by Travis Johnson, Stock Gumshoe | February 24, 2023 7:30 am
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Great update Travis. Especially on Keysight and Goosehead Insurance. I have them in my portfolio but have been very disappointed in performance., but will rethink to hold on based on your comments. Can’t wait to hear from you post visit to Omaha , safe travels..
Where do you purchase your T-bills at?
Thanks
I just buy them directly at TreasuryDirect, though a very short-term bond fund could give similar results.
Treasury Direct is one of the few things the gummint got right. I hope they increase the limit on I-bonds. I have a T-bill ladder going out as far as 6 months with automatic reinvestment instead of a savings account.
I think TD is superior to a bond fund.
Travis, any thoughts on the newer T bill ETFS?
Haven’t looked at them in detail. When you’re dealing with a 1-2 month time period, which most of these seem to be, you may well be better off just buying a money market fund, it might feel a little safer and more consistent because of the $1 per share “peg” those funds use (and the best money market funds offer about 4% currently, with that number likely to rise as they roll to new maturities). In the end, it seems likely that the inexpensive ETFs that hold a less-than-a-year portfolio of T-bills will probably end up with returns similar to money market funds over time, but it might feel more volatile because, unlike money market funds, their share prices fluctuate a bit… one that looks fairly appealing is the Goldman Sachs 0-1 year Treasury ETF (GBIL), which is inexpensive (0.12% expense ratio) and whose portfolio now has a yield to maturity of about 4.6% and an average duration of about 4 months, I’d be willing to put some of my “cash” in that fund, though the returns are currently pretty similar to my brokerage sweep account (money market fund that yields about 4.2% now) so I haven’t bothered to move that cash around much.
If you’re not getting 4-5% on your idle cash, it makes sense to do something to “catch up” with those prevailing rates and let your cash continue to roll over to higher-returning safe T-Bills (or similar) if rates continue to rise, whether it’s money market accounts or buying T-Bills or these extremely short-duration ETFs… but it matters less exactly what you do and whether it earns 4.2% or 4.8% at this moment, partly because those numbers are also in flux. You don’t want to take any real risks with cash you might need in the near future, of course, but the bigger issue is getting out of lousy cash accounts that still pay far below 1%.
I like holding actual T Bills and having a rolling portfolio of them, though that is admittedly more work.
Thanks Travis!
I am new joiner to the site. Your updates are very insightful! I am sorry if I missed out on the previous write-ups but I am keen to hear your view on Electronic Arts. Shares seem to have collapsed 20% following their last earning update. Thanks.
Hi tantafu Travis has a previous write-up on Electronic Arts dated 2/14/2019 https://www.stockgumshoe.com/reviews/stock-advisor-canada/fools-bezos-is-dumping-970-million-into-a-bizarre-2nd-coming-of-netflix/
Thanks tanglewood.
Any new insight on the seemingly perpetual negativity for $MPW? Earnings this week didn’t seem to justify the price drop, though admittedly I am not a whiz of an analyst and only glanced over some numbers. People just love to hate any tenant hiccups they have. I’m content to let my position compound for decades to come, but would also like to opportunistically add when I can.
Travis. Thanks for another great analysis. What is your opinion now on CCI?
With regards to paying off the mortgage. 15 years ago, I was earning quite a bit of money, maxing out my 401(k) and decided to start double paying my mortgage. I also had quite a few stock options from my employer and knew I would never pick the perfect time to cash them in so I made a decision that when the payoff value of my mortgage was equal to the value of my options. (Stock options, becoming more valuable as the stock went up in value and mortgage payoff going lower as I was double paying the monthly number) I would cash the options and pay off the mortgage… That day arrived, I paid everything off and was 100% debt free.
A year and a half later, an accident left me a quadriplegic and unable to work any longer. while my long-term disability insurance (best investment I ever made) has kept the bills paid, and my wife and I solvent and doing well in spite of our circumstances, being mortgage free has allowed us to stay in the house with no issue.
Another decision I was making at that time was to keep my stock grants as they vested every year. I sold a third to pay the taxes and held onto the rest. Many of my colleagues thought I was crazy not to cash everything in and take the money. I didn’t need the money so I thought building equity in the company, Merck, was worthwhile. Today, those dividends pay my property taxes and all that stock provides a solid foundation to my investment portfolio that allows me to take chances with the rest (now that I actually have some free time to focus on my investments – something that didn’t exist, while I was working like a nut)
You just never know what the future holds.
Sorry to hear about your accident. I carried disability insurance until I retired. Insure your life, your health,, and your ability to earn.. You navigated your situation really well IMHO.
I no longer carry life insurance because none of my survivors need it. I don’t carry disability since I’m retired, and my health insurance is Medicare plus supplemental and Part D.
And the future isn’t what it used to be.
After 401k and HSA, LTD is the only elective payroll deduction I take. The cost to benefit makes sense to me. STD no thank you. Glad that you had it.
Here’s a important little fact about disability insurance
If premiums are paid with pre-tax dollars, your disability insurance benefits are taxable to you. In this case, you would include the amount of benefits you receive on your tax return as part of your salary or wages. If disability insurance premiums are paid with post-tax dollars, your LTD benefits are not taxable.
I have not paid a penny of federal income taxes on my disability benefits, because I made a simple choice on my payroll deduction.
fascinating point!
Fortunately I bought NVDA in 1/2016 @ $29.05 in my IRA. It’s been a roller coaster ride when I sell some at a profit and watch the rest go down. I’m still holding some and watching it go up currently.
Thanks Travis. Another great summation. After looking at the price action of STEM I can’t help but get caught up on the price action (lower) on above average volumes. Sorry but I’m still trying to figure out the correlation between price action and volumes…there’s something telling there…maybe. lol Or I’m a fool.