The innovation bubble looks like it has gone bust. The ARK Innovation ETF is down almost 80% from its all-time high. Those are dotcom-type bust numbers. Disruptive technologies that were supposed to change the world have been some of the best performing stocks over the last decade. The hype cycle reached a peak following COVID. Investors heard for years that this breed of disruptive technology firms was different than the dotcom bubble era companies. Why? Because these stocks had real revenues and real cash flows. We would note, no dividends to speak of, but yes there was real revenue and … [Read more...]
Ginnie Mae (GNMA) Bond Yields
What do Ginnie Mae (GNMA) bonds yield? The table below lists the yields on two of the major Ginnie Mae (GNMA) indices as well as the latest SEC yield on some of the top Ginnie Mae (GNMA) dedicated funds. A note of caution when you are looking at yields on Ginnie Mae funds. Like all SEC yields, these yields are based on the last 30-days of income generated by the fund. They are not directly comparable to the yields on the Merrill Lynch and Barclay’s Ginnie Mae (GNMA) indices. Description Symbol Yield as of 9/30/2021 Yield as of 3/31/2022 Merrill Lynch Ginnie Mae … [Read more...]
Bond ETF’s Fair Weather Liquidity Poses Risks
In the Financial Times, Tatjana Puhan explains how heavy trading of ETF bond funds could lead to lower liquidity during times of market stress. She writes: The market volatility triggered by the Ukraine war is a reminder that crises can expose hidden stresses and strains that have built up over time in the financial system. Boom time changes to market structures can turn into significant risks when there is an abrupt turn in conditions, particularly when trading liquidity dries up. In that context, investors should note one recent change to the financial plumbing of US markets. The New … [Read more...]
Can ESG Work Without a Bubble?
Can an investing model created to supply certain companies with easy money work when there isn't a bubble in the market? That's the suggestion of James Mackintosh in The Wall Street Journal, who says that in a bubble-less world, ESG investing won't make the difference it intends to. He writes: A full-blown ESG bubble would surely encourage investment in things that count as “good” ESG, especially low-carbon energy. Every other bubble in history has been accompanied by a corporate spending boom, whether on canals, railways, the internet or mines, as existing companies take advantage of cheap … [Read more...]
DON’T GET BIT: Careful When Investing with the Big Dogs
Investing with the big money management firms might not always work out for individual investors. Read below the experience of one investor who faced a massive surprise tax bill after investing with Vanguard. Jason Zweig reports: One investor posted there: “I think I’m screwed by Vanguard resulting in an enormous tax bill…. I feel that Vanguard guided me down this path which is frustrating.” In the Bogleheads area on Reddit, another online forum, an investor posting as “Sitting-Hawk” said he received about $550,000 in distributions in Vanguard’s Target Retirement 2035 fund. So he owes … [Read more...]
The Truth About S&P 500 Index Funds Is Revealed
Investors who loaded up on S&P 500 index funds are beginning to understand the truth behind the S&P 500. Big component companies like Disney, Netflix, Salesforce.com, and Twitter are fueling a sell off. That's not to mention Apple, where a sell off has erased over 6% since the beginning of the year, when Apple was worth as much as McDonald’s, Walmart, AT&T, Philip Morris, Berkshire Hathaway, Proctor & Gamble, JP Morgan Chase, Starbucks, Boeing, Deere, and American Express combined. The number of securities at 52-week lows each day is higher than normal. That's a bad … [Read more...]
The Masters of the Universe Align Themselves with CHINA Using YOUR Money?
BlackRock now manages over $10 trillion in assets. Its funds are among the three largest shareholders in more than 80% of the companies in the S&P 500. In speaking about CEO Larry Fink, David Rubenstein, the co-founder of the private-equity firm Carlyle Group Inc. said, “Treasury Secretaries and finance ministers come and go. They work for someone else who can fire them tomorrow and have to build what others want them to. When you are the CEO of the biggest asset manager, you don’t have to do that.” So when you become THAT BIG, doesn’t life get boring? What’s next? Another jet, or a … [Read more...]
BLACKROCK’S BITCOIN-ESG PARADOX: You Can’t Have It All
You know that you can't have it all. You can't say one thing and do another. That's the fastest way to break the trust of the people around you. You know BlackRock has been selling environmental, social, and governance (ESG) funds, promising investors they'll change the world by lowering greenhouse gas emissions. It's all a game to charge higher fees for funds, and to drive the EGOs of those in charge. But what you won't see anything about in the glossy ESG brochures is BlackRock's investments in bitcoin mining. That's because mining bitcoin is energy-intensive, generating massive amounts … [Read more...]
Why Bond Mutual Funds and ETFs No Longer Work
OK, third-quarter report cards are in, and investors want to know how they did. But perhaps just as important, they want to know the WHY behind the performance. When it comes to mutual funds and ETFs, there’s a better way to go, especially when it comes to choppy markets, which have been tough as of late. Why are bond prices down? Because interest rates have risen just a tiny bit, and bond prices move in the opposite direction of rates. Over the quarter, especially the last few weeks or so, interest rates have risen enough to lower prices for bonds this quarter. But we’re talking about a … [Read more...]
Why Mutual Funds and ETFs No Longer Work
Look, I know a lot of you own Mutual Funds and ETFs, especially if you’re wrapped up with an advisor where you invest, he wins. Today, there’re maybe a handful of funds I’d put my own money into, and the same probably applies to yours. The problem is, once you set sail, it’s hard to change course. I get it. But don’t be fooled by past voyages. Mutual Funds and ETFs are sold to you based on past performance. That’s like loading up the boat before a hurricane thinking, “well, the last trip went just fine.” Looking through the rearview mirror isn’t how you drive. But it’s absolutely how funds … [Read more...]
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