Great piece by Jason Zwieg in this weekend’s WSJ. Zwieg offers some solace to investors who still think financials and fundamentals are a more meaningful indicator of corporate performance than fantasies and fairytales about the future. Emphasis is ours. Pop quiz: Name the giant store whose customers scoff at whatever goes on sale, but flock to buy whatever costs the most. It isn’t a supermarket. It’s the stock market—especially over the past decade, when value stocks have moldered in the bargain bin. Such companies, trading at low prices relative to their earnings, net assets or other … [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 11/30/2019 Yield as of 12/31/2019 Merrill Lynch Ginnie Mae … [Read more...]
Corporate Bond Yields: What You Can Earn Today
Corporate bonds are a good place to pick up yield in the bond market. With yields on government bonds in much of Europe and Japan in negative territory, corporate bonds offer a higher-yielding alternative. Corporate bonds are a broad universe, though. There are investment-grade corporate bonds, junk bonds, foreign corporate bonds, hybrid corporate bonds, and floating-rate corporate bonds among other variations. Investment-grade corporate bonds are the largest part of the corporate bond market. How Much Do Corporate Bonds Yield Today? We break the investment-grade corporate bond … [Read more...]
Migration: Where High-Tax State Exiles Are Going
“Where are high-tax state exiles going?” asks the WSJ’s Review and Outlook. “Zero income tax Florida drew $16.5 billion in adjusted gross income last year.” It’s a trend you and I have been watching for years and will continue to see as Democrats ruin the fiscal health of the states they’re leaving. The good news is that the inflow will give states like Florida more representation in D.C. The bad is they packed bankrupting politics in the U-Haul. The Editors at The Wall Street Journal write: Many have also fled to Arizona ($3.5 billion), Texas ($3.5 billion), North Carolina ($3 … [Read more...]
What the Iran Situation Means for Gold
Since the end of 2019, gold prices have been on a breakout trajectory. Now, in response to rising tensions with Iran, things are getting very interesting. The news that the United States had bombed Iranian Major General Qassem Soleimani increased the perception of risk in the Middle East, and drove the price of gold even higher. I have always suggested to investors that they maintain a gold component in their portfolios, not as a road to riches, but as an insurance policy against inflation, disaster, and war. Typically when every other assets’ price is falling, gold’s is … [Read more...]
Trump Right on the Money with Iran
“Finally, to the people and leaders of Iran: We want you to have a future and a great future — one that you deserve, one of prosperity at home, and harmony with the nations of the world. The United States is ready to embrace peace with all who seek it.” Watch the entire speech here. Originally posted on Your Survival Guy. … [Read more...]
2020: Markets Still Dependent on Fed Liquidity
Fed liquidity is the grease that’s making this market run. When the grease runs out or fails to work, will the market melt-up come to an abrupt end? This is uncharted territory, which to me means you need to make sure you have your risk tolerance figured out before it’s too late. Michael S. Derby reports for The Wall Street Journal (abridged): After a dimming in demand for Fed money just after the start of 2020, this week has seen increase operation sizes. On Monday the Fed added $76.9 billion. Analysts at Wrightson ICAP said money markets may see frictional pressure Tuesday. That may explain … [Read more...]
Think Your ETF Portfolio is Diversified?
If you are buying ETFs because you hope to build a more diversified portfolio than you believe you can get by purchasing individual stocks, this chart is for you. The chart below from Bespoke dispels the myth that ETFs always provide adequate diversification. The chart shows the weighting of the top two holdings in each S&P 500 sector. Like many ETFs, the S&P 500 sector ETFs are market-capitalization-weighted. As you can see, the top two stocks are driving the ship in most sectors. In the Communications Services, Energy, and Technology sectors, the top two stocks account for about … [Read more...]
You Achieve Big Gains When Wall Street Misses the Boat
Your best move in 2020? Turns out it’s what we’ve been saying all along: invest for the long haul in rock-solid companies. According to Jason Zweig in his Intelligent Investor piece “How You Can Get Big Gains That Wall Street Can’t,” investing for the long haul actually works but is more difficult to do. Take mutual funds and ETFs with a set mandate to invest in smaller companies for example. “Small-company mutual funds that owned Amazon when it was tiny had to sell it once its market value grew into the billions,” explains Zweig. “Otherwise it would have dominated their portfolios. … [Read more...]
The Silver Lining in the Iran Conflict
Originally posted on Your Survival Guy. … [Read more...]