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Donald van Deventer

 
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  • AT&T Inc. Bonds: 10 Times The Risk Of IBM And Below Average Value [View article]
    Uain53, I'll post updated IBM default probabilities tomorrow morning--those will reflect today's news and the link you were kind enough to send along. Stay tuned!
    Jul 28 11:45 PM | Likes Like |Link to Comment
  • Kinder Morgan Energy Partners, Travelers And Amgen Top 'Best Value' Long-Term Bond Rankings [View article]
    Thanks Uain53, in my part of the universe, "dense" is a compliment! Edward Deming, the famous statistician, is quoted as saying "In God we trust, all others bring data." That's what we do! Thanks again for reading!
    Jul 28 11:42 PM | 1 Like Like |Link to Comment
  • Kinder Morgan Energy Partners, Travelers And Amgen Top 'Best Value' Long-Term Bond Rankings [View article]
    Uain, the rating agencies don't produce these default probabilities--my firm, Kamakura Corporation, does that. They're updated daily and available by subscritpion to retail investors. The statistical tests show they are much more accurate than agency ratings. Thanks for asking--if you need more information my colleagues at info@kamakuraco.com have a lot to show you!
    Jul 28 11:41 PM | Likes Like |Link to Comment
  • Berkshire Hathaway Credit Default Swap Trading Volume Tops $1 Billion July 18, 2014 [View instapost]
    Absolutely right. CDS are the equivalent of life insurance policies on specific (corporate) individuals that are freely trading. The sovereigns have come to dominate what trading there is.
    Jul 28 04:03 PM | Likes Like |Link to Comment
  • Mortgage Yields Twist, With Current Yields Up 0.04% From Last Week And 10-Year Forward Yields Down 0.09% [View article]
    Sure, you can make anything shorter if you leave out the facts.
    Jul 25 02:10 PM | Likes Like |Link to Comment
  • Forward 1 Month T-Bill Rates Show April 2021 Peak At 3.47%, 5 Months Earlier And 0.02% Higher Than Last Week [View article]
    Uain53, yes, you're absolutely right that the two are linked. We'll have a series of articles on how they fit together in coming weeks. As you can tell from the topics we're crunching a lot of bond spread data daily, and the default probabilities that go into those articles are dependent on stock prices, macro factors, and financials. We want to explain the common links between common and corporate debt and relative volatility to help respond to people who ask "why should I buy the debt when the stock yields x%?" We want to quantify the difference in risk. Thanks for the encouragement. One of my first assignments in a bank treasury group in my first real job was an analytical method that predicted when to issue long term debt. Thanks for the encouragement, which is rare on seeking alpha!
    Jul 25 12:14 PM | 1 Like Like |Link to Comment
  • Forward 1 Month T-Bill Rates Show April 2021 Peak At 3.47%, 5 Months Earlier And 0.02% Higher Than Last Week [View article]
    Will do. I've faced the same issue myself and everyone who volunteered an opinion was getting a commission! Thanks for the suggestion!
    cheers
    dvd
    Jul 25 01:10 AM | Likes Like |Link to Comment
  • Forward 1 Month T-Bill Rates Show April 2021 Peak At 3.47%, 5 Months Earlier And 0.02% Higher Than Last Week [View article]
    Thanks hahaha48, we'll be focusing on exactly this issue going forward. Thanks for the encouragement.
    Jul 24 11:20 PM | Likes Like |Link to Comment
  • Forward 1 Month T-Bill Rates Show April 2021 Peak At 3.47%, 5 Months Earlier And 0.02% Higher Than Last Week [View article]
    You must have not have read the section that says "Forward Rates are Not a Forecast." And I am rich.
    Jul 24 08:34 PM | 1 Like Like |Link to Comment
  • IBM: An Updated Bond Market Ranking [View article]
    Thanks for the comment. The watchwords for retail investors in any financial markets are simple:
    1. Every time you trade, you are going to be ripped off. So trade as little as possible.
    2. When fees are low, hide behind a bigger firm when you trade, going through Vanguard or Fidelity. This minimizes the costs from trading.
    3. Thinking you are so smart that you can "out trade" the bad pricing is dangerous. Even your spouse doesn't believe that.
    4. Control your own tax payments. That's why buying and holding for your own account can work out better than a fund or ETF, even if their costs of trading are lower.
    None of these are things I can control or get good information on, except by documentating how badly retail investors are treated in the bond markets.
    cheers
    dvd
    Jul 24 01:29 AM | 2 Likes Like |Link to Comment
  • IBM: An Updated Bond Market Ranking [View article]
    Actually, I wasn't think about the banks as much as investors like Harvard Management Company. With respect to cash, the super conservative "holding strategy" while waiting for the crash is TIPS.
    Jul 23 01:12 PM | Likes Like |Link to Comment
  • Kinder Morgan Energy Partners Leads The Best Value Bond Trades For Maturities Of 10 Years Or More [View article]
    You're asking a question I get a lot. There is a big risk differential between bonds and common stocks. This differential is most stark in bankruptcy where common shareholders get nothing and bondholders normally get at least 60% of par value. But it's also an issue of cash flow matching for the investors. If you need to pay (in 2032 dollars) $100,000 of college tuition, then the 2032 bonds will give you exactly that as long as there is no default. If there is a default, you get about $60,000. The common may give you $300,000 and it may give you $0. Risk, risk, risk, that's what it's all about. Good luck!
    Jul 23 12:47 PM | 1 Like Like |Link to Comment
  • IBM: An Updated Bond Market Ranking [View article]
    I don't make forecasts, but a lot of institutions remember what happened to their equity holdings in the credit crisis. Many others have forgotten completely.
    Jul 23 11:58 AM | Likes Like |Link to Comment
  • IBM: An Updated Bond Market Ranking [View article]
    You match the maturity of the bonds to the tuition payment so $10,000 comes in and $10,000 goes out. There's no interest rate risk or market risk (as long as the bonds don't default) relative to the cash you need to pay, which is something too many investors ignore. This is asset and liability management 1A, as practiced for more than 40 years...firmly embedded in bank regulation and insurance regulation.
    Jul 22 11:01 PM | Likes Like |Link to Comment
  • IBM: An Updated Bond Market Ranking [View article]
    Every time I hear someone say "the stock will outperform the bonds," I refer them to the latest 10-q of the bond issue to see how many billions of dollars have been invested by huge institutions in those bonds. Many of those institutions could have bought either security, the common or the bonds. One reason for buying the bonds is cash flow matching--if you have 4 years of college tuition to pay in the near term, putting 100% in stocks is a high risk strategy. So the right choice (stock or bonds) depends on a lot more than expected return--the risk matters, and the risk is a function of the cash outflow that the investor (retail or institutional) has to generate. Good luck. Fidelity is a great firm.
    Jul 22 08:50 PM | Likes Like |Link to Comment
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