I will not be surprised if Trump comes up with some other lunacy like the tariff business.
But nothing we retail investors can do about that.
We’re retired, so we don’t have as much flexibility to make up losses.
I will continue on a course of moving assets to less volatile instruments, modulated by not wanting to give too much capital gains tax to the IRS in any given year.
you definitely need to do the calculations (and they can get tricky trying to estimate things), but you would need to have a very large 401k/IRA for RMD’s to result in significant taxes. Consider a 75 year old with a 2 million IRA balance (a nice size IRA). This year, their RMD would be around $81k. If the person is married and filing jointly and doesn’t have any other significant income, the federal taxes on that is something on the order of $6200, or less than 10% of the RMD amount.
Sure, but here in Boston $81k isn’t living the high life.
I’m assuming that someone who saved 3 or 4 million is going to want to spend it. I sure would. I wasn’t talking about RMDs.
Here’s a article that’s largely sourcing from the Footwear Distributors and Retailers of America (lobbying group?):
https://www.axios.com/2025/05/21/tariffs-prices-kids-shoes
They’re predicting pre-tariff goods that have been warehoused to dry up in summer, about the time that families start buying up for the new school year, and so the higher prices hitting the market at about that time.
Their calculations produce (for the example product) a 25% jump on the price that customers will see on the shelves.
If the warehouses do all clear out at about the same time, a market-wide 25% price jump does feel like the sort of thing that would lead to panic.
Maybe Walmart has decided to start adjusting their prices early 1) to try and reduce the shock factor that they’d be met with later in the year, and 2) in the hope that there’s still time to turn the boat, getting the citizens out on their side early enough to right things.
Knowing everything we know about just in time delivery, supply chains, etc., I’m really struggling with the idea that there is a 6-9 month supply of goods like shoes sitting in US warehouses just waiting to be sold.
That kind of stock management went out of financial fashion 25-40 years ago.
Yet various pundits & spokes-heads keep assuring us there’s this mountainous supply to goods to be gotten through first. Then the tariffs will hit home. Hard.
Meanwhile, when it comes to gasoline retailers, the conventional wisdom is that they set prices based not on the cost of the fuel in their storage tanks being pumped today, but on their expectations about what they’ll pay the distributor for refilling the tanks next week. Today’s cashflow needs to be big enough to refill the tanks by today’s quantity sold.
Different industries can certainly have different attitudes to all this, but if I was running a big retailer and looking at a COGS cliff coming up, I’d sure be ramping prices in anticipation.
On an average day, I’ll have enough food to feed myself for a few weeks at best.
If you tell me that all indications are that the harvests are all going to fail this year, and give me a few months to prepare, my stocks are going to be a lot different.
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I have a couple of T bills maturing next month & with the sinking US bond rating and overwhelming desire to screw over Donald Trump in whatever tiny way I can, I’ve been looking at non-US fixed income investments. The Canadian banks seem to be offering some attractive bonds, such as:
Am I missing anything?
Or next month etc.
Funny how that always works to make prices go up rather than down, isn’t it?
I don’t know about that. I don’t carefully follow prices, but I almost always buy my gas at the same station time after time.
My observation is that prices go up, prices go down, often by 50 cents a gallon from fill to fill. There doesn’t seem to be any one-way ratchet operating on a scale larger than a few cents or faster than a few months.
Full disclosure: IANAFA.
As with any callable bond, the risk is if it the bond gets called before maturity. But even if it gets called in November, you would still earn 4.67% on your investment for the next six months, which is better than any CD or savings account out there.
Earning 6.863% over the next 10 years certainly seems attractive. If, of course, you don’t mind your money tied up for that period of time. My personal rule of thumb is to purchase bonds no more than 7 years out. But I might make an exception for this one, as the Royal Bank of Canada probably isn’t in much danger of default.
Again, just my decidedly non-professional opinion.
That was pretty much my reasoning. Attractive interest rate, low risk, supports a Canadian institution, if it gets called, move on.
There’s the rub. As an older investor, I don’t want to lock up funds where I can’t access them quickly in an emergency (at least without a penalty). Right now you can find Money Market funds which pay almost as much as bonds or bond funds, so I view bonds as more risky.
The old 60/40 rule used to apply rather a long time ago when Fed rates were considered ‘normal’ at 10% or so. (Remember those times)?
If the Fed cuts substantially in future it may be time for a rethink of strategy.
I guess it depends on which bonds you’re viewing. Short-term Treasuries are certainly not very attractive right now. But you don’t have to look very hard to find corporate bonds that are paying better than most MM funds. (I speak from only my experience on the Fidelity website.)
Of course, Money Markets and MM funds have less risk, so there’s that consideration.
All your funds or only some of your funds?
Are you Canadian? I don’t think so, but I’m sure I’m not sure.
If you’re American and buying these Canadian bonds with USD, then you’ve got to be aware that any change in the USD/CAD exchange rate can easily swamp the CAD interest your investment in CAD-denominated bonds would earn.
If the US’s current criminal regime (CCR, but not as fun as Credence Clearwater Revival) trashes the USD along with the US economy, you might well make out OK on any currency shifts. OTOH, to the degree the USA ends up f***ing up Canada along the way, the CAD may suffer more than the USD does. Meaning that from a US-centric POV your CAD investment loses out on currency shifts.
Bottom line: If you can buy a WAG 5% bond denominated in USD, or a 6% bond denominated in CAD, it’s be easy for currency flails to overwhelm the 1% delta. In either direction.
Ah-hah! That’s probably why, when JFG I previewed an order for buying 5 of those bonds, the ‘effective yield’ was around 4.5%.
Normally the effective yield is somewhere close to the yield-to-maturity figure. I couldn’t figure out why it was so much lower in this case. Now I understand, or at least I think I understand.
Ignorance fought. Again.
There are A LOT of very attractive bonds out there these days. As you said, the only real “risk” is that it gets called early. And that doesn’t really hurt you.
And, depending on how interest rates are moving, you can always sell them. Just maybe not on the best terms. We pretty much assume the $ we have in bonds is not anything we are going to need access to anytime before the expected maturity date.
I doubt that’s it. Any effective yield calc can’t predict how the USD might move relative to the CAD over the future life of the bond.
Here’s some light reading:
Well, damn.
Then I have no idea why the effective yield on those bonds were a full two points lower than the yield-to-maturity.
Yep, I’ve read most of those, plus I’ve read the Bond Book, which I linked to upthread.
Good Lord, no. I try to be very diversified!
But the idea that bonds are a useful hedge seems to be rather a myth these days.
If bonds pay no signficant premium over MM accounts, why take the risk?
As I’ve said: things change and we need to remain alert.