All things STOCKS

#14,528
#14,528
KB5252 said:
For people that have little understanding of the markets what does that mean?
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TMF is the symbol for a debt based, leveraged (3x) trading fund (ETF - Exchange Traded Fund). The underlying securities are long term bonds. Basically it is an instrument to use when speculating on the direction of interest rate changes in the short term (not to be confused with short term “debt” but rather “short term” speculation in the direction of the interest rate (on 20 year long term bonds in the case of TMF)). It’s a derivative which means it “derives” its valuation from different underlying securities.

The pricing of TMF basically moves opposite to interest rates. Interest rates fall (or are speculated to fall) and shares of TMF will go up. If interest rates go up, expect the share price of TMF to fall. The 3x feature means it is a leveraged investment product and moves (approximately) 3x as much as the underlying security (a 20 year bond in this case).

In basic terms, there are two forms of capital that can be bought or sold (4 positions). Debt or equity. You can own either or you can sell an obligation to deliver the “asset” to somebody else that will own them (asset in quotes because when you own debt (a liability) it is an asset from your perspective). Wall Street firms create all sorts of investment products to take one of the 4 positions in debt or equity (owned or owed).

TMF isn’t a good investment for most individuals to be involved with. The time variable erodes a portion of the value as the investor keeps the security in their investment portfolio. It isn’t a buy and hold security - it is mainly a trading vehicle. Traders generally need to stay on top of the variables affecting price and be ready and able to move in or out quickly.

https://www.etf.com/TMF#overview

Exchange-Traded Fund (ETF) Explanation With Pros and Cons

Investing
 
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#14,529
#14,529
Thunder Good-Oil said:
TMF is the symbol for a debt based, leveraged (3x) trading fund (ETF - Exchange Traded Fund). The underlying securities are long term bonds. Basically it is an instrument to use when speculating on the direction of interest rate changes in the short term (not to be confused with short term “debt” but rather “short term” speculation in the direction of the interest rate (on 20 year long term bonds in the case of TMF)). It’s a derivative which means it “derives” its valuation from different underlying securities.

The pricing of TMF basically moves opposite to interest rates. Interest rates fall (or are speculated to fall) and shares of TMF will go up. If interest rates go up, expect the share price of TMF to fall. The 3x feature means it is a leveraged investment product and moves (approximately) 3x as much as the underlying security (a 20 year bond in this case).

In basic terms, there are two forms of capital that can be bought or sold (4 positions). Debt or equity. You can own either or you can sell an obligation to deliver the “asset” to somebody else that will own them (asset in quotes because when you own debt (a liability) it is an asset from your perspective). Wall Street firms create all sorts of investment products to take one of the 4 positions in debt or equity (owned or owed).

TMF isn’t a good investment for most individuals to be involved with. The time variable erodes a portion of the value as the investor keeps the security in their investment portfolio. It isn’t a buy and hold security - it is mainly a trading vehicle. Traders generally need to stay on top of the variables affecting price and be ready and able to move in or out quickly.

https://www.etf.com/TMF#overview

Exchange-Traded Fund (ETF) Explanation With Pros and Cons

Investing
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Does this mean they expect interest rates to be pushed down?
 
#14,530
#14,530
KB5252 said:
Does this mean they expect interest rates to be pushed down?
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That’s the biggest reason for a bond fund to change in price. BUT - it can also mean that there was too much expectation for rates to rise and the increase in the ETF’s price can reflect an adjustment reflecting less interest rate increases. Remember, TMF is considered a very short term investment so the pricing can get away from conventional wisdom.

Also, the price movements can be related to large positions taken for hedging purposes. And a supply/demand imbalance in the availability of fund shares.

But with that big of a move, somebody with a lot of money is expecting interest rates, or expected interest rates, to come down.

https://www.direxion.com/uploads/TMF-TMV-Fact-Sheet.pdf
 
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#14,531
#14,531
Velo Vol said:
There's an ETF for everything.

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Fox or Fox Business busted Cramer big time. It might have been Tucker Carlson’s show on 3/10. Cramer was promoting Silicon Valley Bank to his sheep a month ago. It failed on Friday. It is estimated that 85% of their deposits weren’t FDIC insured. The second largest U.S. bank failure EVER.
 
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#14,533
#14,533
Thunder Good-Oil said:
Fox or Fox Business busted Cramer big time. It might have been Tucker Carlson’s show on 3/10. Cramer was promoting Silicon Valley Bank to his sheep a month ago. It failed on Friday. It is estimated that 85% of their deposits weren’t FDIC insured. The second largest U.S. bank failure EVER.
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Talk about "all your eggs in one basket"
You have to question how many banks are in a similar situation? Almost all of their deposits tied to one industry, and likely most of their loans. I'd guess areas of technology concentraction? Oil in texas? Real Estate in FL?
In 2010 our Community bank had several residential real estate developments, and when things went south we were stuck with many lots and a few homes. Several banks in a similar stuation went under or were merged into other banks at the "request" of the FDIC.
 
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#14,540
#14,540
I think there may be a little bit of confusion about banks. Here are a few short comments that I think are true. They are all leveraged. They have to be in order to pay interest on deposits, and that is their business. The question of how many other banks lost the kind of money on bonds that SIVB did, I think the conventional wisdom is none that anybody knows about. However, practically all banks have a lot of long term fixed interest bearing holdings (mortgages), and generally speaking these investments don't pay as much as the bank should be paying on deposits. They're all in that same jam.

Long ago, the government figured out that it's a whole lot less trouble to save all these banks when the tide goes out, which they can very easily do by purchasing whatever the bank is holding. The Fed NEVER has to sell. Not ever. They don't have to lose money. They generally come out on these things simply by waiting.
 
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#14,544
#14,544
Firebirdparts said:
I think there may be a little bit of confusion about banks. Here are a few short comments that I think are true. They are all leveraged.
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I know there's more layers of complexity, but how is it a losing proposition when banks are paying less than 1% on customer deposits while the Fed Funds/Treasuries are > 4%?
 
#14,546
#14,546
Fun coupon VOL said:
Backing all deposits above $250,000 is corruption at the highest level. Stop awarding bad actors and schemes.
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As long as the money is there it’s okay. Funding (guaranteeing) deposits that no longer exist would be corrupt. If it is a short term loan to restore the banking operations rather than handing out benefits for deposits of over $250k then there’s not an issue. Nobody needs a massive run on deposits which would result in widespread bank failures.
 
#14,548
#14,548
Velo Vol said:
I know there's more layers of complexity, but how is it a losing proposition when banks are paying less than 1% on customer deposits while the Fed Funds/Treasuries are > 4%?
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typical banks have a lot of expenses.
Most people don't leave very much money in the bank now that we have the internet.
Banks also have CDs. The rate on all of their products is determined by their need for cash which is typically determined by loan volume and the need to shore up their balance sheet/ratios.
 
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