Complacency is a dangerous foe to a successful investment program. After one of the least volatile years on record in the stock market, many equity investors are complacent today. Though it is discussed much less, so are bond investors. Long bonds are the dog that never seems to bite, but that doesn’t mean they aren’t dangerous. As the WSJ describes here, some investors don’t seem to mind the danger of bonds. The latest pillar supporting the U.S. Treasury market: everyday investors. Ordinary investors are a growing force keeping longer-term bond yields low, even as the Federal Reserve … [Read more...]

I introduced the Dynamic Maximizers® portfolio to my Intelligence Report subscribers as a way to stay safe and dividend-centric during the next stock market collapse. The Dynamic Maximizers® portfolio is ideal for retired investors as well as conservative IRAs and education programs. My long-term total return goal for the Maxis is 3-9% per year with no down years and few double-digit up years. My median expected total return is thus 6%. Any 6% total return year I rate as a B. I expect mostly B and C years out of the Maxis portfolio, with zero F years and not many A years. The Maxis are … [Read more...]

The FT reports on the sell-off in the $1.3 Trillion high-yield bond market. We wrote about the shifting landscape in the high-yield bond market last week. The high-volume sell-off in junk bond ETFs is continuing. High-yield bonds are on pace for their worst month since January of 2016, the month of the last major stock market correction. Even if you don’t invest in high-yield bonds, the market should be watched closely as it can be a harbinger of things to come in equity markets. Junk-rated debt has already lost 1.1 per cent in value so far during November, on pace for its worst month … [Read more...]

Bloomberg is reporting on the sell-off in high-yield bond ETFs (see here). Volume is soaring and prices are plunging. Part of the problem is the new structure of the high-yield bond market. High-yield bond ETFs have become the tail that can wag the dog. Yesterday, the dollar volume of the four big high-yield bond ETFs spiked to over 57% of the average traded value of the total high-yield bond market. The fast money crowd as well as yield chasers are the driver here. The fast money crowd favors junk bond ETFs over individual bonds because they are believed to have better liquidity. And … [Read more...]

As more money piles into stocks, there’s never been a better time to get acquainted with Dick Young’s investment North Star, the Treasury bill. Backed by the full-faith credit pledge of the United States government, the T-bill is your risk-free rate of return. To see the chart, click here, and roll your finger, left to right, from the mid-80s to today. Do you see a problem with today’s investment environment? It’s a lot different from when Dick Young began writing to you, as I explain when you click on the chart link above.  Originally posted at Yoursurvivalguy.com. … [Read more...]

You know something in this market environment isn’t quite right when eight years into a bull market investors are still hanging on every word out of the world’s central banks. The WSJ reports on the upcoming tight-rope act of ECB President Mario Draghi. There used to be a time when the prices of stocks and bonds reflected company and business cycle fundamentals. Today, that seems like an idyllic movie set from a bygone era. Mr. Draghi’s task on Thursday is even trickier than the balancing act that faced the Fed when it wound down its own QE program almost four years ago. The ECB has had to … [Read more...]

The reach for yield in fixed-income markets continues full-steam ahead. The latest junk issuer to tap into investors desire for income at any and all costs comes courtesy of Tajikistan. Tajikistan just closed on its first ever international bond issue last month. Never heard of Tajikistan? Tajikistan is a tiny landlocked former Soviet republic with a population of about 9 million people. The Tajikistan bonds are rated B- by S&P and come with a coupon of 7.125%. Junk bond issuance in the developing world is already up 60% over last year’s total and we still have three months to go. This … [Read more...]