Predictions. They’re right up there in the mountain range of Mount Hope and Chance Peak near the end of “Failure to Plan” trail. Because when it comes to life, especially in investing, accidents that happen are most often accidents that should have been avoided—and could have been avoided. And yet, after every crash, slip, and fall, there’s carnage below with injured souls blaming the conditions, the weather, and never much self-introspection—no questioning of the route taken up the mountain. When I see the glossy reports spit out by a robot or algorithm and delivered by a salesman calling … [Read more...]
Young Research & Publishing has been providing research and insights on bonds to institutional investors, corporate financial officers, business owners, and individual investors for over four decades. Richard C. Young started Young Research & Publishing in the 70s to publish the authoritative Young’s World Money Forecast, a 50-page monthly investment report for institutional land high net worth investors. Today, our research on bonds is geared toward investors in or nearing retirement who are looking to preserve and protect wealth.
Are Inversion Fears Overblown? FT’s Lex Says Yes
Portions of the Treasury yield curve have inverted, but the FT's Lex service downplays the risk of the current yield picture. They write: Wall Street is obsessing over the US yield curve these days. No wonder. An inverted US yield curve, in which short-term interest rates are higher than long-term ones, is widely seen as an ominous sign of looming recession risks. On Monday, the yield on 30-year Treasuries fell below that on five-year ones for the first time since 2006. That comes after yields in other parts of the curve — namely the five to 10-year and three to 10-year — inverted last … [Read more...]
“Hey, Survival Guy, Why Are Bond Prices Down?”
In my conversations with you, you’re asking, “Hey, Survival Guy, why are bond prices down? Aren’t they supposed to be our anchor to windward?” “Of course, they are,” I say, “but bond prices decline as interest rates rise.” “Well, don’t take this the wrong way Survival Guy, but isn’t it obvious rates are going higher?” you say. “About as obvious as predicting Covid or the war in Ukraine,” I respond. Look, I’m Your Survival Guy, not Your Hope and a Prayer Guy. I know how ugly stock and bond markets can get, and I don’t get too worked up about temporary declines in prices. Your … [Read more...]
WAR HAS BEGUN: What Advice Are You Giving Your Loved Ones?
OK, in my conversations with you, you’re obviously concerned. You’re seeing a White House Spokeswoman tell you with a straight face that higher prices are a “sacrifice” we all have to make. That’s just stupid. Has there ever been a more out of touch administration? How about blue-state politicians and corporate elite? They recently figured out where Kyiv is on a map and tell us we need to defend it. Why? What about defending our southern border? What about all the energy that’s untapped here? Why are we letting Putin push us around? How much money is the Biden family beholden to in Ukraine? … [Read more...]
YOUR INVESTMENT STRONGHOLD: A Moat Around Your Money
Happy Monday from Your Survival Guy. It was quite a week for two S&P 500 darlings, Facebook (Meta) and Amazon. What’s interesting is how so many commentators are saying, “I told you so,” as if predicting the future is easy. I can give you plenty of reasons why it could be tough sledding ahead for Amazon’s stock price. But the low hanging fruit is to pick at the road ahead for Facebook. Here’s my takeaway, why bother with either when such huge price swings are part of the equation? Because when everyone’s talking about the same stocks, isn’t the secret out? Why not focus on the picks and … [Read more...]
How High Can Bond Yields Rise Before Killing the Stock Market?
At what point will stock investors give up and instead invest in bonds? How high can bond rates rise before company financing costs begin to hurt profitability? Those are the questions Philip Coggan examines here in the Financial Times, writing: The year has not started well for equity markets. Fears of inflation and tighter monetary policy are weighing on share prices as tensions between Russia and Ukraine darken the outlook. There is a sense that government bond yields, after declining for 40 years, might be trending upwards again. There are three reasons why this can be bad news for … [Read more...]
Yes, Money Can Buy You Happiness Here’s How
Yes, money can buy you happiness. How? By working for it. Not wishing and hoping the market does it for you. Your most productive asset is yourself. Think about the market as a way to keep what you’ve made. You work too hard for your money to lose it. And when you consider how important your money is to your family’s freedom, you can't afford to take risks. Listen, I’m the weatherman, not the weather. When T-Bills blow around like dust bunnies on a wood floor, you need to invest accordingly. Who else do you know that’s writing to you about this? You know I’m Your Survival Guy, not someone … [Read more...]
Why You AWLAYS Need This in Your Portfolio
Your Survival Guy wants you to understand that you own bonds so you can invest in stocks. As the late, great, Ben Graham explained about portfolio allocation, investors need to fall within a 70-30 mix of stocks and bonds, or vice versa. In other words, even the most aggressive stock jocks need to have some bonds as an anchor to windward. You might be shocked at how much of a cushion having just 30% in bonds can provide for a portfolio in a market decline. But check out Your Survival Guy's Deadliest Markets This Century for proof. And for the most conservative, or wealthy among us, … [Read more...]
BOND BLOWUP? Don’t Lend Your Money to Blue States
OK, blue-states are drowning in pension debt that may or may not be paid—think Illinois. And yet these cities and states are issuing more debt in the form of municipal bonds. Is that good or bad for investors? Last year the S&P Municipal Bond Index was up 1.76%, but when you dig into the guts of it, there are plenty of reasons, at least for me, to be concerned. Number one on my list is the average duration of the fund—with its 212,627 constituents—is 12.13 years. This isn’t covered in the article I quote below, but it’s a major factor in the fund’s future performance if interest rates … [Read more...]
SQUARE PEG, ROUND HOLE: Are ETFs and Muni Bonds a Good Match?
There are some asset classes that lend themselves well to the high liquidity world of ETFs, and some that don't. The municipal bond market is not a very liquid part of the investing universe. The mismatch between ETFs' super liquidity and munis' lack thereof could be a problem in the future. Heather Gillers reports in The Wall Street Journal: Investors this year spent record amounts of cash buying shares in all types of ETFs, baskets of securities that trade as easily as stocks and typically track indexes. They are drawn to muni ETFs for their easy access to tax-exempt yield at low cost under … [Read more...]
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