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  • Gross: A Sense of an Ending [View news story]
    The implication is that an overall defensive posture is required, with a recognition that average returns will be considerably below average. Good timing and opportunistic risk-taking, including leverage, will be needed to create excess risk-adjusted returns.
    May 4, 2015. 11:17 AM | Likes Like |Link to Comment
  • A 5 Position, Offensive-Line-Like REIT Portfolio [View article]
    I agree with the proposed strategy to ease into these REITs due to valuation. However, I am less cautious than before regarding the REIT space in general because I believe the risk of rising rates at the intermediate to long end of the curve is less than generally believed due to slow global growth and declining inflation. This environment is very supportive of valuation of REITs, MLPs and dividend growth stocks.
    Jan 30, 2015. 10:07 AM | 1 Like Like |Link to Comment
  • BAML's High Yield Master II Index falls through 7%, and nears the record low level of 6.95% set in 2005 (when it was just the ML High Yield Index). The 10-year Treasury yield was in the 4-5% range then, as opposed to 1.92% today, meaning spreads are nowhere near as tight now, meaning maybe, high yield still has room to run.  [View news story]
    To be perfectly clear, the YIELD TO MATURITY fell through 7%, not the index. Clarity is important when talking bond statistics. THis is good news for the economy, but also indicates ongoing opportunity for investors. The yield has room to fall farther.
    May 3, 2012. 09:18 PM | Likes Like |Link to Comment
  • Ninety years of credit spreads shows the current BBB spread with plenty of room to fall if the economy remains in decent shape. (h/t Bloomberg's Kevin Depew)  [View news story]
    Agreed, but it would be meaningful to plot the high yield spread to the A or Baa spread since the AAA yield is so distorted by Fed policies.
    Apr 22, 2012. 06:46 AM | Likes Like |Link to Comment
  • "The days of leveraged U.S. companies issuing BB bonds at 6.3% may be over," writes Sober Look, noting spreads on high yield bonds have widened 35 bps since the March lows. On top of that, HY bond funds saw their first outflows of the year this week, with mutual funds (home of the patient money) leading the ETFs - suggesting the losses could endure for awhile.  [View news story]
    YThe spread widening is due to investors worry that the economy will slow down again this year, as it did in 2011, and this could weaken the credit profile of such companies. The stock market pulled back also. If you believe the economy is on a modest growth trajectory, then you will be rewarded holding HY bonds, though not as well as you were coming out of the Great Recession. That was an opportunity that comes around less than every decade.
    Apr 14, 2012. 08:11 AM | 1 Like Like |Link to Comment
  • A long-term chart of the S&P 500 dividend yield shows today's current 2.1% looks enticing only when compared to the bubble years of the late 90s. Investors, however, must deal with the market they have, not the one they want. Will we ever get the chance to feel like Warren Buffett in 1974?  [View news story]
    Dividend yields today are influenced by expected dividend growth, expected inflation, yields available in the Treasury and corporate bond market, and the tax laws that subject dividends to double taxation. Corporations must manage the tension between providing a reasonable stream of dividends for shareholders, and the more efficient use of free cash flow in repurchasing shares in order to prevent double taxation of corporate earnings.
    Mar 22, 2012. 12:27 PM | Likes Like |Link to Comment