Bond

10 Jan 2022

The Fed’s Policy Pivot: Higher Rates Ahead

The big story last week was Federal Reserve’s hawkish tone. In fact, though, the Fed’s pivot started a few weeks ago, but last week solidified it through the release of the minutes from their December meeting. There are two key factors that investors are watching: what the Fed plans to do about their bond-buying program known as quantitative easing (QE) and their plans for short-term interest rates. Regarding short-term interest… Read More

By David Ott Tags: Bonds, Economy, Federal Reserve, Interest Rates, Markets, Portfolio Strategy, Wall Street

20 Dec 2021

Alternatives are Tough

I wrote a lot about inflation in 2021 for pretty obvious reasons. I also wrote that bonds are difficult investments to own right now because the expected inflation rate over the coming decade is more than the current interest rates. After receiving a lot of inquiries about bond alternatives like REITs, utilities, and the like, I wrote an article shooting down those too. This article is a variant on that… Read More

By David Ott Tags: Alternative Investments, Bonds, Economy, Inflation, Interest Rates, Investing, Markets, Portfolio Strategy, Stocks, Volatility

13 Sep 2021

Inflation and the Price of Milk

The inflation that we all worried about earlier this year is showing up in the monthly numbers. It’s too early to say whether the higher readings are transitory, as the Fed would say, or here to stay. The most recent reading showed that inflation for the 12-months ending in July is 4.2 percent for ‘core’ inflation, and 5.3 percent for headline inflation. What’s core inflation? It’s the headline number but… Read More

By David Ott Tags: Bonds, Economy, Federal Reserve, Inflation, Interest Rates, Markets, Wall Street

16 Aug 2021

What Kills a Bond Portfolio

Even if everything goes according to plan, we are probably stuck with zero percent on cash for the next few years. We’ve been in this situation for so long that it almost seems normal, and with some negative interest rates elsewhere around the world, sometimes zero even seems good (actually, it never does, but negative is just so bad). Earning nothing is so lousy that every once and a while,… Read More

By David Ott Tags: Bonds, Cash Investing, Interest Rates, Investing, Markets, Wall Street

14 Jun 2021

Drawdowns in Retirement, Part Deux

Last week’s Insight about the risks associated with so-called bond alternatives with higher yields prompted a lot of feedback, which I always appreciate. Here’s the article in case you missed it. One curious reader asked a great question: what if we allocated some of the bond money to a few of these higher-yielding options? That was enough to send me down the rabbit hole, looking at all kinds of higher-yielding… Read More

By David Ott Tags: Bonds, Diversification, Investing, Markets, Portfolio Strategy, Stocks, Volatility

7 Jun 2021

Drawdowns in Retirement

This past week, I was meeting with a client and the discussion turned to the low yield bond environment. The client has a pretty common question – isn’t there something that yields more? The answer is yes, there are a lot of things that yield more than the investment-grade bond market. We could buy junk bonds, emerging markets bonds, or other questionable issuers. These kinds of bonds aren’t inherently bad,… Read More

By David Ott Tags: Bonds, Fixed Income, Markets, Portfolio Strategy, Portfolio Theory, Volatility, Wall Street

17 May 2021

Inflation Data Spooks Market

Markets were caught off guard last week by several inflation data points last week, and the biggest surprise came from the core inflation rate which was expected to come in at 0.3 percent for the month but was 0.9 percent instead. Most of the time stocks and bonds move independently of each other, but stock and bond prices fell on the inflation news because it could prompt the Federal Reserve… Read More

By David Ott Tags: Bonds, Economy, Federal Reserve, Inflation, Interest Rates, Markets, Wall Street

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

By David Ott Tags: Bonds, Derivatives, Investing, Markets, Portfolio Strategy

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

By David Ott Tags: Bonds, Economy, Markets, Small Cap Stocks, Volatility

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

By David Ott Tags: Bond Yields, Bonds, Economy, Federal Reserve, Inflation, Interest Rates

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