You get an idea how the struggle between bondholders and pensions quickly turns into a political nightmare, as reported in the WSJ: San Juan, Puerto Rico—One of the thorniest tasks awaiting a seven-member board charged by Washington with cleaning up Puerto Rico’s debt crisis is deciding how to balance a $70 billion debt load with […]
Once in a Lifetime Stress?
You need to check out this stress index. The Kansas City Financial Stress Index is a monthly measure of stress in the U.S. financial system based on 11 financial market variables—including the high-yield bond/Baa spread, volatility (VIX), and the correlation between returns on stocks and Treasury bonds. As you can see in the chart below […]
The 10 Largest Bond Funds
Investors are taking on more risk—and are doing it in a major way. Bond funds, which should be your anchor-to-windward money, are loading up on junk. The below investment grade waste piling up in the 10 largest bonds funds is shocking. We’re not talking small potatoes here. These are the big dogs. “Who wants an […]
The 10 Largest Bond Funds: Part II
Yesterday I wrote to you about how the 10 largest bond funds are increasing risk by loading up on junk bonds. The only fund company of the group not doing this is Vanguard. No surprise there. Vanguard always seems to do the right thing for investors. But there’s another narrative inside this grouping of behemoths […]
Counterbalancing for the Crushing Market Declines
A counterbalanced portfolio is your key to investment success. For an example of how counterbalancing works I’ll point you to the Vanguard Wellesley fund. For my taste, a “one size fits all” fund simply does not exist today. But this one comes pretty close. Take a look at the years where stocks were destroyed. When […]
Don’t Just Do Something, Stand There!
Another example of investors heading for the exits at precisely the wrong time. This time it’s the largest bond fund PIMCO Total Return run by Bill Gross. The WSJ points out here. According to people familiar with the fund, its investors incurred an average loss of 1.4% over this period, nearly double the loss of […]
Detroit Muni Bonds to Pay Less than 10 Cents on the Dollar
With Detroit on the brink of bankruptcy the latest workout has muni bondholders receiving less than 10 cents on the dollar. I don’t want you going near blue state muni bonds. Expect more haircuts like Detroit’s in other pension bloated cities across the country. The investing class will be an afterthought. As Matthew Dolan of […]
Obama and Bernanke Stick It to the States
U.S. Federal Reserve Chairman Ben Bernanke and Obama’s White House are sticking it to the states with their misguided policies.
An American Greek Tragedy
You may have heard. Greece couldn’t adhere to its deficit-reduction targets. Investors want nothing to do with its debt. It takes a 15.7% yield to entice them into Greek bonds. The European Union will have to step in because Greek taxpayers are about as real as ancient Greek mythology. Apparently there is no such thing […]
Bond Market Bubble and a One Term President
Our One-Term President – Tom Bethell, The American Spectator The economy is still in big trouble, and with Barack Obama in office for nearly 20 months, it’s getting harder and harder to play the “blame Bush” card. It looks like Barack Obama’s time in office will be limited to one term, if he doesn’t resign […]