretty easily IMO

[Planner]

Your sister had a 3-5 month investment timeframe and you’ve got a model that accurately predicts the bond market movement to 95% accuracy and you didn’t tell her??!? Should be a fun holiday weekend…. I’d probably hold that one close to the vest until things settle down a bit.


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[Grande06]

S&P is down about 5.5@% YTD. How much are her bond funds down? There is way more to consider than the two questions you asked in proper portfolio allocation. What type of account (taxable, tax deferred, etc), other accounts and their allocation, time horizon, risk tolerance, and other previously mentioned details. Her goals are going to be the biggest factor, not a current event headline.

[M16]

I've done quite well managing my own ****. I trust no one with the money I earned. Kinda like giving a gambler a blank check. No thanks.

Amen, I figure if I was smart enough or lucky enough to make it. I'm smart enough or lucky enough to do my own investing.

[Cullstuff]

RR - long response here, brother:

The recent CPI #s are 8.5% for 1year. So the cash holders, mattress stuffers, and coffee can buriers are losing whether they realize it or not.

Suppose she went to that FA and said she wanted to be aggressive, has a long time horizon, growth oriented etc.? Chances are she would have been overweight in Growth (think Tech/Small Cap/International) and would have “lost” twice if not more than what she has. She would be unhappy with that right?

Or, if she went to that advisor to invest her hard earned $, paid a fee, and then logged in to her account only to see she was in CASH? She would be unhappy with that right?

Or, maybe what you are suggesting is the advisor allocate her with a stock/cash mix as opposed to stock/bond. For that to make sense the cash % could only be a % of what was needed for short term needs. No investment adviser is going to place someone in cash for a mid-long term investment where they are guaranteed to lose to inflation. And anyone moving in and out of cash, or heavily adjusting the cash %, is timing the market…

As you pointed out interest rates were expected to increase. However, no one expected them to increase as quickly as they are and are expected to continue. If someone had that crystal ball they would’ve gotten out of bonds AND stocks. Then, after everything fell, bought into 3X leveraged funds and really had fun… Sounds like there was a lump sum investment or large rebalance, perhaps 3-6month dollar cost averaging would’ve been a better strategy.

Definitely sounds like she wasn’t expecting this, so more communication upfront about expected volatility is key. Hop on a 3way call with her and the FA. Ask him. If he is worth his salt at all he should be able to explain in clear detail why he chose the allocation he did. Completely agree that your sis (and you) deserve answers

Oh, my answer to your question is yes. As others have pointed out there are a tremendous amount of different bonds out there. The bonds and % allocation would depend on the client/situation. ( For example a 20yr old probably doesn’t need bonds in their 401k…)

My .02

[ctom87]

A little off subject, but does anyone know anything about ibonds? Their interest rate is based on inflation. Started to look into them the last few months.

I was thinking of starting a new thread on this topic. A buddy of mine reached out to me about them. I don't know much about them. He has been grinding out work and keeping a mattress full of cash and was looking at getting into this.

[Atfulldraw]

Look at you, with the 20/20 hindsight….

Shopping for a FA for someone else is like picking their spouse for them

[tps7742]

I've done quite well managing my own ****. I trust no one with the money I earned. Kinda like giving a gambler a blank check. No thanks.

I understand totally what you are saying but what works for you may not for others that don’t want to put in the upfront work to stay on top of investing. I have had a FA for the last 9 years. I use to stay on top of my own investing for approximately 30 years but finally got burned out. I am very happy with our FA situation. I retired at 53 in 2015 and have went back to work on a couple of short term projects over the years.
Again I get it what you are saying but it may not be for everyone because it does take time and stressful at times.

Op
I have minimal in bonds and heavier into equities in my specific situation.

[RiverRat1]

Look at you, with the 20/20 hindsight….

Shopping for a FA for someone else is like picking their spouse for them

Search my posts on bonds before they tanked. Your welcome.

https://discussions.texasbowhunter.com/forums/showthread.php?t=828726&highlight=bonds

So a country boy could see it coming but FA's want to stay in bonds to make their clients 1% ?

And why does everyone avoid the two questions I asked a few posts back?


I'm not trying to bash FAs. I even use one. But I see no reason a FA wouldn't see the risk in bonds after the FED plainly stated they were going to raise rates a lot.
I understand losing to inflation by holding cash. But those who have bonds lost 4-10% plus lost to inflation. Cash would have been far better.

And going forward the FED plainly stated they will reduce their balance sheet starting in May. I'm not sure what this means but I assume it means selling stocks, corporate bonds etc that they've been buying for 2 years. 90 Billion a month they are supposed to sell. Is this to be ignored also?

[Snacks]

It is hard to answer the question with yes/no without giving more specifics.
For example, what kind of bond fund(s) did he put her in?
Sr. Loans are down -0.2% YTD, Short-Term Treasuries are down -2.5% YTD while long bonds (TLT) are down -16.57%. Most actively managed strategies are down 8-9%.
While I agree that inflation was obvious to anyone paying attention, it has been an extremely difficult year with very few places to hide.
Inflation running at 8.5%, so cash doesn't really work
S&P 500 -7%/NASDAQ -14%, so equities taking a hit
Last year we reduced 50% or so of our fixed-income exposure across the board and went into liquid alternatives - things like Long-short commodities, fund of funds, etc. That has proven to be very beneficial for our clients in this period.
However, in the past that same move has left money dead for long periods of time as the 60/40 portfolio rocked on.
So, to answer your question, this game is F'ing hard. This year in particular has been extremely difficult with very little clarity. Sometimes FA's don't get it right and maybe this one is indeed incompetent. However, without more clarity on the clients goals/strategy/risk tolerance, I will reserve judgement.