Yesterday I wrote to you about how the 10 largest bond funds are increasing risk by loading up on junk bonds. The only fund company of the group not doing this is Vanguard. No surprise there. Vanguard always seems to do the right thing for investors. But there’s another narrative inside this grouping of behemoths that I want to share with you today. Who is the biggest holder of junk and who will pay the price when markets turn? DoubleLine Total Return bond fund has loaded its portfolio with 28% of its assets junk rated. You may recall this beauty of a quote from its manager. He said that … [Read more...]
Archives for May 2014
The 10 Largest Bond Funds
Investors are taking on more risk—and are doing it in a major way. Bond funds, which should be your anchor-to-windward money, are loading up on junk. The below investment grade waste piling up in the 10 largest bonds funds is shocking. We’re not talking small potatoes here. These are the big dogs. “Who wants an index fund that yields 2%?” said Jeffrey Gundlach, manager of the Total Return Bond fund at DoubleLine Capital LP. Investors “want exposure to these high-yield and distressed securities and they've become comfortable with what we’re doing,” he told the WSJ. I’m not buying … [Read more...]
Bonds Are Dead?
This has been a good year for bonds. They’re not dead. And it’s the high quality bonds that are leading the way. This from the WSJ: Bonds perceived as safe have produced better returns than riskier ones for the first time since 2010 and the second time since 2006, according to data from Barclays PLC. U.S. government bonds have rallied, high-grade corporate bonds have posted larger gains than junk bonds, and higher-rated junk bonds have risen more than more-speculative ones. The safe-bond gains underscore the far-reaching effects of a rally in U.S. Treasury prices that few analysts or … [Read more...]
I’ve Never Been Busier
“I've never been busier”, is a phrase I often hear from retirees. We all think we’ll have tons of free time in retirement. And we do. But the hours still get filled-up with things to do. That’s why it’s crucial to plan ahead and understand some of the pitfalls out there. I’ve advised that you should rent your second home, at least to start off with, so you can get your bearings. I like this article in the The WSJ by Tom Lauricella on “The Five Myths About Retirement”: 1. You'll probably retire earlier than expected. Sounds like a good thing, but it's not. Among the most critical variables … [Read more...]
The Power of Billionaire Brands
Forbes: How do billionaire brands control our lives? Watch Forbes break down the wealthiest brands by item in a typical day. … [Read more...]
Dividends Lead Tech into Summer
High flying speculative tech stocks often make the news and are anchors of the water-cooler conversation. But as you can see in the chart below, since the beginning of April, sturdy dividend Aristocrats have led NASDAQ's 100 top stocks in total return. We advise a dividend focused strategy for investors looking to retire with a low risk portfolio. Read our recent special report, Collecting Rare and Hard to Find Dividends for seven of our favorite dividend stocks. Get the report by clicking here. … [Read more...]
Live Where You Want
Finding your perfect retirement spot has never been easier. I love the idea of websites like homeaway and airbnb for retirees looking for a place to retire. Renting before you buy gives you plenty of options to move to another locale to sample and it forces you to live in one spot for more than a long-weekend. The money trap of buying first and living there later is one that can get you stuck living where you don’t want to be. … [Read more...]
Dumb and Dumber
“Don't just do something, stand there!” is easier said than done. All investors have a breaking-point. And most believe it to be higher than it really is. That’s why it’s important to learn from the past and establish the right portfolio for your emotional make-up. I like the work The WSJ’s Jason Zweig references here in his piece “Just How Dumb Are Investors?”: A new study finds that the average investor in all U.S. stock funds earned 3.7% annually over the past 30 years—a period in which the S&P 500 stock index returned 11.1% annually. That means stock-fund investors underperformed the … [Read more...]
American Silver Eagle Coins
I recently purchased some American Silver Eagles through Blanchard and Company, Inc. If you’re interested here is their website. … [Read more...]
Here’s How Not to Invest
In Chasing Yield, Investors Plow Into Riskier Bonds, Tom Lauricella and Katy Burne of The Wall Street Journal highlight the dangers of the current investing environment in one succinct opening paragraph. To wit: “Large investors are rushing into the riskiest corporate bonds, frustrated by low interest rates on safer investments and convinced that even companies with shaky finances are in little danger of default.” At Young Research we regularly council investors to keep emotions out of their investment decisions, never to reach for yield, and to demand a margin of safety. If this Wall … [Read more...]