OK, stocks go down, as witnessed by yesterday’s 700-point drop in the Dow. Does that mean it’s time to panic? Well, that depends on how you’re invested. If you’re with me, as I hope you are, you know that stock market drops are a blessing in disguise to Your Survival Guy. Because when prices are lower, I smile at the better prices I’m getting with reinvested dividends. It’s like real estate. Imagine you’re a landlord like Your Survival Guy was in his early- to mid-twenties. My multi-family in Marlborough, MA, was a cash-generating machine. Rents would come in every month. I’d pay down the … [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.
Your Survival Guy Is Uneasy about This Market
Your Survival Guy received a chart package yesterday that leaves a lot to be desired. I’m talking about the desperate state of the yield on Treasuries thanks to three nasty cracks in the stock market so far this century. Note: When stocks fall, Treasury prices usually rise as investors flee to the full faith and credit pledge of U.S. government bonds, for whatever that’s worth. Take a minute to see how low yields are (which move in the opposite direction of bond prices). The series of charts below runs from the beginning of this century and displays maturities from as short as 12-months to as … [Read more...]
Work to Make Money/Invest to Save Money
The U.S. government must finally wise up and put an immediate end to the insane double taxation of dividends. The government, facilitated by the Fed, is in an ongoing war to destroy the value of the dollar by printing money beyond any reasonable rate of expansion. Simply take a look at real estate prices to witness the explosion in liquidity. Do not let the government destroy the value of your retirement. Demand that the government ends the double taxation of dividends! Originally posted October 17, 2017. With the exception of the large sums of money that I invested in zero-coupon … [Read more...]
April RAGE Gauge: Are Your Bond Funds Dead or Alive?
My April RAGE Gauge is in, and RISK remains HIGH. Therefore, I want you to be a mindful and cautious investor, especially with your “safe” money. Your anchor-to-windward savings need to be safe. I’m talking specifically about bonds. Bonds are not dead, far from it. They’re alive and well, especially if you have access to new and secondary market issues. And not just letting the chips fall as they may. Remember, bond prices swing in the opposite direction of interest rates. Their sensitivity to interest rate swings is measured by duration. As a rule of thumb, duration (measured in years) … [Read more...]
Time for the Fed To Stop Babying the Bond Market
At The Financial Times, Richard Bernstein suggests the Federal Reserve begin a tough-love campaign with the bond market. He writes: The Ferber Method, a sleep training technique, teaches babies to self-soothe and fall asleep on their own. It’s as much a training technique for new parents to ignore their baby’s crying as it is for the child to learn to cope by themself. The US Federal Reserve should consider Ferberising bond investors and ignore future “taper tantrums” like the market disruption that occurred when the central bank signalled tighter monetary policy in 2013. The long-term … [Read more...]
Why Buying Bonds Matters in Times Like These
In times like these, you need to be in touch with your money. Literally, overnight, we’re on the cusp of losing the Senate and much, much more. Making sure your financial plan is airtight is front and center like never before. I want you to get out a piece of paper (do it now) and draw a line down the middle. Write down what you own on the left side, and what you owe on the right. Your goal is to make sure that what you owe is not only less than what you own but that it gets down to ZERO. You’re not being helped by the Fed holding rates at zero. When you lose money simply by saving … [Read more...]
The Reach For Yield Reemerges
Not even a year removed from a crash in risky bonds, investors are already reaching for yield again. Bond issuers are putting payment in kind (PIK) provisions into newly issued junk bonds. PIK deals allow bond issuers to make interest payments with more debt. That’s like applying for a new credit card to make the minimum payment on an existing card. With 10-year Treasury bond yields under 1% and the expectation that the Fed no longer has any red lines on bailing out investors, the reach for yield is back on. The FT has more: Private equity firms are testing investors’ appetite for … [Read more...]
Dump All Low Yielding US Treasuries Now
Today we have a situation where the Fed has forced individual investors with life-time savings to subsidize corporate buybacks, acquisitions, and Wall Street banking industry borrowing and speculating. It’s what I call de facto robbing and stealing. In reality, the Fed is nothing more than a private club to favor corporate and banking elites. When the Federal Reserve was first established in 1913, Congress directed it to “furnish an elastic currency, to afford means of rediscounting commercial paper” and to establish a more effective supervision of banking in the U.S. The Fed’s duties … [Read more...]
Investors Devour Bonds
Joe Rennison and Eric Platt report for the Financial Times on investors' demand for bonds from blue-chip companies. They write: Bonds sold since March by blue-chip US companies including Northrop Grumman, Intel and Coca-Cola have surged in value, as investors scrambled to get hold of the unusually high coupons offered during the most intense phase of the pandemic. Intel’s $1bn bond maturing in 2060, launched just before the US Federal Reserve announced sweeping measures to support the corporate bond market, has soared to more than 144 cents on the dollar from its sale price of just over 98 … [Read more...]
Do Stocks Always Beat Bonds Over the Long Run?
The WSJ reports on new work that shows historically investment-grade bonds have beaten stocks in 40% of ten year periods. What’s more, in many 10-year periods the return on bonds is only about a percentage point less than the return on stocks. With Treasury bond yields nearing rock bottom levels, it would seem to be a cinch for stocks to beat Treasuries over the coming decade, but today’s historically lofty stock valuations make the calculus more complicated. And if you are willing to venture beyond the safety of Treasuries, the return opportunities in corporate bonds aren’t as depressed as … [Read more...]
- « Previous Page
- Next Page »