Seeking Alpha

Andres Rueda

 
View as an RSS Feed
View Andres Rueda's Comments BY TICKER:
Latest  |  Highest rated
  • Revamping Your Bond Portfolio With A Simple Momentum Strategy [View article]
    Your momentum strategy is interesting, but I'd rather stay out of the long T-bond market altogether. Fed policy is to intentionally make the long T-bonds as toxic as possible, to push folks into risky assets. Long T-bonds are nose-bleedingly expensive right now, with yields well below inflation. When the Fed exits the market for long T-bonds - or, worse, when it starts selling - watch out below.
    Aug 31 10:53 AM | 1 Like Like |Link to Comment
  • Long-Term Treasury ETFs: Ultimate QE3 Play? [View article]
    No, hold your long T-bond for its entire term and there will be no capital gains. You will end up with a bunch of miserable, tiny coupons and a principal that on an inflation-adjusted basis is worth much less than your initial investment amount. Only if you can dump the stuff down the road on somebody else (maybe the Fed (?)) in a game of musical chairs will you see so-called "capital gains". There is little fundamental value in long T-bonds at today's prices.
    Aug 30 09:00 PM | 1 Like Like |Link to Comment
  • Long-Term Treasury ETFs: Ultimate QE3 Play? [View article]
    Long-term T-bonds are a deteriorating asset, if inflation adjusted.
    Aug 30 08:30 PM | Likes Like |Link to Comment
  • Vale: Don't Miss This Buy Opportunity [View article]
    The answer is that prices may go lower, but they will eventually rebound. Short-sighted investors are dumping Vale as if iron ore prices were permanently anchored at the bottom. If you hold Vale for at least 1 yr you may see gains on your position in excess of 100% as the price of iron ore (and the price of the stock) reverts to norm.
    Aug 29 11:55 AM | 3 Likes Like |Link to Comment
  • Good Dividend Payer BreitBurn Energy Partners Brightens Its Future With New Oil Asset Purchases [View article]
    You got a tough audience, but nobody really questions the basic premise of your article - an investment in BBEP is a solid investment. The company has good prospects and sound fundamentals. You did not mention this, but BBEP has an unusually low P/E ratio for an MLP. Profitability is of course a plus, although in the MLP context the investor unfortunately directly bears the pass-through tax consequences!
    Aug 26 02:49 PM | 1 Like Like |Link to Comment
  • Good Dividend Payer BreitBurn Energy Partners Brightens Its Future With New Oil Asset Purchases [View article]
    One of the best entry points for BBEP and other dividend/distribution payers is right after the effective date of a dividend/distribution. Many people dump the stock right after the dividend/distribution becomes effective. The fall in the stock is typically more than the dividend/distribution amount.
    Aug 26 02:41 PM | 2 Likes Like |Link to Comment
  • Treasurys extend a big 2-day rally following the FOMC minutes, the 10-year yield off 8 basis points to 1.71% (after nearing 1.9% yesterday). If the Fed is truly going to launch QE3, bond bulls (and bears) should take note because past QE episodes have sent Treasury prices lower. [View news story]
    At these price levels, long-dated T-bonds are the idiot's version of greed - great risk for no reward.
    Aug 22 11:04 PM | Likes Like |Link to Comment
  • Treasurys extend a big 2-day rally following the FOMC minutes, the 10-year yield off 8 basis points to 1.71% (after nearing 1.9% yesterday). If the Fed is truly going to launch QE3, bond bulls (and bears) should take note because past QE episodes have sent Treasury prices lower. [View news story]
    The T-bond market has lost all contact with rational thinking. The guys who buy these bonds apparently cannot do basic math. Yields on the 10-yr dropped today to 1.69%. Is anybody who buys this paper actually thinking of holding it for the 10 yr term of the bond, collecting those "juicy" coupons, or is the notion simply to dump it on somebody else (maybe the Fed or the Chinese (?)) down the road? At these low yield levels, a small hike in interest rates (we're talking mere basis points!) crushes the cash flow value of these insanely overpriced bonds.
    Aug 22 08:05 PM | 1 Like Like |Link to Comment
  • Don't Rush To Buy Stocks At These Levels [View article]
    Err... ok, so what should an investor do with his spare cash? Buy CDs? Buy long-dated T-bonds at no yield? Real estate? Everything is relative. The Fed has been pumping cash into the economy for quite a while already, so there is an awful lot of it lying around (just check the numbers, published by the Fed at its website), waiting to be deployed. The stock market offers the best yield (by far) than most other asset classes, offers inflation protection, and will not get crushed if interest rates hike up just a little bit (tell that to the guys who bought 10-yr T-bonds at a 1.41% yield as recently as a couple of weeks ago; I assume you think they had the right idea at the time, huh?)
    Aug 20 07:50 PM | 4 Likes Like |Link to Comment
  • More on Greece : France and other S. European countries are pushing to give Greece more aid, if required, in order to keep the latter in the euro, Welt am Sonntag reports. If true, it could make France receptive to an extension to Greece's austerity program. However, German finmin Wolfgang Schaeuble yesterday said, "We can't make yet another new program." [View news story]
    No, the Germans pay low yields because the bond market is dysfunctional. A smart investor does not pay a country for the benefit of lending to its sovereign. Only a lunatic does that. And yet, we have seen negative yields. Look at the US debt market for another example. There's a risk of default there. Debt to GDP in the US is approaching 100%, much higher than Spain. No chance of repayment other than through an inflated US dollar. And yet, despite large inflation/interest rate/default risks, yields on the T-bonds are still tiny (the recent mini-crash in T-bond prices notwithstanding). Why? Because people are scared and any market driven by emotions becomes dysfunctional and a very poor allocator of capital.
    Aug 19 08:01 PM | 1 Like Like |Link to Comment
  • More on Greece : France and other S. European countries are pushing to give Greece more aid, if required, in order to keep the latter in the euro, Welt am Sonntag reports. If true, it could make France receptive to an extension to Greece's austerity program. However, German finmin Wolfgang Schaeuble yesterday said, "We can't make yet another new program." [View news story]
    The Germans should stop acting like they're the big victims of the Euro crisis. They are anything but. They pay almost nothing for their debt, because during the height of the crisis panicky investors dumped the bonds of Southern European countries and parked the sales proceeds in "safe haven" (no such thing!) German government debt. The Southern countries are in fact subsidizing them at this point, thanks to a dysfunctional, emotion-driven bond market. Did anyone say "negative yields"?
    Aug 19 06:28 PM | 1 Like Like |Link to Comment
  • More on Greece : France and other S. European countries are pushing to give Greece more aid, if required, in order to keep the latter in the euro, Welt am Sonntag reports. If true, it could make France receptive to an extension to Greece's austerity program. However, German finmin Wolfgang Schaeuble yesterday said, "We can't make yet another new program." [View news story]
    Actually, the cost of a Greek default IS probably 0. It already defaulted. It is a small country. At this stage, only hedge funds and speculators hold its debt. There will be no "contagion" because the ECB will eat alive any short sellers of Spanish or Italian debt.
    Aug 19 06:20 PM | 1 Like Like |Link to Comment
  • "The risk of default on municipal bonds in California is rising," says Moody's MD Robert Burtter, lead author of a detailed look into city finances there. "Across-the-board rating revisions are possible ... in the next month of two." "Bankruptcy as a tool to extract bondholder concessions as part of a budgetary solution is a significant new risk for bondholders," says another report author. [View news story]
    If investors panic in the municipal debt markets, the consequences will be terrible for cities, counties and municipalities. Their budgets are exploding with unfunded pension obligations, etc., their revenues are thin or thinning, and they have a hard time as it is despite very low interest rates. Jack up those low interest rates just a little bit, and ouch, ouch, ouch... California - the new Greece?
    Aug 18 02:53 PM | Likes Like |Link to Comment
  • Considering Treasuries? 2 Reasons To Reconsider [View article]
    Noone in his right mind would pay a negative real (or in some cases nominal) yield to own so-called "safe haven debt". Why would you pay for the "privilege" of lending money to a sovereign? Public institutions (e.g., the Fed) are not motivated by profits. Banks and other institutions may be forced into a bargain with the devil by Basel, and may purchase these bonds solely because they are compelled to do so for regulatory reasons. For average investors, these bonds have way too much risk. At currently miniscule yields, a small spike in yields already results in mark-to-market losses, which will vary depending on maturity, with long--term debt seeing a disproportionately larger loss than the short-end of the duration curve. Then there is inflation. If you want to lose your money in real terms, do what the Fed is telling you NOT to do: purchasing "safe haven" assets. As the author suggests, the Fed has created aberrant behavior in the bond markets as a result of its quantitative easing programs and the resulting scarcity of "risk free" (there is of course no such thing!) debt.
    Aug 12 08:17 PM | 2 Likes Like |Link to Comment
  • Michael Harkins offers a quick lesson in duration, saying a buyer of the 10-year Treasury at 1.5% will get crushed with just a move back in yields to 2.5%. The bond market is a fabulous bubble, he says, growing in size as those who went short at the then impossibly low rate of 2.5% a year ago lack the conviction to do the same at 1.5%.  [View news story]
    The "ouch" is in buying 10-yr T-bonds at current prices, and holding on to that garbage for 10 years!
    Jul 31 11:20 PM | 4 Likes Like |Link to Comment
COMMENTS STATS
174 Comments
287 Likes