Muni bond funds run by Pacific Investment Management Company (PIMCO) have seen their distributions cut by as much as 45% after a jump in short-term rates droves up borrowing costs. As recently as October, analysts urged investors to jump into munis for their high yields with no regard for what might happen when rates rise. It turns out, reaching for yield can be dangerous. Bloomberg's Martin Z. Braun reports: Pacific Investment Management Co. cut monthly payouts on nine municipal bond closed-end funds by as much as 45% after a sharp jump in short-term rates increased borrowing costs. The … [Read more...]
Institutional Investors “Lulled Into Complacency” by VC “Phoney Happiness”
Through a comparison of venture capital to Kathie Wood's Ark Innovation ETF, Daniel Rasmussen, suggests in the Financial Times that institutional investors are "lured by promises of higher returns and lower volatility," but are "lulled into complacency, paying an illiquidity premium for the “phoney happiness” of private marks." He writes: Consider an institutional investor looking to add growth/tech exposure at the start of 2020. They could choose between allocating to Cathie Wood’s Ark Innovation exchange traded fund or to a VC fund. The ETF was on a great run, beating both the Nasdaq and VC … [Read more...]
Short Sellers Celebrate 2022
Originally posted December 14, 2022. Short-selling hedge funds are celebrating 2022 as falling stocks, tight money, and an energy crisis create prime opportunities for them. Laurence Fletcher reports for the Financial Times: “Recently we’ve been getting more absolute return from the short book,” said Chris Crawford, who runs a long-short hedge fund for Eric Sturdza Investments. “The reality is setting in for these companies,” he said, referring to unprofitable groups that investors rushed into during the bull market. Higher interest rates have ratcheted up the pressure on firms whose … [Read more...]
How to Invest in Gold
How should you invest in gold? We explain how to invest in gold in seven different ways. We explain how to invest in gold coins or bars. How to invest in gold exchange traded funds (ETFs). How to invest in gold mining stocks and gold royalty stocks, and how to invest in gold futures. At Young Research, we have followed the gold market for over four decades. Young Research’s founder and Chairman, Richard C. Young even owned a small private gold company that specialized in Gold Pandas. To invest in gold back then, it was either gold mining stocks or gold coins for most. Today, … [Read more...]
How Is the Economy?
Originally posted December 5, 2022. The ISM Manufacturing index fell into contraction territory in November for the first time since 2020. The ISM index is a monthly survey of purchasing managers at more than 300 manufacturing firms. The index measures the change in manufacturing activity from month to month. Activity in housing, a large cyclical sector of the economy, has also turned down, and homebuilder sentiment is at recessionary levels. We are also seeing some weakness in advertising markets and softness in other sectors of the economy. The leading economic indicators which seek to … [Read more...]
Vanguard’s Year-end Tax Surprise
Originally posted December 12, 2022. With bonds on pace to have their worst year on record and the broad-based stock indices that most professional investors follow down double digits YTD, one would think 2022 would be a non-event for capital gains taxes. Unfortunately, that’s not the case for many investors who own open-end mutual funds. Many open-end mutual funds are distributing substantial capital gains this year despite racking up significant losses for investors. Even Vanguard, arguably the most investor-friendly mutual fund shop, is saddling investors with substantial capital … [Read more...]
Finally There’s a Way to Sell Your Own Data
After years of everyone else making money from your data, now you can sell your own. Caden Inc. wants to pay users for their personal data. Megan Graham reports for The Wall Street Journal: A startup backed by an internet-search pioneer wants to give cash to users who share personal data including what they buy or watch on mobile apps. The startup, Caden Inc., operates an app by the same name that helps users download their data from apps and services—whether that’s Amazon.com Inc. or Airbnb Inc. —into a personal “vault.” Users who consent to share that data for advertising purposes can … [Read more...]
Congress Looking to Make Significant Changes to Your 401(k)
Members of both the Democratic and Republican parties in Washington, D.C. are looking at ways to change your 401(k) plan. Anne Tergesen and Richard Rubin report in The Wall Street Journal: Congress is on the verge of passing a bill that aims to help Americans save more for retirement and leave their retirement savings untouched and untaxed for longer. The bill nearing approval raises the age people are required to start withdrawing money from tax-deferred retirement accounts to 75 from 72. It increases retirement savings contribution limits for older workers and provides an increased … [Read more...]
Is There Anywhere to Hide in the Era of High Interest Rates?
In the Financial Times, Ruchir Sharma suggests in the tight money era, wealthy investors will find no place to hide in private investments. He writes: If a bubble is a good idea gone too far, the $10tn global market for private investing in everything from debt to companies to real estate may be one. The rage for private investing began in the early 2000s, after the success of the Yale University endowment fund led by David Swensen, who embraced private investments to diversify away from stock and bond markets and stabilise returns in the long run. Swensen’s definition of “long” was … [Read more...]
Recent IPOs Enter a Hard Winter
One in four stocks of companies that went public in 2020 or 2021 is now trading below $2/share. Many of these companies' shares may never recover, according to Corrie Driebusch at The Wall Street Journal. Busch writes: Hundreds of companies that went public when the market for initial public offerings was booming have suffered such sharp reversals that they now face a stark reality: Their shares may never recover. More than one in four of the nearly 600 companies that went public via a traditional IPO in 2020 or 2021—including oat-milk maker Oatly Group OTLY -1.10%decrease; red down … [Read more...]
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