Bonds

  • 07 Nov
    Why You Should Be Holding Cash Now

    Why You Should Be Holding Cash Now

    • Beware of the financial industry pushing you to invest your cash. They are only doing so because they don’t earn a dime on it.
    • Market circumstances change, so what might be the best option now compared to other assets, might not be the best option in next five years.
    • Cash is a call option and before investing in anything, you should ask yourself what the risks are. Investing in stocks with a 50% potential decline around the corner for a 2% yield isn’t always the best idea.

    Introduction

    In an environment where everyone is looking to find the next best returns boosting investment, an asset that is rarely discussed and often taken for granted is cash.

    Today we’ll discuss the role cash should play in investors’ portfolios, the perspectives we have on cash, and finally, how much cash investors should have in relation to current market circumstances. More →

  • 17 Oct
    Why A Market Crash Could Be Just Around The Corner

    Why A Market Crash Could Be Just Around The Corner

    • We’ll discuss some risks first and then discuss potential rewards.
    • Valuations are the tipping point toward a riskier perspective.
    • After reading this article you’ll be able to decide for yourself what the best strategy is for you to follow.

    Introduction

    In order to see where the market is going, let us first take a look at what the market has been doing in the last two years.

    The market has had a 7% yearly return if we look at it from October 15, 2014, however, if we wait a month, the yearly return for the last two years will fall to 1.8% per year. 1.8% a year plus a dividend yield of 2% isn’t bad in the current low yield environment, but it is bad when compared to the risks stock investors are running. More →

  • 29 Sep
    What Do Investments, Yields & Buybacks Tell Us?

    What Do Investments, Yields & Buybacks Tell Us?

    • The 10-year and 2-year treasury yield spread is getting smaller.
    • Investments peaked last year.
    • The market is standing on legs of hope coming from positive expectations. What are you standing on?

    Introduction

    We will take a look at yields, investments, buybacks and valuations, and look for trends that might trigger a bear market. More →

  • 19 Sep
    Beware The House Of Cards

    Beware The House Of Cards

    • Stocks and bonds don’t provide diversification, while gold only does sometimes.
    • Alternative assets are better, but not all of them are equal.
    • Hedge funds perform well in bear markets but heavily underperform in bull markets.

    Introduction

    The increased market volatility after the quiet summer demonstrates how risky markets can be. The market falling by 2.5% in a few days on practically no news except for an increased probability of a small increase in in interest rates and no additional stimulus in Europe is a sign of the market’s fragility. More →

  • 16 Sep
    Want To Retire Comfortably? Do You Have $2,000,000?

    Want To Retire Comfortably? Do You Have $2,000,000?

    • The low yields we have now increase the amount necessary for a comfy retirement nest egg.
    • $500,000 is only estimated to last for a 13 year retirement. Most retirees will completely miss the mark.
    • Avoid risky assets no matter how tempting might the yield be.

    Introduction

    Last week we discussed the true cost of low interest rates with particular attention paid to pension funding. Many defined pension plans are underfunded, and it’s a situation that has to be dealt with now despite it being against human nature to think about a problem that will only arise in the distant future.

    On top of the problems in defined pension funds, low interest rates have a detrimental effect on general pensions and your retirement. More →

  • 15 Sep
    Troubled Waters Ahead For Developed Markets. Look Here For Returns.

    Troubled Waters Ahead For Developed Markets. Look Here For Returns.

    • Europe and Germany aren’t the best places for international diversification right now.
    • The U.S. is looking a bit better, but you’ll find the best opportunities are mostly in emerging markets.
    • Look for companies that are relatively cheap and that have exposure to China, India, and/or Brazil.

    Introduction

    Two days ago we discussed what is going on in the markets in relation to monetary policies. Today we will discuss what is going on in global economics.

    As the market is showing a high level of volatility, basic economic fundamentals is where we should look to get answers on what to do. By analyzing the latest global economic indicators, we can better determine the risk of a recession in the U.S. and Europe or a slowdown in China, all of which could contribute to a decline in global markets. More →

  • 13 Sep
    What To Expect From The Markets Now

    What To Expect From The Markets Now

    • The German bond’s 3% loss on a 12 basis point yield move shows how risky bonds are right now.
    • The value of the S&P 500 should be around 1,600 but could go lower with bad economic news.
    • Bonds and stocks seem very risky as they both have low yields and large downsides.

    Introduction

    Last Friday was a pretty scary day in the financial markets. The S&P 500 lost 2.45% and bonds also lost ground due to higher yields.

    Stocks and bonds are correlated and don’t provide quality diversification. We have been warning about the risks inherent to bond investing for a while with warnings that the low yields mean high risk and low returns. More →

  • 12 Sep
    Is Cash An Opportunity Cost, Or An Opportunity?

    Is Cash An Opportunity Cost, Or An Opportunity?

    • Holding cash may be considered an opportunity cost, but its also a call option with no expiration date.
    • The yield you can expect from bonds is 1.5% and the yield from stocks is 2% or 4% when earnings are included.
    • Holding cash will give you the liquidity to load up the truck when opportunities come knocking.

    Introduction

    We’re often taught that action is the way to solve all issues; the more you work the more you have, and as good economists, we have to use all available resources. But that isn’t always the best way to approach investing because all that action may sometimes be just like rowing toward a cliff.

    The other option is to do nothing,—or even better, to do something completely separate from investing, like playing with your kids, traveling, etc.—and sticking to cash with a significant part of your portfolio for a while. More →

    By Sven Carlin Bonds Cash Investiv Daily Stocks
  • 02 Sep
    Bonds, Ratings and Yields, Oh My…

    Bonds, Ratings and Yields, Oh My…

    • Credit ratings are very subjective and should therefore be taken with a grain of salt.
    • Junk bond yields have been declining since January, but their volatility represents a huge risk.
    • Be careful with international bonds as you might be exposed to greater risk for lower yields.

    Introduction

    Last week we discussed how dangerous common retirement advice can be. Currently, One of the biggest risks comes from the low yields on bonds because any kind of interest rate increases would immediately lower bond values which might have a severe impact on your retirement. But as there are many types of bonds, today we are going to discuss and compare the various yields and the risks involved within bond investing. More →

  • 26 Aug
    How Dangerous Is Common Retirement Advice?

    How Dangerous Is Common Retirement Advice?

    • Things are much different than they were 10 or 20 years ago but everyone seems to follow the same retirement investing advice.
    • As retirees are in need of more security they are now forced into more risk as bonds have become riskier than stocks while also giving a lower yield.
    • If you’re looking for security, cash may be your best bet.

    Introduction

    You’ve likely heard the advice that as you get closer to retirement you should move toward having a bigger chunk of your portfolio in bonds rather than stocks. Most retirement funds are structured in that way. Vanguard Target Retirement Funds allocate 90% of assets in equities and 10% in bonds if you are going to retire between 2058 and 2062, thus 45 years from now. More →

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