I find the many posts that say "sell" and go "all cash." Also totally unrealistic.
I like many of the people who own this fund need to generate monthly income. I understand that it may go down another 10% or even more. But I haven't seen an alternative to move my money to. I also find the "option" of going "all cash" not very realistic.
So I need a % of what I have saved. Theoretically, as long as whatever I invest in doesn't shave its dividend or interest it should not matter if it goes down. Given a number of years and the interest generated in the interim, eventually it should come back. In the meantime I can live off of that interest.
But let's assume that I go "all cash." And, I wait and wait and wait. Six months, a year goes by. In the meantime PTTRX (or any other bond fund) is returning 4-6% or more in interest. But i'm sitting on the sidelines collecting nothing. Let's also assume that I guess wrong and sit out for six months and buy back in at a higher price. Immediately, I have lost 2-3% + or more.
I am also not going to live off of "all cash" because I am going to sell some portion of it monthly to live on.
Having said all this I need an alternative. What's out there? GE, VZ, ATT...all paying 3 1/2+% dividends and whose stock may go down faster in share value than PTTRX.
OK, I should buy gold since it's down to $1275 an ounce....$1275 an ounce. Wasn't this $1700+ an ounce a couple of months ago? Could it fall further? Even more than PTTRX?
What about a REIT? Perhaps real estate? Oops, as interest rates go up it means that mortage rates go up. It also means that it costs more to build rental property which means it will cost more to rent it. In a soft economy it may be more difficult to do this.
What about something in Europe or Japan or Brazil or?
The U. S. dollar is going to influence this. I remember in '99 when it was .86 and then three years ago it was 1.58. Now, at $1.32 who knows.
I am keeping PTTRX.
You sound like a guy trying to chear himself up after losing over $10500 since I sold this dog of a fund at 11.11. Here is the problem with your logic: As you are not re-investing the dividends, you are not taking advantage of "dollar cost averaging." There is no shame in pulling out of this beast in favor of a 1.5% money market fund while the storm passes. Get back in at the 9-9.25 range or go by a corporate bond in the 5% range. At least with the corporate, you are much more likely to get your initial investment back. Take a little bit of the money and sell BOND short.
Sentiment: Strong Sell
You are not realistic.
1. No money market is paying 1% let alone 1.5%.
2. You are making an assumption that it falls to 9.0% which would be the greatest loss in its 25 years. If I gambled on this and lost I will have cost myself 1.50-170 per share.
3. "Safe" corporate bonds are not paying 5%. They are paying half to two thirds of this.
4. You are not listening to what I wrote: I MUST live off of dividends. I am retired. I cannot reinvest them-I have to receive them, cash them and spend them.
Investing is different when you are retired from when you worked. By definition you save until an age and when you reach that age you spend what you saved.
It's very simple. If one has one million dollars and is trying to live off of the interest and dividends this pays it is impossible to do this without more risk than staying with PTTRX. Almost everything that retains principal pays two per cent or less which is not enough to live off of.
Timing the market is tough . I'm about ten years from retirement and saving $30 or $40k on my 401k seems wise. I'm not living off the divy , which has been very minute the last few months. Anyone that pays attention to the market knows that interest rates are rising ... not a good atmosphere for bonds.
Got out of this at $11.10 and every penny it drops was about $200 for me. I'd be down almost $10k in a very short time. Don't know how low this is going , but it's far from bottoming out from here. Under $10 ? Who know's .
Up 20% on Contra and Low priced stock fund....so I'm more than happy to ride out this downturn in a money market and wait for more clarity. Dow 12,500 or close to it would be my target.
As to your question about other alternative dividend generating MF's, i also use Pimco's PIMIX and PIGIX that generate a monthly income stream but with an annual yield closer to 6%. I've found both to be as sound as PTTRX.
While I understand your position, I respectfully disagree primarily because I am nearing but not yet retired and do not rely on the monthly dividend to live. I dumped my PTTRX at slighlty above 11 and moved it to a fixed income fund that pays 1-2% with no loss incapital. Given the Fed uncertainties, Bill Gross's own comments, forecasts for rising interest rates ... etc., there is significant bullish pressure on this fund. Therefore, for me, it is better to sit on the sideline and let this fund drop to 10 and then buy back in.
Yeah I feel bad for the retirees or soon to be retirees. I'm still about 12 years away so I'm not walking away from pttrx or other bond funds. But the warning signs have been discussed in various circles for those paying attention. The real danger in recent months was with bonds not equities. The considerable gains made last year are gone in just a couple months. It will take a long time to recover that. Equities have also taken a hit but they can bounce back quickly. I've been reducing my bond stakes gradually over the past weeks.....now just 20 pct of my portfolio.This is where I'll stay for awhile then begin buying again.
Well said! It won't be long before others figure this Fed induced problem out and start buying bonds again driving the price back up. I am personally buying at this point with the some 20% cash I have set aside as part of my portfolio. I am also retired... knowing that this economy is not ready to ride without the training wheels it will be a bumpy ride. The Fed will not be raising rates for a couple years. Besides Ben said MAY cut back bond purchases... and as slow as this recovery has been it may be awhile before any moves happen. If the 10 year goes to 3% and stays there for awhile home sale will suffer and that is the single most driver of this ecomomy. All the bond gurus predict 10 year at 1.8 by end of summer. Guess we will see.. meanwhile I'll take the~ 3% every month.
If you look at PTTRX' chart going back to, say, the last 20 years there are seven or eight times that it has touched $11 or higher. Each time it fell from the top, some times down as much as 10-13% before returning. Literally, quite like a rollercoaster ride. Over the course of this time it continued to pay a dividend and capital gains dictated by the prevailing bond rate, T bill and whatever other investments they were in. Their returns tended to be higher when interest rates were higher. The year or two that it took the share value of the fund to "correct" to reflect this represented the rollercoaster drop and following ascent. BUT IF YOU GO BACK TEN YEARS AND TAKE THE EXACT AMOUNT OF MONEY THAT PTTRX PAID IN DIVIDEND AND CAPITOL GAINS AND TOTAL THIS-and assume that every single penny is returned to the fund holder in cash (NOT used to reinvest and buy additional shares)-for the entire ten years there is not a SINGLE YEAR THAT THE RETURN IS LESS THAN FIVE PER CENT.
So, if I am sitting here with my 25,000+ shares and need some money to live each money PTTRX is going to pay me somewhere between $550 and 800 a month or more. At the end of the year in December there may be one or two additional payments offering literal thousands more.
And I am not reinvesting a penny of this. I am using it (and other funds proceeds) to live.
Simply it doesn't matter to me whether the NAV value is 9.92 or 11.71. I am only focused on the income the fund generates to allow me to live. Again, for over ten years of actual hard data the returns have shown a minimum return of no less than five per cent.
I should note that I have gone back twenty years and yes, there was one that dipped to about 4 1/4%. Others in that decade included several double this. But over the total twenty year period, once again, PTTRX returned an average individual year's 5+% with most years better than this.
There are only a handful of funds worth trusting like this. VWINX, PAAIX and a few more.
Sentiment: Strong Buy