jhowle

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    • Mon Nov 17th 19:51 PM | Rating: 0 0
      Commented on:
      Short Treasuries? Never A Better Time
      In regards to the post I made on the PZA/TBT spread trade keep in mind the John Meynard Keynes quote ' The market can remain irrational longer that an investor can remain solvent'. I put this trade on some time ago and was under water in mid Oct as spreads widen out even further. Caveat Emptor.
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    • Mon Nov 17th 19:46 PM | Rating: 0 0
      Commented on:
      Short Treasuries? Never A Better Time
      An investor can take some of the risk out of being short by taking a spread trade with munis and treasuries. You could buy PZA which is a muni ETF with about the same duration as TBT. So you could be long TBT (which is a short position in the long Treasury) and long PZA. Keep in mind that TBT is a double short so you would need to buy twice as much of PZA on a dollar basis. Now you would be long munis and short Treasuries with a positive carry since there is not interest to pay on the TBT and PZA pays about a 4.50% tax exempt dividend. Then you sit back and wait for the spread (which is at levels far above anything I have seen) collapse.
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    • Sun Nov 9th 22:16 PM | Rating: 0 0
      Commented on:
      Stocks vs. Bonds: An Update for the Current Market
      although credit spreads look tempting we have yet to see any headline bankruptcies and I think that is coming and could widen spreads even further. Senior loans also look cheap but there has to be some blowups coming in that area as well. The muni/govi spread trade looks more appealing from a risk standpoint. You can play this using the PZA and TBT. Just keep in mind that TBT is a double short of the Treasury so you would only buy half as much.


      On Nov 09 06:04 PM Roger Knights wrote:

      > What do you think about an arbitrage-type play of shorting long-term
      > treasuries and buying BBB corporates? The great divergence in their
      > yields shouldn't persist. (Right?)
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    • Thu Sep 11th 23:40 PM | Rating: 0 0
      Commented on:
      T. Boone Pickens' Stocks Struggle
      Where is the information on the hedges he had in place?
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    • Thu Aug 21st 22:56 PM | Rating: 0 0
      Commented on:
      High Yield Credit Spreads at Post Bear Stearns High
      Not an eye opening observation. What should be taken away from this graph is the fact that credit spreads are continuing to widen and will probably do so until they take out the July 15th low in the inverterd chart. Because the common is simply a long term option on the assumed future cash flows and are junior to the bonds they should be more volatile and lead the turns in the market.
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    • Thu Aug 21st 22:41 PM | Rating: 0 0
      Commented on:
      Three Bond Classes: Year-to-Date Returns
      Brett: A good observation but the question is why? Why do high grade municipal bonds on the intermediate and long term part of the curve out yield Treasurys?
      Why has the intermediate portion of both the Treasury and muni curve out performed the long end? The muni/treasury relationship has created what I feel are rare opportunities in muni bonds. If you want to put on an abritrage trade then you can buy PZA (a muni ETF) and buy TBT ( a short treasury ETF) and wait for the spread to collapse.

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    • Mon Jul 21st 00:16 AM | Rating: 0 0
      Commented on:
      Preferreds and Munis
      Other than the fact that both MUB and PFF have interest rate risk there is very little correlation in the credit risk of the two. Therefore I would find it hard to draw the analogy. PFF is 78% financials and interest rates are rising. It may get some help if rates turn south again. Watch out for another fall in MUB if one of the old bond insurers gets taken into receivership.
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    • Sun Apr 27th 23:03 PM | Rating: 0 0
      Commented on:
      Upstream MLPs and Canadian Royalty Trusts: High Return, High Risk?
      It is my understanding that these can be held in tax-deferred accounts up to a limit. Check with your tax advisor. You can also avoid the issue by investing in a closed-end fund that owns these stocks. I like the midstream MLPs as the consistantcy of their dividends is less depedent on the price level of the commodity. Moving energy around the globe looks like a good business for many years to come.
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    • Fri Apr 11th 19:12 PM | Rating: 0 0
      Commented on:
      Stocks vs. Bonds: A Surprising Result
      The chart is correct because he started with a chart of t-bills which have very little price volatility and then he added a flat 200 basis point credit spread. The average returns of either asset class are simply a benchmark but almost no one actually ever realizes any where near those average returns. Investors usually fall into one of two camps, those that outperform on a long term basis and those that under perform on a long term basis. It is not a function of which asset class you chose but what you do with it. An able minded debt investor can hang with just about any equity, currency, commodity investor over the long term. These charts simply do not reflect real world after tax, after inflatoin returns. Consider the fact that in the early 80's investors could buy long term munis yielding 12% at a time when the tax rate was 50%. These investors were earning a tax equvialent yield of 24%. I know of course they were losing a fair amount of purchasing power for a period of time but not for the life of the bond, inflation was back down to 2.50% in 1983. Equity investors were experiencing the same inflation. So much for my ramblings. Have a good weekend.
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    • Sun Mar 23rd 14:08 PM | Rating: 0 0
      Commented on:
      Negative Real Yield 5-Year TIPS: Betting On Higher Inflation, Price Appreciation
      George: Don't you find it interesting that these still trade at huge discounts given the quality of their assets? When traders start moving out of TIPs and they return to a more reasonable real rate of return we are going to see the NAV drop which could put even more pressure on the market price. I hate to sell my positions at such deep discounts but I surely do not want to be holding when the market turns. An inflation driven bear steepening in the Treasury market is coming at some point.
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    • Tue Mar 4th 12:04 PM | Rating: 0 0
      Commented on:
      Some Muni Bonds Appear Screaming Buys Here
      When investing in any market there will be certain securities to avoid. California munis with poor underlying ratings would be one. Here in Texas real estate values are holding up very well. The same is true for many other areas as well. California is a unique market that seems to have always had it's own unique financial problems. You have to be selective but there are still some great values in the muni market.
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    • Mon Mar 3rd 21:04 PM | Rating: 0 0
      Commented on:
      Some Muni Bonds Appear Screaming Buys Here
      The fact that some investors are concerned about falling property values when discussing the municipal bond market is exactly why we still see good value in this market. Is there a fear that municipal bond defaults could dramaticly increase to over 1%? Is that any reason to avoid bonds with the full faith and credit of the issuer, in the case of GO bonds, that have an 'A' or better underlying rating and some insurance or guarantee on top. If you are truly concerned about buying municipal bonds at these prices due to credit concerns you better bury your gold in the backyard and start hoarding food and water. If there is a concern about 8%-10% inflation then I hope you bought CIPs, corporate inflation protected bonds, when they were trading at a 400bps real rate of return. The municipal bond market does not offer big price dislocatons but about once every decade.
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    • Fri Feb 22nd 12:51 PM | Rating: 0 0
      Commented on:
      AIG Selloff Was Overdone; Shares Have 50% Upside - Barron's
      why would I want to own a stock that has added almost no shareholder value in 10 years and any value an investor has recieved has only come from the small dividend.
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    • Mon Feb 18th 19:05 PM | Rating: 0 0
      Commented on:
      More Than Just Insurance: Monolines Provide an Efficient Municipal Market
      Michael: The possibility of the monolines splitting is a huge legal problem. The fact is that each of the purchasers of an insurance policy whether is was a municipality or a CDO had the full capital of the underwriter to draw from in case of a claim. If I am a CDO policy holder then I want all the capital of the insurer available to pay my claim. If I am a bond holder of an insurer such as MBIA, where does my debt go? I know companies have been split before and capital structures divded up but I see an enormous amount of litigation if they try this route. What the market wants to see is a AAA rating that is also listed as stable. The muni insurance is so imbedded in our financial system that the AAA rating must be maintained and the markets need to know that the AAA rating will be maintained. The domino effect is already being felt with the failure of the adjutable rate auctions. Follow the trail of the failed auctions and it leads right back to a lack of trust in the muni insurers maintaining their AAA rating. The CEO of MBIA has stated they need no additional capital and they need no additional regulation. They may be correct on the first but are wrong on the latter. If they do have adequate capital then they need to find a way of convincing the rating agencies of that. I understand that a good bit of the problem is mark-to-market prices on the underlying CDOs but this huge number of defaults that are priced into many of these CDO prices have not happened as of yet. They surely may happen but it is a bit like Orange County in the last mortgage security derivative blow up. The majority of the IO derivatives owned by Orange County ended up being money good. The problem was the run on the bank, and of course the absolutely poor job done by the county treasurer. Back to the muni insurers and the MBIA CFO Mr. Chaplin. Because the AAA rating of the insurers now plays such an integral role in the financial system the insurers need more oversight. It is now evident that when they place their capital at risk they place risk in the entire system. The dominoes don't stop here but consider the fact that if the insurers lose their AAA rating, the muni bonds held by financial institutions now must raise additional capital in the billions in because those bonds now fall into a higher risk category. How about all the muni bond funds, trust departments and other entities that are mandated to hold only AAA rated securities. Will they have to sell them into a market with no or very few buyers? Without that extra layer of high quality insurance the individual buyers must rely on the underlying rating and many of the issues have no underlying rating. What MBIA, AMBAC and FGIC should have done once they saturated the muni market and could no longer deploy the capital in a safe and profitable manner is return the capital to the rightful owners, the stock holders, through a higher dividend. Instead the management wanted to grow their entitiy so they could recieve bigger pay packages. As for phdinsuntanning's comments he has obviously had to much sun. Yes the monolines profit from insuring an asset class that really needs no insurance but people are buying peace of mind. They worked and saved all their lives and now do not want to put that money at risk. And it is not just old people, ask Mark Cuban what the average rating is on his muni bond portfolio?
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    • Thu Jan 31st 11:03 AM | Rating: 0 0
      Commented on:
      Getting Positive Again on Garmin
      Notable: Here is my question. I recently purchased a new Lexus and decided to not forgo the expensive navigation system due to the fact that I already have that service on my Verizon phone. I can use the navigation system on my phone from any car or anywhere else at a small fraction of the cost. Does this situation impact Garmin or are they providing the service to the phone companies.
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