April 19, 2024

Some index funds are mutual funds, and some are ETF's. And there are actively managed ETFs and mutual funds

It used to be that almost all ETFs were index funds, while most mutual funds were actively managed funds. But there have been mutual fund index funds since the 70's. And a growing proportion of ETFs are actively managed.

Actively managed means that an individual or team tries to pick the best stocks to buy and sell, and so tend to be more expensive (higher expense ratio) than index funds where they work to match what's in the benchmark they are indexing.

Examples (both are S&P 500 index funds at Vanguard):

VOO - an ETF - Expense Ratio: 0.03% https://investor.vanguard.com/investment-products/etfs/profile/voo#overview
3 year performance: 11.42% (annualized)

VFIAX - A mutual fund - Expense Ratio: 0.04% https://investor.vanguard.com/investment-products/mutual-funds/profile/vfiax#overview
3 year performance: 11.44% (annualized)

Unfortunately, I can't find the expense ratio to more than single significant digits accuracy, but even if they are indeed 0.01% difference, that's $1 per $10,000 invested per year.

Personally I prefer mutual funds over ETFs because I like that the former are bought and sold at Net Asset Value (NAV), whereas an ETF trades at a varying premium or discount to NAV. But I own both mutual funds and ETFs.

One should use limit orders to purchase or sell ETFs as their price can swing considerably during the day above and beyond changes in the underlying NAV. ETFs are traded throughout the trading day, sometimes resulting in sizable bid-ask spreads, particularly for the smaller more specialized ETFs.

OTOH, ETFs have some tax advantages as they aren't forced to distribute capital gains as much as mutual funds are. I'm not clear how that works, but I don't doubt that's the situation.

For funds held within retirement accounts like 401k's and IRA's (both traditional and Roth), there is no difference between the two as far as taxes.

April 17, 2024

Higher inflation expectations causes bond yields to rise, and causes bond prices to fall.

Bond prices always move in the opposite direction to yields.

"why would people be SELLING Treasuries?"

For example, a few days ago I found the purchasing power of an S&P 500 equity fund (VFIAX) is up 12.90%, while that of the VCOBX bond fund (mixed government and corporate bonds, intermediate term) is down 21.78% in the 3 years to 4/9/24. (Edited to add: Those are total returns, including reinvested dividends and interest, and then adjusted for inflation /end edit). People just don't want any more of that kind of punishment.

As an old person, I have a 60%-40% equities to fixed income allocation. The portfolio has been massacred on the fixed income side of things (most of my fixed income holdings are intermediate term bond funds. VCOBX -- Vanguard Core Bond Fund -- is one of my holdings).

EDITED TO ADD:

https://www.investopedia.com/articles/bonds/09/bond-market-interest-rates.asp

1/4 of my fixed income allocation is in TIPS and I-bonds. This is the part of my fixed income portfolio that isn't suffering.

When inflation heats up, some of the money that would have gone into bonds goes into commodities or commodity-related stocks like oil and gas companies. The lower demand for bonds causes bond prices to fall and the bad cycle for bonds begins. Some other bond money shifts to very short maturity investments like money market funds.

April 14, 2024

Inflation in the last month and last 3 months, graphs and all. PCE, CPI, PPI. Regular and Core

I've been seeing some mischaracterizations of the recent inflation situation in the media, so here is a summary table followed by the graphs.

I annualize them all to be easy to compare to each other, and to compare to the FED's 2% goal. I use the actual index values rather than the one-digit changes that are commonly reported in the media. Links to the data are with the graphs.

The "1 month" number is the change from February to March, expressed as an annualized number (for the PCE it's the change from January to February; the PCE folks don't do March until near the end of April).

"Regular" is the "headline" number that has "everything"

"Core" is the regular with food and energy removed (The Fed prefers this as a basis for projecting FUTURE inflation)

3/29/24 PCE (Fed's favorite inflation measure)

REGULAR 3 month: 3.4%, REGULAR 1 month: 4.1%; CORE 3 month: 3.5%, Core 1 month: 3.2%;

4/10/24 CPI-Consumer(retail) inflation

REGULAR 3 month: 4.6%, REGULAR 1 month: 4.6%; CORE 3 month: 4.5%, Core 1 month: 4.4%;

4/11/24 PPI (Wholesale prices)

REGULAR 3 month: 4.4%, REGULAR 1 month: 1.9%; CORE 3 month: 4.7%, Core 1 month: 2.5%;

Edited to Add:
. Average real (i.e. inflation-adjusted) hourly earnings are up over the past 2 years and are above the pre-pandemic level:
. . . # Real average hourly earnings of production and non-supervisory workers: https://data.bls.gov/timeseries/CES0500000032
. . . # Real average hourly earnings of private sector workers: https://data.bls.gov/timeseries/CES0500000013

And now the graphs, in the following order:

* Core CPI and Regular CPI

* Core PCE and Regular PCE (Core PCE is the Fed's favorite for projecting FUTURE inflation)

* Wholesale inflation - Core PPI and Regular PPI

CORE CPI

http://data.bls.gov/timeseries/CUSR0000SA0L1E



The Regular aka Headline CPI
https://data.bls.gov/timeseries/CUSR0000SA0



CORE PCE through February that came out 3/29/24
CORE PCE: https://fred.stlouisfed.org/series/PCEPILFE

This is the one that the Fed weighs most heavily. The Fed weigh the PCE more heavily than the CPI. And in both cases, they weigh the CORE measures higher than the regular headline measures for projecting FUTURE inflation



Regular PCE through February that came out 3/29/24
PCE: https://fred.stlouisfed.org/series/PCEPI


WHOLESALE INFLATION (PPI - the Producer Price Index)

https://www.bls.gov/news.release/ppi.nr0.htm

As for which core PPI measure, since the BLS highlights the one below in its reporting (as opposed to the one without food and energy), then I guess I should do likewise.

BLS Data Series CORE PPI (excluding food, energy, trade services): http://data.bls.gov/timeseries/WPSFD49116



===========================================================

BLS Data Series Regular PPI ( includes "everything" ): http://data.bls.gov/timeseries/WPSFD4

April 14, 2024

I don't know what Al Gore was getting at, but in his day, before, and today, SS is invested in the safest investment

in the world, namely U.S. Treasury securities.

BY LAW, each year the surpluses are loaned to the federal government

and no, that didn't start with Reagan. Nor did it start with LBJ. It has been that way from the beginning.

The government in turn creates special issue treasury securities that are deposited in the Social Security and Medicare trust funds. These earn interest -- paid in the form of more special issue treasury securities. In a year when Social Security revenues fall short of benefits then trust fund securities are redeemed to make up the difference. This is already occurring:

"At the end of 2021, Social Security’s trust fund reserves were $2,852 billion, having decreased by $56 billion over the year." - Source: 2022 Trustees report, https://www.ssa.gov/OACT/TRSUM/2022/index.html

Similarly the Medicare Trust fund.

Anything you read about "pilfering" of the programs is literal fucking bullshit.

Social Security Trustees 2022 report -- https://www.ssa.gov/OACT/TRSUM/2022/index.html
from the above link:

Federal law requires that the Trustees invest all excess funds in interest-bearing securities backed by the full faith and credit of the United States. The Department of the Treasury currently invests all program revenues in special non-marketable U.S. Government securities, which earn interest equal to rates on marketable securities with durations defined in law. The balances in the trust funds, which represent the accumulated value, including interest, of all prior program annual surpluses and deficits, provide automatic authority to pay benefits.

(By the way, the 4 trustees are all high level Biden administratrion appointees. This isn't a report by right wing economists or the right wing media or such)

The report is signed by:

Janet Yellen, Secretary of the Treasury, and Managing Trustee of the Trust Funds.
Xavier Becerra, Secretary of Health and Human Services, and Trustee.
Martin J. Walsh, Secretary of Labor, and Trustee.
Kilolo Kijakazi, Acting Commissioner of Social Security, and Trustee.

(and if some idiot says, well what do you expect liberal Democrats to say? Well, the same language is in Trump era SS Trustees reports too, for example this snapshot from 2019: https://web.archive.org/web/20191125074043/https://www.ssa.gov/oact/trsum/ )

Actuarial Note #142 of January 1999 (how interest rate determined, the trust fund securities etc.) http://www.ssa.gov/OACT/NOTES/note142.html

And as the above said, they earn interest that goes into the trust funds and are invested in new treasuries.

If they were put in a "lock box", they wouldn't earn a fucking dime in interest or any other kind of earnings. So like I say, I don't know what Al Gore was getting at, to put it nicely.

I have treasuries too, about 10% of my investable assets. (I'm kinda old and invest conservatively with a 60% equity and 40% fixed income allocation).

I also suffer paying income tax on 85% of my SS benefits.

What makes it easier to stomach is that income taxes on SS benefits goes into Social Security, NOT into the general fund.

I agree with your OP that more, a lot more of this, should be paid by the billionaires and corporados.

December 12, 2023

CPI GRAPHS: Month-by month bar graph and rolling 3 months

though nowadays they look at things like "supercore service inflation" and core ex shelter and who knows what other series.

First the regular headline CPI number, and the regular month-by-month increases (rolling 3 months stuff comes later) :



After a frightening late summer jump, a nice downward trend to 0% in October and 0.1% in November

Now the CORE CPI number that the Fed is more interested in (though actually its the CORE PCE inflation gauge that historically has been their #1 gauge of underlying inflation trend to project FUTURE inflation)


It appears to have stabilized around a 0.25%/month average over the last 6 months. Actually the 6 month average, calculated using actual index numbers, is an annualized 2.90%.

CPI Rolling 3 month average thru November 2023:

For better accuracy, I calculate the rolling 3 months average using the actual index numbers, not the one digit monthly change numbers

A rolling 3 month helps smooth out month-to-month volatility, and since 3 months is an average of 3 data points, it is less likely to be dismissed as a "one off" like a single month's increase could be.


A big plunge as the August number (7.84% annualized) fell out of the 3 month average, while the November number (1.17% annualized) got added in. There likely will be another substantial drop next month when the Sepember number (4.85% annualized) drops out of .the 3 month average.

CORE CPI Rolling 3 month average thru November 2023:



It appears to have stabilized at a little above 3% annualized

The next Fed rate-setting meeting is December 12-13 (yes the anti-climatic big decision is tomorrow).

BLS CPI press release: https://www.bls.gov/news.release/cpi.nr0.htm

Various series:

CPI: https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth
CORE CPI: http://data.bls.gov/timeseries/CUSR0000SA0L1E&output_view=pct_1mth

For all BLS timeseries data, one can see the index values and other periods like rolling 3 month, rolling 6 month, rolling 12 months by clicking "More Formatting Options" on the upper right and then on the page that shows up, check the various checkboxes

REAL AVERAGE HOURLY EARNINGS of production and non-supervisory workers https://data.bls.gov/timeseries/CES0500000032 ,
. . . private workers: https://data.bls.gov/timeseries/CES0500000013

CPI excluding shelter - https://data.bls.gov/timeseries/CUUR0000SA0L2
. . . FRED: https://fred.stlouisfed.org/series/CUUR0000SA0L2
. . . Table 3 has CPI ex shelter, as well as Core ex shelter https://www.bls.gov/news.release/cpi.t03.htm

Rent (SA) https://data.bls.gov/timeseries/CUSR0000SEHA
Fred: (SA) Rent of Primary Residence in U.S. City Average https://fred.stlouisfed.org/series/CUSR0000SEHA
(NSA) https://fred.stlouisfed.org/series/CUSR0000SEHA

SA = Seasonally Adjusted, NSA = Not Seasonally Adjusted

November 14, 2023

GRAPHS: month-by month bar graph and rolling 3 months

though nowadays they look at things like "supercore service inflation" and core ex shelter and who knows what other series.

First the regular headline CPI number, and the regular month-by-month increases (rolling 3 months stuff comes later) :



After a frightening late summer jump, a nice downward trend to 0% in October (actually 0.04% which annualizes to 0.54%)

Now the CORE CPI number that the Fed is more interested in (though actually its the CORE PCE inflation gauge that historically has been their #1 gauge of underlying inflation trend to project FUTURE inflation)


After a bump-up in late summer, a nice move downward in October back to the June-July numbers.

CPI Rolling 3 month average thru October 2023:

For better accuracy, I calculate the rolling 3 months average using the actual index numbers, not the one digit monthly change numbers

A rolling 3 month helps smooth out month-to-month volatility, and since 3 months is an average of 3 data points, it is less likely to be dismissed as a "one off" like a single month's increase could be.



The big August & September jump hurt the 3 month average. As August and September fall out of the 3 month average in the coming one and two months, there should be a dramatic improvement.

CORE CPI Rolling 3 month average thru October 2023:



It has finally come down to about the 3% range. As August and September fall out of the 3 month average in the coming months, this may well improve considerably.

The next Fed rate-setting meeting is December 12-13.

BLS CPI press release: https://www.bls.gov/news.release/cpi.nr0.htm

Various series:

CPI: https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth
CORE CPI: http://data.bls.gov/timeseries/CUSR0000SA0L1E&output_view=pct_1mth

For all BLS timeseries data, one can see the index values and other periods like rolling 3 month, rolling 6 month, rolling 12 months by clicking "More Formatting Options" on the upper right and then on the page that shows up, check the various checkboxes

REAL AVERAGE HOURLY EARNINGS of production and non-supervisory workers https://data.bls.gov/timeseries/CES0500000032 ,
. . . private workers: https://data.bls.gov/timeseries/CES0500000013

CPI excluding shelter - https://data.bls.gov/timeseries/CUUR0000SA0L2
. . . FRED: https://fred.stlouisfed.org/series/CUUR0000SA0L2
. . . Table 3 has CPI ex shelter, as well as Core ex shelter https://www.bls.gov/news.release/cpi.t03.htm

Rent (SA) https://data.bls.gov/timeseries/CUSR0000SEHA
Fred: (SA) Rent of Primary Residence in U.S. City Average https://fred.stlouisfed.org/series/CUSR0000SEHA
(NSA) https://fred.stlouisfed.org/series/CUSR0000SEHA

SA = Seasonally Adjusted, NSA = Not Seasonally Adjusted

October 31, 2023

GRAPH: ECI - Employment Cost Index: 2018-Q1 thru 2023-Q3

The Employment Cost Index as it is said to be a much better indicator of wages and compensation than the usual go-to metric of average hourly earnings that comes out on first Fridays (usually). The ECI is said to looks at trends in the same occupations, whereas average hourly earnings gets distorted by job losses or gains occurring in certain sectors more than others; last hired first fired stuff (in the pandemic that caused the averages to soar). Whatever. I'm saying this off the top of my head, there are better explanations out there.

http://www.bls.gov/news.release/eci.nr0.htm

Their table shows the 12 month INFLATION-ADJUSTED number is +0.6%. At a glance I don't see their inflation-adjusted 3 month number anywhere.

==================================================================
From: https://www.piie.com/blogs/realtime-economic-issues-watch/us-wages-grew-fastest-pace-decades-2021-prices-grew-even-more

[1] The Pandemic’s Effect on Measured Wage Growth, The WHite House, 4/19/21
https://www.whitehouse.gov/cea/written-materials/2021/04/19/the-pandemics-effect-on-measured-wage-growth/

=====================================================


This particular one is INFLATION-ADJUSTED wage and salaries for private sector workers.

Note the build-up to the Q2.2020 peak. Then it plateaued through Q1.2021, President Biden's first quarter, then went down.
Finally it has been turning up since a local bottom in Q3.2022 for four quarters.

The last reading (103.2) is 3.1% below the peak, and 2.9% below the Q1.2021 value.

We're not quite at the 2019 Q4 pre-pandemic level of 104.4, but are getting there (We're down 1.1% from that level).

Source: https://fredblog.stlouisfed.org/2018/02/are-wages-increasing-or-decreasing

I tediously moused over point by point gathering the data from their graph (the numbers for each point pop up, so I didn't have to "read" the graph like back in middle school). Later: There's a "Download data" link at the lower left of the second graph at the Source that I had been aware of and had clicked and thought it was just downloading a PDF file of the page. But it turned out it was offering to download the Excel data for the graph which is of course what I wanted. So I did that and verified that the data was the same, to within 0.0 accuracy, as used for my graph, but I went ahead and replaced my old data with it (since it has a few more digits to the right of the decimal, and heck why not).

The source link just above also compares to inflation-adjusted average hourly earnings and also to inflation-adjusted median usual earnings of full-time workers.

This (the ECI) is reportedly the Fed's favorite wage and salary indicator as explained earlier in the post.

October 13, 2023

GRAPHS of CPI and CORE CPI (from yesterday's inflation report)

October 1, 2023

Amazon: "Important information about your Google Play gift card order"

Anyway that's the title of an email from store-news@amazon.com that I got about 30 minutes after placing an order for stuff (but not gift cards) at Amazon.

The email continues:

"Thank you for purchasing Google Play gift cards from Amazon.com.

We would like our customers to be aware of some important information relating to purchase of Google Play gift cards.

There are a variety of scams in which fraudsters try to trick others into paying with gift cards from well-known brands. To learn more about some common scam attempts that may involve asking for payment using gift cards please click on the button below, or alternatively contact us now (link)

I Googled and found some Reddit threads with postings like this:

Called Amazon through the app and had a waaaay long wait time. They assured me that the emails were a test to tell us to look out for emails like that.

One would think Amazon would send a follow up email and post something on their website. One would think wrong.

September 27, 2023

Hard boiled eggs

The most common Internet suggestions look something like this:

Put eggs in saucepan, add cold water (eggs b4 water) to cover, and heat it up rapidly to boiling

Turn off heat and set a timer for 10 minutes

After 10 minutes, dunk the eggs in an ice bath to stop the cooking. Best to begin peeling while still warm.

Anyway almost all the methods I've seen, and I've seen many, have this in common.

I found peeling to be a real bit by bit by bit chore. I decided never again.

I found but lost a great article that discussed positively and skeptically all the different suggestions that can be found, so unfortunately I can't post it. But here are a couple of articles:

We Tried the 5 Best Ways to Perfectly Peel a Hard-Boiled Egg
These are the most effective techniques from Reddit and YouTube.
https://www.prevention.com/food-nutrition/healthy-eating/a20486471/best-way-to-peel-a-hard-boiled-egg/

We're Using a Spoon To Peel Our Hard-Boiled Eggs From Now On ...
Take an egg out of the cooling water and crack it along the fat end by tapping it on the counter or cutting board. Peel just enough shell to be able to slip the tip of a spoon under the shell. Carefully slide the spoon in so that the curve of the spoon follows the curve of the egg. Then, rotate the egg as you move the spoon between the shell and the egg white.
https://www.southernliving.com/food/dairy/eggs/how-to-peel-boiled-egg-with-spoon

Does anyone have some suggestions to make this all easy? Thanks

=============================================

BTW, my gas stove gave out some time ago, and I've been making do with slow cookers, which fortunately also have grill bases. But these are kind of slow heating - I think they max out at 500 watts.

I have on order from Amazon:

CUSIMAX Electric Hot Plate for Cooking Portable Single Burner 1500W Cast Iron hot plates Heat-up in Seconds Adjustable Temperature Control Stainless Steel Non-Slip Rubber Feet Upgraded Version B101
https://www.amazon.com/CUSIMAX-Electric-Adjustable-Temperature-Stainless/dp/B07D71TD67/ref=sxin_17_sbv_search_btf
-- Not induction, 8.78"D x 11.6"W x 3.39"H (so roughly 9" X 12", < 4"tall) Wattage 1500 watts
-- "uses 7 thermostatically controlled heat settings conveniently to cook a variety of foods such as warm sauces, decoct steak, grilled cheese, boil water, make soup, cook pasta and vegetables and do so much more. Meet your daily cooking needs."

Anyway, for a hot plate, I've never seen so many bells and whistles.

=============================================

As for what to have for breakfast, I haven't thought about it yet, beyond sipping a cup of coffee now. I don't have any eggs around, so it won't be hard-boiled eggs.

EDITED TO ADD: 3 prunes, and an apple, (and the coffee) and that's probably going to be about it. I'm just not hungry for anything that's in the fridge/cupboards/pantry right now.