The Investment Thread

[Fear The Chorizo]

26 minutes ago, owbc said:

The miles driven in my household plunged during the pandemic and never went back to the previous normal, so now I'm sitting on a second car that is 12 years old with roughly 75,000 miles. I came fairly close to going down to a 1 car household when used car prices were high, but it's nice to have it around for the 3 or 4 times per month that it gets used. If it was the 'before times' I would have wanted to replace it but instead we splurged on an expensive primary car and I'll keep the backup car as long as possible. 

Yes, the mileage driven lag during the pandemic definitely helped extend the life of used cars to the point we're at currently in the US.  We've got a pair of 120K+ mile vehicles currently going in our household, and our gameplan is to also splurge on a new or very lightly used vehicle as our new primary when that time comes and then keep our minivan for local kiddo shuttling.  My small SUV probably will have less miles on it but really won't fit our family as the kids get bigger, so I'd hope to sell that via craigslist to have a healthy downpayment on our new ride once we're ready to buy.  It'll take one of our cars becoming mechanically unusable before we buy another one - at least until car prices drop quite a bit more.

[LouisEly]

On 12/13/2022 at 11:48 AM, Fear The Chorizo said:

Average age of a vehicle across the US has ballooned to over 12 years, an all-time high for this country.  Used car sales plummeting was bound to happen when large portions of the consumer base for buying used were priced out of the market and have instead continued pumping money into their existing rides for repairs.

 

Actually, the biggest reason behind this is that the global competition from so many auto manufacturers (finally) forced all manufacturers, particularly the US-based auto manufacturers, to up their quality game.  No more planned obsolescence, because they saw that there was no more guarantee that they would get that next vehicle purchase ("just because they're an American company").  Poor quality perceptions reduced that first purchase likelihood, forcing manufacturers to act.  The long-term maintenance costs have dropped significantly because vehicles are designed to last longer.  Yes, if vehicle prices were lower more people would buy newer, but there are plenty of people like me who can afford a new car but choose not to because they are not having any problems with their older vehicle.  If more people could afford new cars, demand would increase, pushing prices up..  It would have made the chip shortage even worse.

[homer]

wow, gas prices really tumbled the last few weeks. I've seen $2.59 here in Milwaukee.

[Fear The Chorizo]

45 minutes ago, homer said:

wow, gas prices really tumbled the last few weeks. I've seen $2.59 here in Milwaukee.

they've dropped about $.40/.50 a gallon here in MPLS area the last few weeks, too.

end of summer gas formulations, typical seasonal drop in driving miles for winter in the midwest, and a good ol' fashioned recession is a good mix to get those prices back down.

Also, just checked the SPR stockpile graph - seems like oil has continued being siphoned from them even into December, down to levels not seen since early 1984....that's definitely having an impact to accentuate gas price dips for now.

[Fear The Chorizo]

2 hours ago, LouisEly said:

Actually, the biggest reason behind this is that the global competition from so many auto manufacturers (finally) forced all manufacturers, particularly the US-based auto manufacturers, to up their quality game.  No more planned obsolescence, because they saw that there was no more guarantee that they would get that next vehicle purchase ("just because they're an American company").  Poor quality perceptions reduced that first purchase likelihood, forcing manufacturers to act.  The long-term maintenance costs have dropped significantly because vehicles are designed to last longer.  Yes, if vehicle prices were lower more people would buy newer, but there are plenty of people like me who can afford a new car but choose not to because they are not having any problems with their older vehicle.  If more people could afford new cars, demand would increase, pushing prices up..  It would have made the chip shortage even worse.

yes and no - the concept of upping the quality game for auto manufacturers to maintain market share has been around for a looong time, which has definitely led to increased vehicle age on the roads over the years.  If US automakers hadn't upped their game 15 years ago many more of those companies wouldn't be around.  

The recent surge and now drop in used car prices is more supply and demand-based, not just because cars magically got more reliable in the past two years so nobody even wanted to buy a different (new or used) vehicle than the one(s) they currently have.

[AKCheesehead]

1 hour ago, homer said:

wow, gas prices really tumbled the last few weeks. I've seen $2.59 here in Milwaukee.

Must be nice.  Here in Bethel we are locked into the price from whenever our last fuel barge of the year comes, usually end of September.  So, it's $6.73 until June.

[owbc]

57 minutes ago, Fear The Chorizo said:

they've dropped about $.40/.50 a gallon here in MPLS area the last few weeks, too.

end of summer gas formulations, typical seasonal drop in driving miles for winter in the midwest, and a good ol' fashioned recession is a good mix to get those prices back down.

Also, just checked the SPR stockpile graph - seems like oil has continued being siphoned from them even into December, down to levels not seen since early 1984....that's definitely having an impact to accentuate gas price dips for now.

The decision to draw down the SPR is looking brilliant assuming they can start refilling in early 2023 at a 20-30% discount vs. what they were selling it for in 2022. 

[homer]

Everything I've read says the draw down had a pretty small impact on gas prices. On the order of 20 - 30 cents. I think most people knew once a few refineries came back online and demand wavered a bit as summer ended it was going to drop so they  did a thing that made it seem like "hey we're doing something".

[igor67]

Whether or not it had a big impact on the prices I do think it is a healthy dose of cold water for those who speculate on prices too much that just driving the price up can trigger some shifts to help keep people more honest in their valuations.

[LouisEly]

Still $4.50/gal in my neighborhood.  Down from $4.90 a couple of weeks ago.

Is WI subsidizing gas or certain formulations of it?

[owbc]

6 hours ago, igor67 said:

Whether or not it had a big impact on the prices I do think it is a healthy dose of cold water for those who speculate on prices too much that just driving the price up can trigger some shifts to help keep people more honest in their valuations.

I agree, some of that was driven by the Ukraine situation but the Russian oil is managing to make it to market. 

Here in the Seattle area it’s fallen below $4 in the cheaper spots. I was out of the city near the refineries last weekend and I saw $2.75 so I topped off my tank for $14. What a deal! 

[Fear The Chorizo]

15 hours ago, owbc said:

The decision to draw down the SPR is looking brilliant assuming they can start refilling in early 2023 at a 20-30% discount vs. what they were selling it for in 2022. 

It was never, ever intended to be used as a way to manipulate gas prices at the pump, definitely not to the extent that it was drawn down (~40% reduction in 2022) knowing the current domestic production capabilities won't be enough on its own to both maintain domestic supply and build the reserve back up without prices spiking again.  Let's just hope there isn't further international strife that disrupts the supply to the US domestically now that the reserve has reached a level where it can no longer be used as a rainy day fund for energy supply.

And buying it back next year in the midst of a recession will actually keep gas/oil prices higher than they otherwise would be during a period of diminished demand.  

 

[homer]

16 hours ago, LouisEly said:

Still $4.50/gal in my neighborhood.  Down from $4.90 a couple of weeks ago.

Is WI subsidizing gas or certain formulations of it?

I think I read that Chicagoans pay about a dollar in taxes and fees per gallon of gas. I would wager that is most of the difference. You go out to Brookfield, IL and gas is like $3.30

[homer]

On 11/28/2022 at 12:35 PM, wallus said:

Yes I did. It's a little annoying that it takes 5 days to get into your account but I've now deposited twice. $42 earned so far which is more than I earned in my regular savings all year.

They bumped it to 4%

[homer]

[wallus]

54 minutes ago, homer said:

They bumped it to 4%

Ha, was just going to quote you and mention this. I was hoping it would go to 4.25% but they do need to make a few bucks too I guess.

[wallus]

On 1/12/2022 at 1:43 PM, wallus said:

I am pouring some money into the market again. Probably a good time for everyone else to pull theirs as I have had comically bad luck in past attempts. For example, I had a large position in BP right before their oil spill. That led me to just focus on real estate which I have had extremely good luck with.

 

I have a specific set of conditions for my real estate purchases and there is nothing out there right now that fit so back to the market I go. Not to "flex" too much but I could retire today from my real estate income which is pretty good for a dude in his 30s.

Just an update on my 2022 investing if anyone cares. I invested all of my primary job's salary (before bonus) in the market. I did weekly buys in 4 ETFs. 40% in a Total US Market Fund, 40% in a Dividend US Fund, 15% in an Income US fund and 5% in an International Dividend Fund.

I ended up being down 1% for the year after re-investing dividends. I was hoping to dump some of my year end bonus in the market but right now have it in high yield savings accounts earning around 4%. If the market starts to go down and hits certain figures, I will start throwing the bonus money into the 4 funds above.

Talking to other people, they said I did pretty well. If you put a lot of money in Tech, you probably got killed.

I put in offers for 4 rental properties and did not get any of them. All of them were bought with cash and well over ask so nothing lost.

2023 goals are to keep investing weekly and not check my account so much. 

[Fear The Chorizo]

On 12/16/2022 at 11:03 AM, homer said:

That along with the fact they've finally stopped drawing from the reserve a few weeks ago helps explain why the price of gas has shot up $0.30/gallon by me in two weeks during what is typically the lowest seasonal period of demand, even before this limited sale happens and oil actually gets siphoned away from the market and back into empty storage tanks.  The fact that this initial bid process is for purchasing 3 million barrels when the SPR was depleted of ~225 million barrels in the last year indicates how long this buyback process will inflate prices at the pump over where they'd be without needing to put oil back in the reserve.

I think the average sale from the SPR was with oil around $96/barrel - right now it's at low to mid $70s, so the govmint will make a 30% killing on buying enough oil to refill about 1% of what they removed from the reserve.  

Despite the plan of instilling price caps/controls on buybacks independent from the market,  these fixed price contracts won't look nearly as attractive to producers when they will be able to sell oil elsewhere for much closer or even more than $100/barrel, which is where prices will head once again as the year goes along.

This also all assumes there won't be any new geopolitical or weather events that would typically warrant drawing from the SPR to prevent supply problems or price shocks over the course of years, not months or weeks. 

[owbc]

On 1/1/2023 at 7:59 PM, wallus said:

Just an update on my 2022 investing if anyone cares. I invested all of my primary job's salary (before bonus) in the market. I did weekly buys in 4 ETFs. 40% in a Total US Market Fund, 40% in a Dividend US Fund, 15% in an Income US fund and 5% in an International Dividend Fund.

I ended up being down 1% for the year after re-investing dividends. I was hoping to dump some of my year end bonus in the market but right now have it in high yield savings accounts earning around 4%. If the market starts to go down and hits certain figures, I will start throwing the bonus money into the 4 funds above.

Talking to other people, they said I did pretty well. If you put a lot of money in Tech, you probably got killed.

I put in offers for 4 rental properties and did not get any of them. All of them were bought with cash and well over ask so nothing lost.

2023 goals are to keep investing weekly and not check my account so much. 

Down 1% is impressive for 2022! That was a tough year. 

I'm still deciding what to do in 2023. In 2022 I had some losses on S&P 500 index funds that I cashed out in the fall (partially for tax reasons plus a lack of confidence that stocks are going to go up in 2023). I also bought my full allotment of I-Bonds when the rate was 9%. And finally I bought some of my company's stock at a 5% discount which has stayed flat in the past 6 months. Currently my extra cash is sitting in a Fidelity account earning 4%.

The other uncertainty that sits over my head is the possibility that student loan payments will resume...and whether there will be any forgiveness or not (and whether I will be eligible for it)...and if payments do resume should I refinance or pay it off with our lower interest HELOC as my financial advisor has suggested. 

I've also thought about getting a vacation/rental property but everything still seems way overpriced and my partner would prefer to upgrade our house, which doesn't make sense right now because we're locked into a low interest rate and the housing market needs to cool off more. 

So I'm pretty happy getting the 4% for now...it seems like they will do anything to get inflation down so the I-Bonds don't appeal to me in 2023...I guess old school stuff like CDs and savings accounts might be the safest investment these days...

 

 

[homer]

7 hours ago, Fear The Chorizo said:

That along with the fact they've finally stopped drawing from the reserve a few weeks ago helps explain why the price of gas has shot up $0.30/gallon by me in two weeks during what is typically the lowest seasonal period of demand, even before this limited sale happens and oil actually gets siphoned away from the market and back into empty storage tanks.  The fact that this initial bid process is for purchasing 3 million barrels when the SPR was depleted of ~225 million barrels in the last year indicates how long this buyback process will inflate prices at the pump over where they'd be without needing to put oil back in the reserve.

I think the average sale from the SPR was with oil around $96/barrel - right now it's at low to mid $70s, so the govmint will make a 30% killing on buying enough oil to refill about 1% of what they removed from the reserve.  

Despite the plan of instilling price caps/controls on buybacks independent from the market,  these fixed price contracts won't look nearly as attractive to producers when they will be able to sell oil elsewhere for much closer or even more than $100/barrel, which is where prices will head once again as the year goes along.

This also all assumes there won't be any new geopolitical or weather events that would typically warrant drawing from the SPR to prevent supply problems or price shocks over the course of years, not months or weeks. 

They only started soliciting bids. They didn't actually buy any yet. That comes next month.

As for the recent uptick:

 

[Fear The Chorizo]

They only started soliciting bids. They didn't actually buy any yet. That comes next month.

I know - they have stopped taking out of the reserve to supplement whatever other supply is coming in from producers to refine, and that loss of product entering the refining market isn't going make the price of gas drop.    That can also help explain a portion of the dip in refinery utilization, too - although this time of year its common for refinery output to drop a bit (not 12%, but some) for a few weeks no matter what the weather is doing.  End of year cleaning/equipment maintenance and staffing limitations over the holidays aren't anything new - particularly at the end of a year when refineries were basically running at max capacity most of the time.

And knowing the government is going to become a buying customer for the forseeable future is going impact oil futures markets.  I doubt they are in any hurry to rapidly replenish the SPR anywhere close to where it was a year ago but they probably do need to get it back over 500M barrels, unless things really get bad economically and they can buy oil at $30 a barrel to totally replenish the reserve and keep oil companies operating because demand has cratered.

 

[zurch1818]

My wife and I just made 2023 Roth IRA contributions.  With that said, we still have a little bit of money that we have earmarked for more short-term expenses.  I'm looking at getting a high-yield savings account since with my dad retiring in a few weeks, I am going to be losing my sweet deal of prime interest rate (7.5%) for our emergency fund/short-term saving fund.  I'm looking at the bank being part of the FDIC, the interest rates, minimum account balances and it seems that UFB Best Savings has an APY of 4.11%.  Does anyone have any experience with them?  Does anyone else have any other recommendations?

[nate82]

37 minutes ago, zurch1818 said:

Does anyone else have any other recommendations?

Depends how comfortable are you with not having a physical bank to go to?

Any of these are good:

https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts

[RobertR]

I'm dabbling in the market this year, buying into Warner Bros Discovery when it was around $10 because I thought they had been punished for making some unpopular but necessary cost cutting decisions. Decisions that they're ahead of Netflix and Disney on.

I don't know if it's a long term play, but I like that they're less reliant on one or two franchises than some of their competitors. 

[Fear The Chorizo]

So is this still because it got really cold over a month ago during the typical refinery holiday shutdown period, or is it more due to the fact they've stopped drawing from the SPR for a few weeks and wasted the previous year not getting domestic production capacity (both extraction and more importantly refining) to a place where it could keep up with demand?  And this is before any actual small volume purchases to start refilling the SPR directly reduce available crude for fuel refining.  

If we thought gas prices were bad last spring/early summer, I think this year's saying "hold my beer", even with economic output sputtering.