My favorite bond funds are not known for their king like managers. And I like it that way. One would think that the world renowned Bill Gross (whose compensation reached $200 million in years past) could make things work at PIMCO. But with interest rates so low, it was getting too hard for him to make a difference. In this interest rate environment, the only way a bond fund manager is going to make a difference is by taking on more risk than his competition. It’s not rocket science. But I have a feeling investors aren't going to be comfortable with these risks, as I explained here. … [Read more...]
Archives for October 2014
The Monday Melee: World War III
What We’re Reading: Correlation and causation (tylergiven.com) Wanna be rich--get back to work! (theguardian.com) When not to load up on stocks (Fortune) Don't use one of these passwords. 25 commonly used password list 2014 (Visual.ly) Know Which Fish Are Low in Mercury With This Chart (lifehacker.com) The Market Makes a Case for Conservative Investing (WSJ) … [Read more...]
Politics Matter
Even after the passing of some of the most economically damaging policies the nation has ever seen, there are still some investors who insist that politics and investing don’t mix. These investors somehow believe that economic and financial market performance are independent of policy. Seems hard to believe when you look at the structure of government. In the U.S., the President appoints the Federal Reserve Chairman and few would deny that the Fed plays a major role in interest rate markets and has influence over other asset markets. The Congress has the power of the purse. And one-fifth of … [Read more...]
GNMA Up Over 2% Yesterday
I like your odds with Vanguard GNMA. Yesterday, with the DJIA falling 1.4% and the speculative Nasdaq down 1.6%, good 'ole GNMA was up about a half of a percent or 2% relative to the Nasdaq. For the year, GNMA is up 5.25% and yields 2.56%. Sometimes the difference between an ok investor and a great one is that the great one is able to take the ups and downs of the market. In the real world it's hard to do. But by having a little GNMA in your back pocket it becomes a whole lot easier. And more fun. … [Read more...]
Market Internals Point toward a Correction
Markets internals aren't sending a signal of optimism. My first chart below on the NYSE advance-decline line looks like it is rolling over. The advance-decline line is a measure of market breadth. A healthy uptrend in the stock market should bring along all of the troops. When the advance-decline line begins to diverge from the broader market it is a sign of a narrowing market with fewer and fewer stocks propping up the broader indices. The second chart below shows the 5-day moving average of NYSE new lows and new highs. The number of new lows is soaring while the number of new highs is … [Read more...]