Over the years, we’ve seen and created a ‘periodic table’ of returns that stacks asset classes in order of their performance on a year by year basis. By color coding each asset class, most investors look at the table and realized that asset classes jump around a lot and it’s difficult, if not impossible, to make good timing decisions. I thought it would be interesting to the same thing with… Read More
With the Federal Reserve now unwinding their bond purchasing program known as quantitative easing, it’s likely that the Fed will start to raise short-term interest rates at the end of 2015 or the beginning of 2016 (assuming no new information). Now that we ‘know’ that the Fed will raise rates, what will happen when interest rates rise? The short answer is that it depends. I know that’s an unsatisfying answer,… Read More
ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: Remember The Taper Tantrum? What’s My Duration? Bond Sector Performance
Interest rates are low and many investors are worried about rising rates, which can hurt bond prices. As always, Wall Street has rushed to the aid of investors by creating products to meet this need, just as they did with internet funds in the late 1990s and real estate funds during the bubble. One of the ‘solutions’ that Wall Street has created to meet investor demand is something called a… Read More
Yesterday, someone asked me what’s going on in the markets. I said that stocks are flopping around zero – plus two percent or minus two percent depending on what you look at, nothing really. I said that the interesting story, in my opinion, was that the yield on bonds has been dropping all year, much to everyone’s surprise. When I hung up the phone, I looked up the yield and… Read More
Yesterday, I came back from lunch and found the most recent Bloomberg Business Week on my keyboard so that I couldn’t possibly miss it. The cover features a confused and slightly incredulous Bill Gross, the Chief Investment Officer (CIO) of PIMCO and general bond king with the headline, ‘Am I really Such a Jerk?’
A few days ago, I was listening to the podcast EconTalk (yes, that’s what I do in my ‘off’ time). The host, economist Russell Roberts interviews well known economists about a whole hos to economic subjects, from the broad theory to the day-to-day application. The episode that I was listening to (but haven’t yet finished), featured Gene Fama, the University of Chicago Booth School of Business professor who came up… Read More
ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: The Plan to Wind Down Fannie and Freddie Economic Analysis – Fed Digests Mixed Data Bond… Read More
A lot of our attention at Acropolis is focused on asset classes like US large or mid cap stocks, emerging markets or bonds. We also spend a lot of time researching and trying to optimize strategies like value, momentum, size and quality. Another dimension that factors into our decision making process are stock sectors (bond sectors too, but I’ll save that for another day). Within the S&P 500, there are… Read More
At the end of October, I wrote that investors could earn a tax-free nine percent yield on their fixed income portfolio buy purchasing bonds issued by Puerto Rico. In the article, I said that ‘markets caught on before the bond ratings agencies’ since prices had fallen dramatically while Moody’s had just cut their rating from Aa3 to A2, which is still five rungs above investment grade. A little more than… Read More
