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Michael A. Gayed, CFA  

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  • Current Treasury Yield Snapshot [View article]
    Doug - great summary. Is there any way to take a look at what the rolling correlation of yields to stocks is over shorter time frames? You mention that during the sample period the correlations are weak, but I would be curious to see if there are specific junctures where the two perform more closely.
    Sep 24, 2010. 11:46 AM | Likes Like |Link to Comment
  • Why Lower-Rated, High-Yield Bonds Might Not Be as Risky for Their Returns [View article]
    A great summary of the performance of junk bonds. The move has been remarkable as investors continue to reach for yield and expected default rates continue to decline in lower-rated issues. The recovery in prices is indicative that there actually is quite a bit of liquidity flowing into the risk segment of the bond market. It would make intuitive sense that as that trade nears its end, investors would then pile into stocks as the transition from debt to equity begins.
    Sep 24, 2010. 11:46 AM | 1 Like Like |Link to Comment
  • Bond Investing: Why History Is So Misleading [View article]
    Jeb is correct in this point. You have to really look at total return as opposed to ex-dividend performance to see how stocks have done relative to bonds over long periods. People tend to completely underestimate the impact of dividends and reinvesting those dividends on equity total returns.
    Sep 24, 2010. 11:34 AM | 1 Like Like |Link to Comment
  • Could a Big Dollar Decline Break Treasuries? [View article]
    I think you're correct. The point of this posting was to speculate that perhaps the Fed does not serve as the catalyst for yields to rise, but rather a panic decline in the dollar which forces marginal foreign buyers out of bonds because of negative currency translation.
    Sep 23, 2010. 11:07 PM | Likes Like |Link to Comment
  • Could a Big Dollar Decline Break Treasuries? [View article]
    I very much agree with you on this point. In many ways, the Fed is making the situation worse by leaving things vague. Longer-term Treasury yields should rise given at least the possibility of inflation...10 years is a long time to be certain about low economic growth and deflationary pressures.
    Sep 23, 2010. 09:37 PM | Likes Like |Link to Comment
  • Total Returns for U.S., EAFE and Emerging Markets [View article]
    The last few years has seen an increasing correlation for emerging markets to developed markets. Much of this is due to the heightened volatility of equity markets and comovement across all asset classes being higher.
    Sep 23, 2010. 02:17 PM | Likes Like |Link to Comment
  • Pairs Trade: VIX Futures Curve [View article]
    Surly - is there any research that shows how equity markets behave when you have such a wide term spread? It is a contrarian indicator if investors are betting on future volatility that far exceeds spot volatility?
    Sep 23, 2010. 02:00 PM | Likes Like |Link to Comment
  • If Stock Picking Is Dead, Then Index Investing Is Completely Broken [View article]
    I've always been fascinated by the comovement effect of stocks that get included into an index. I've seen studies that show that a stock's beta actually increases when included in an index despite no fundamental change in company earnings. This is a phenomenon that has existed pre-ETFs, and I think has important implications on the nature of price movements.
    Sep 23, 2010. 01:58 PM | Likes Like |Link to Comment
  • The Fed's Biggest Bubble [View article]
    Agree with the analysis. The bond market is behaving with such certainty that the next 10 years will be a period of low inflation that any kind of positive economic surprise or unexpected increase in CPI could send bonds down heavily.
    Sep 23, 2010. 01:49 PM | Likes Like |Link to Comment
  • Why Hyper-Inflation Is a Low Probability Event [View article]
    While I agree that its a low probability event that the U.S. experiences hyper-inflation, what about a worldwide bout of hyper-inflation? If every single country experienced a sudden surge of rising prices all at once, then currencies would stay the same in relative terms. If there is going to be a currency crisis due to the U.S. dollar, it likely would have to be because of a flooding of foreign investors out of Treasuries.
    Sep 23, 2010. 01:37 PM | Likes Like |Link to Comment
  • Nine Thoughts on Bonds [View article]
    I wonder about the idea that governments would have "no choice but to bail out bondholders while throwing equity owners under the bus, again." Pension funds nationwide have a huge allocation to equities, and are still massively underfunded. If equities collapse again, I shiver at the thought of the state of corporate pension plans.
    Sep 23, 2010. 01:04 PM | Likes Like |Link to Comment
  • Beware of Renewed Consumer Spending With Regard to Retail Sector ETFs [View article]
    Kevin - in your opinion, how much of the outperformance of retailers over the past year may be due to the fact that the number of women in the workforce exceeds the number of men for the first time ever? I wonder if the gender shift of who holds purchasing power is impacting retailer prospects going forward.
    Sep 22, 2010. 01:28 PM | Likes Like |Link to Comment
  • Irish Spreads Continue to Climb [View article]
    Currencies are a relative trade. Who is ultimately in worse off shape? If the prospects for the U.S. are worse than Europe, than the dollar would decline as the Fed attempts to reflate. Keep in mind that the Eurozone does have some strong players (most notably Germany). What are the strong states in the U.S.? Last I checked, NY and California appeared to have big problems of their own in terms of their respective municipal balance sheets.
    Sep 22, 2010. 12:07 PM | Likes Like |Link to Comment
  • Homebuilder ETFs Likely to Face Downward Pressure as Oversupply Continues [View article]
    I actually just put up a posting about Homebuilders on my InstaBlog here on SeekingAlpha MDmoney - might be helpful in helping to provide some perspective on how markets are interpreting the outlook for homebuilders going forward.
    Sep 22, 2010. 11:33 AM | Likes Like |Link to Comment
  • Three Different Ways to Assess 'Fear' in the Stock Market Through ETFs [View article]
    Also worth watch sector performance within the stock market to assess "fear". For example, if Utilities, Consumer Staples, and Healthcare show relative strength to the S&P 500, it might indicate an overweighting of defensiveness is beginning to occur.
    Sep 22, 2010. 10:41 AM | Likes Like |Link to Comment