26 Apr 2021

Derivatives in Your Portfolio

Last week, the Wall Street Journal (WSJ) ran a gripping article about a mutual fund that blew up due to problems with derivatives in the fund’s portfolio. You can read the whole article by clicking here, but let me start by sparing you of wondering whether you have it: not with us; our portfolio management software doesn’t even recognize the ticker. The thrust of the story is that the fund,… Read More

15 Apr 2021

Portfolio Insights

We are pleased to provide a digital copy of Portfolio Insights, our quarterly newsletter. Table of Contents: Stock Market Summary Bond Market Review Sensational Small-Caps The Gift that Keeps On Giving Pandemic Volatility Subsides The Big Picture Click here to read the issue: Q1 2021 Portfolio Insights

1 Mar 2021

Worried About Inflation?

Although some of the weakness was thought to be technical in nature, it is also the latest chapter in an ongoing tough market for bonds amid rising inflation expectations, a reasonably strong macro-outlook, solid corporate earnings, improving covid trends, and expectations for continued fiscal stimulus. Only energy posted a win for the week, up 4.3 percent. Utilities and consumer discretionary stocks were down -5.0 percent respectively, and technology fell by… Read More

27 Apr 2020

Stocks or Bonds in a Recession?

Even in today’s economic environment, coming up with topics daily can be a challenge.  So, when a reader asks a question, I am more than happy to answer it in this forum. Last week, I received a question in response to my article, ‘Chance of Recession: 100 percent.’  The reader wanted to know what the recession meant for bonds, especially in the coming months when markets will be volatile. That’s… Read More

15 Apr 2020

Junk Bonds in Today’s Market

Yesterday, I discussed corporate bonds, and how their yield tells us something about investor risk appetite.  You can read the article here. The same thing applies to non-investment grade bonds, which are also called ‘high yield,’ or less pleasantly, ‘junk bonds.’ The first chart below is exactly like the first chart in yesterday’s article, but also includes the yield on junk bonds (in yellow) in addition to Treasury bonds (in blue)… Read More

14 Apr 2020

Corporate Bonds in Today’s Market

One of the areas of the market that we’re paying close attention to right now is corporate bonds.  To raise money, companies borrow money in the form of bonds or issue stock by selling ownership in the form of equity. Corporate bonds are safer than stocks in the aggregate because if a company fails, the bond holders get their money back before the equity holders.  While corporate bonds may be… Read More

11 Mar 2019

Calling Dr. Draghi, Dr. Mario Draghi

Investors have been hyper-focused on every word that comes out of every Federal Reserve official since October, but when the European Central Bank (ECB) made a major policy reversal last week, the markets yawned. Ten years ago, Warren Buffett described the 2008 financial crisis as akin to a heart attack.  The Fed, acting as a physician, prescribed zero interest rates and when that wasn’t enough, they tried an experimental strategy known as quantitative… Read More

17 Sep 2018

Remembering Lehman Brothers: What Have We Learned?

Five years ago, at the five-year anniversary weekend remembering the collapse of Lehman Brothers, I wasn’t ready to deal with the bad memories of that terrible time. Granted, what happened 10-years ago in financial markets was not like being in a war, a natural disaster, sick with a terrible disease or the victim of a terrible crime, but it was still upsetting to me (no doubt because I live in… Read More

30 Apr 2018

Cheap Rates

It finally happened. For the first time since 2014, the yield on the 10yr Treasury just traded over 3.0%. For months, many have proclaimed that 3.0% is the Maginot Line that, if crossed, spells impending doom for the markets. While it is easy to get excited about round numbers, the reality is that the economic impact of 3.0% is no different than 2.99%. The Treasury rate that I really find… Read More

12 Mar 2018

Busting Another Wall Street Myth

Over the last few months, I’ve read multiple articles making the claim that the correlation between stocks and bonds is shifting and that the new relationship will negatively impact portfolios. One recent Bloomberg article, titled ‘Easy Allocation Models ‘Doomed’ as Diversification Breaks Down’ really set me off and caused me to take a closer look at some of these claims. The thrust of the claim is that the recent negative… Read More