According to AAA, the average price per gallon of regular gasoline is $3.12, up 14% from a year ago. But another way of viewing the price change is as a decrease in the value of your dollar. And a weaker dollar eventually leads to a lower standard of living, since your quantity of dollars isn’t limitless. When government controls the money supply, its quantity of dollars is limitless. And the government’s ability to print more dollars may be the force most destructive to your personal wealth—and even to your well-being in your lifetime. In When Money Dies: The Nightmare of the Weimar … [Read more...]
5 Reasons to Still Like Gold
5 Reasons to Still Like Gold By Dave Kansas, Smart Money Here are some excellent points for why gold belongs in your diversified portfolio. As an aside, the author's second point should say that President Obama complains about China's low currency, not high currency. "Precious metals have become hugely popular with investors over the last couple of years and nothing attracts passion like gold. Whether it’s Glenn Beck talking up the importance of owning the metal on his Fox show or the cash-for-gold shops popping up at retail centers like the Mall of America -- gold seems to be everywhere." … [Read more...]
Retirement Isn’t What You Expect
You don’t want to face a retirement in which you are forced into lowering your living standards. Yet that is exactly what the majority of baby-boomer households are up against. They may not have a choice in how they live their retirement years, because they’re not prepared. Retirement isn’t as easy as everyone thinks it is. It’s emotionally difficult not having a steady paycheck and the peace of mind a paycheck can provide. You have an idea of how much your living expenses will be, but you don’t necessarily expect the dream vacation or car your spouse suddenly needs to have. And even if you … [Read more...]
Bondholders Are Rattled by Prepayment Covenants
Bondholders Are Rattled by Prepayment Covenants By Carrick Mollenkamp and Matt Wirz, The Wall Street Journal "Bond markets remain so frothy that corporate-bond buyers aren't worried they won't get paid; they are worried about getting paid too soon. High-yield, or "junk," bonds typically include a stipulation, known as call protection, that forces borrowers to pay steep "make whole" penalties if they buy back the debt early, compensating investors for the interest payments they will miss. But as inflows flooded high-yield funds in 2010, managers became less picky about the protections … [Read more...]
Fidelity Still the Best
You should browse Fidelity.com when you have some free time between Christmas and New Year’s. You’ll have an enjoyable experience. That’s because few, if any, investment companies spend as much money on technology as Fidelity Investments. That’s been true for years, a fact I remember well because my first job out of Babson College was with Fidelity. It’s hard to believe that was almost 16 years ago. At the time, there was no question Fidelity was the leader in technology. Chairman Ned Johnson III made technology a priority, and that explains why the company remains at the top today. I … [Read more...]
Muni Bonds Continue to Tumble
Muni Bonds Continue to Tumble by Romy Varghese and Kelly Nolan, Wall Street Journal Prices of municipal bonds fell sharply for the second day Tuesday, driving yields on long-term bonds to the highest points in more than 18 months, as investors worried about the impact of the end of a federally subsidized borrowing program…"We are hitting the market as quickly as we can because it's only going to get worse," said Harold Downs, treasurer of the Metropolitan Water Reclamation District of Greater Chicago. … [Read more...]
It’s a Shame You Don’t Make More Money
Yes, you may feel it’s a shame you don’t make more money. But you don’t want to make the mistake of being more aggressive with your portfolio to make more money. That’s a fool’s errand. Working more, saving more, and spending less guarantee you’ll make more money. Putting more of your money in stocks or commodities guarantees only one thing: You’ll have more of them. The market has zero interest in you making more money. And don’t think the Fed is doing you any favors with the bubbles it has inflated. Easy money has decimated hedge funds and venture capital. Commodities and farmland may be … [Read more...]
Pimco Total Return Among Biggest Losers as Bond Rally Fizzles
Pimco Total Return Among Biggest Losers as Bond Rally Fizzles By Sree Vidya Bhaktavatsalam and Charles Stein, Bloomberg "Bill Gross’s Pimco Total Return Fund, the world’s largest mutual fund, was the second-biggest decliner among the largest U.S. bond managers in the past month as clients pulled money for the first time in two years amid a selloff in Treasuries. The $250 billion Pimco Total Return fell 3 percent in the 30 days through Dec. 8, trailing all but one of the 10 largest bond mutual funds, which lost an average of 2 percent, according to data compiled by Bloomberg. Only the $33 … [Read more...]
Tax-Cut Deal Results in Turmoil for Bonds
Tax-Cut Deal Results in Turmoil for Bonds By Mark Gongloff and Tom Lauricella Wall Street Journal “The tax deal in Washington led investors to dump government bonds on Tuesday, with yields on Treasurys hitting their highest level in six months... "The tax compromise will keep the economy on track, but there's the question of how we're going to pay for this," said George Goncalves, head of U.S. rates strategy at Nomura Securities International, who has been bearish on Treasurys since mid-October. "It will require more Treasury borrowing."... One fear among bond investors is that foreign … [Read more...]
Up 30% with GNMA
You’re right to be concerned about higher interest rates and a decline in bond prices. Yet it would be a shame to miss the boat on the wonderful returns coming from bond funds with short-term maturities. The Vanguard GNMA fund, for example, with an average maturity of less than two years, has returned 7.6% YTD. For income investors, GNMA provides a relatively attractive yield of 3.27% compared to other short-term bonds like Treasuries. The Vanguard Short-Term Treasury, for example, yields only 0.30%. And compared to stocks, the Vanguard GNMA fund was up 7.2% in 2008 while the S&P 500 … [Read more...]