BondGuy

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19 Comments

    • Mon Oct 13th 09:15 AM | Rating: 0 0
      Commented on:
      Irrational Stupidity
      Maybe you are worried that buying the bonds from, for example, the ninth largest economy in the world, California, backed by one of the wealthiest tax bases in the world, with a constitution that explicitly prohibits defaults on the state's bonds, to be an irrational investment. Most people would consider a state guaranteed taxable equivalent return of 9.5%, a number that is higher than the long run expected return on the S&P 500, to be a once-in-a-lifetime opportunity. You are certainly entitled to disagree with the once-in-a-lifetime opportunity argument, but if you think this is the most irrational bit of exuberance out there, I suggest you try getting out a little bit more. The fact is that the rate of default on high quality municipal bonds is 1/4th that of the highest rated corporate bonds put out by bellwethers like GE and Microsoft. I'd call that type of investment pretty rational.
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    • Wed Oct 8th 16:11 PM | Rating: 0 0
      Commented on:
      New Treasury Supply: Did It Already Cost Taxpayers $240 Million Today?
      @ Smarty
      If excess money creation is the fear, why did the 10 year TIPS under-perform? Please try to make sense. As Jansen explains, this is just too much supply for the market to absorb on one hour notice. End of story.
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    • Fri Oct 3rd 13:34 PM | Rating: 0 0
      Commented on:
      Munis in the Crosshairs
      Don't scare people needlessly. This has almost no relevance to the overall muni market. Jefferson County was trading derivatives, and was ripped off by Wall Street banks. Also, the underlying bond was a "revenue bond," which is more like a corporate bond, as it was paid off by the sewer authority revenues rather than by tax revenues, like a GO muni bond. GO (general obligation) bonds are what most muni investors have, and these bonds are the next safest thing to T-Bills, in that they are backed by the full faith and credit of the state. They are incredibly safe.
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    • Wed Sep 3rd 14:49 PM | Rating: 0 0
      Commented on:
      Runaway Inflation: Do TIPS Really Help?
      However poor a measure of inflation CPI may be, the so-called advantage of stocks, the equity premium over safe bonds, is also measured against CPI. A 10 year TIPS guarantees 1.7% real return over the next decade. Will you be able to beat that with stocks over the next 10 years? If history is a guide, the answer is yes. The equity premium is estimated to be a 5 percent real return over safe bonds, yielding a predicted 6.7% real return The only question is whether history will repeat itself. We all know the answer to that. Don't we?
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    • Sat Aug 23rd 10:04 AM | Rating: 0 0
      Commented on:
      Foreigners Selling U.S. Stocks: A Good Sign
      I agree with 2houndz, it's a stampede from dollar denominated assets. Given the FEDs recent policy moves, it's no wonder, as the FED has created too much currency risk for foreign equity investors. They want a pure play on US equities, but they can't get it without dollar hedging, which is expensive and reductive of yields to an unacceptable extent. So they have quit the market.
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    • Sat Aug 23rd 09:58 AM | Rating: 0 0
      Commented on:
      Stocks vs. Bonds: The Next Decade
      The flaw in this comparison is pretty obvious: Bonds are in a short term bubble making them extremely expensive relative to stocks right now. In 6 months or a year, bond yields are headed up and prices down, making them a pretty decent investment for the regular contributor to an IRA or 401K. On the other hand, in absolute terms, stocks are still expensive, with a ten year trailing PE way above the historic mean. The S&P will have to decline roughly another 25% to put stocks at the historic mean of 16 PE. Until that happens, the projected rate of return on equities seems below that of bonds. Going forward, on a risk adjusted return basis, bonds seem the better deal by a considerable margin.
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    • Sun Aug 3rd 10:52 AM | Rating: 0 0
      Commented on:
      Bill Miller on This Tough Market
      There will come an era when even Warren Buffet will be proved wrong, and financial columnists will no longer reflexively resort to quoting him when they have not a single original thought to offer. I hope that day is nigh; it can't come too soon.
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    • Sun Aug 3rd 10:44 AM | Rating: 0 0
      Commented on:
      The US Dollar Elevator is Going Up!
      Sadly, this writer is a product of the same witless idiocy that runs the country now.
      View article »
    • Sat Aug 2nd 10:28 AM | Rating: 0 0
      Commented on:
      Bill Miller on This Tough Market
      The 20th Century was the American Century. We won two wars while the rest of the world was devastated, and went from an agricultural country to the greatest industrialized power in the world. No surprise about the huge returns to the US stock market in that epoch. Now, ask yourself, what are the odds that the 21st century will be equally favorable to the USA, and its stock market? The performance of stocks in 21st century will in all likelihood be MUCH lower than they are telling us.
      View article »
    • Fri Aug 1st 16:49 PM | Rating: 0 0
      Commented on:
      Bond Expert: Refunding and Treasury Financing
      Actually, TIPS are good for locals, because there is relatively little foreign ownership. That means they will not suffer as much as nominal Treasuries in a dollar crisis, nor are yields unnaturally depressed by SWF safe harbor buying, a serious worry with nominals at this point. As a class, they have performed very well historically. The CPI calculation is a negative, but this is a known problem, and thus, the yield/price reflects the somewhat diminished inflation protection. The biggest problem is liquidity -- these should be buy and hold instruments, held primarily as core holdings in retirement accounts due to the unfavorable tax treatment. They won't make you a millionaire, but if you are one already, they insure that you will stay that way forever, after inflation.
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    • Tue Apr 8th 18:05 PM | Rating: 0 0
      Commented on:
      Ambac, MBIA Finally Get the Rating They Deserve
      Unfortunately, no one cares anymore. The FED has mooted the concept of default-- to say nothing of responsibility, prudence, and fairness.
      View article »
    • Tue Apr 8th 18:01 PM | Rating: 0 0
      Commented on:
      Where's the 'Protection' in TIPS? Better to Go with Silver and Gold
      Your blog is shockingly inept. With 4+% inflation, a 2.75% money market is a lot worse than TIPS. Moreover, 20 year tips are at 1.8% plus inflation, which is a strong case for owning thm at this juncture. Bingo on the point that they are insurance against another Jimmy Carter presidency, which killed Ma and Pa saver. They should be in TIPS instead of the equity portfolios that the mutual fund industry is pushing at retirees. I won't even mention the bad advice dished out by 99% of the commission brokers. Disgraceful.
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    • Sun Mar 9th 15:09 PM | Rating: 0 0
      Commented on:
      Memo to MBIA: Now Is Not A Good Time To Fire Fitch
      Actually, the grander "truth is stranger than fiction" moment was Spitzer and Danello declaring victory on the Ambac rescue. But this is pretty hilarious, I agree.
      View article »
    • Sun Mar 9th 15:04 PM | Rating: 0 0
      Commented on:
      Freefall Fed Policies?
      To the extent that you are suggesting that the US government would default on its EXPLICIT guarantee of GNMA paper, you are a complete lunatic. I leave it to others to assess the wisdom of other advice you dispense in light of this observation.
      View article »
    • Wed Mar 5th 09:39 AM | Rating: 0 0
      Commented on:
      Auction-Rate Securities, RIP?
      Agree with stockbrokerfraud.com. This has been truly appalling behavior that does huge damage to investor confidence not only in these notes, not only in munis, but in all aspects of financial markets. It's obvious that retail investors assume the same decency in others that they have in their normal, everyday dealings with others. Now they have learned this is not reciprocated by the financial industry, which will damage confidence in the entire private investment system.
      View article »
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