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On Thursday, April 15th, we will host two webinars about the MFO Premium search tool site.
The site helps individual investors and financial advisers 1) sort through the vast number of funds available today based on criteria important to them, 2) maintain candidate lists of promising funds to conduct further due diligence on, and 3) monitor risk and return performance of their current portfolios.
Since our last webinar in January, which featured my colleague Lynn Bolin, the site has experienced several upgrades, including:
The morning session will be at 11 am Pacific time (2pm Eastern). The afternoon at 2pm Pacific time (5pm Eastern). The webinars will be enabled by Zoom. You are welcome to register for both webinars.
Please use the following links to register for the morning session or afternoon session. Each will last nominally 1 hour, including questions.
Material covered in previous webinar can be found here.
Hope to you can join us again on the call. If you have any topics you'd like discussed, or general questions, happy to answer promptly via email ([email protected]) or scheduled call.
When you shift risk from individuals to the government (or anyone else, as what happens every day in financial markets) one of three things can happen:
1. The risk still exists, but it’s smaller because of the power of diversification.
2. The risk stays the same size and is transferred from one party to another.
3. The risk increases, because you’ve created a new systematic risk, moral hazard, or some distortion in which prices and incentives don’t make sense anymore.
known-unknownsWelcome to Known Unknowns, a newsletter that’s here to remind you that although you can shift risk onto someone else, it never really disappears.
whats-changed-for-now-and-whats-changed-foreverOn the economic and investment side, the quants at BofA are thinking that... over 60% of the bank’s analysts see rising prices in their respective coverage universe. One of BofA’s top strategists, Michael Hartnett, is talking about 2020 being the secular bottom for rates and inflation.
and,
... a whole lot of fiscal stimulus and monetary stimulus, too. But here we are, at the big, fat middle part of an economic expansion with rising prices, capex growth, increasing demand for skilled labor and a massive, generational infrastructure bill on the way.
inflation-rebound-means-40-year-bull-market-in-bonds-is-over-says-bofaThe value of U.S. financial assets are now six times the size of gross domestic product. “Wealth gains obscene, but extreme asset bubbles natural end to nihilistic bull markets of past decade,” he said.
And longer-term drivers of disinflation were poised to wane, too. Fiscal authorities were now more open to increased spending and central banks were now explicitly targeting higher inflation as a goal.
Hartnett anticipated the coming decade could show similarities to the late 60s and early 70s when inflation and interest rates started to lift off as investors questioned the combination of easy fiscal and monetary policy.
So what does this all mean?
First of all, investors will have to get used to a world of lower investment returns, while dealing with an upturn in volatility, said Hartnett.
And the ravages of inflation could turn negative returns in fixed-income into the norm. Instead, investors should look to take shelter in assets that tend to thrive during period of price pressures such as commodities.
Thank you for the performance comparison and composition of your portfolio, 50% in dividend companies. I held DIVO since late last year and sold it, it just wasn't moving, sideways or down.@Mav123 - adding to @catch22's response I do invest in my own collection of a dividend 'growth' portfolio. It's composed primarily of dividend champions and aristocrats. I built it primarily for the income AND of stocks that I felt I would be comfortable holding forever. (Note: stuff happens so we both know that ain't true). It represents roughly 50% of my total portfolio.
Anyway, my portfolio has delivered that income and income growth in spades. It has also produced a comfortable total return BUT one has to be quite patient when selecting buy points. Also, I don't use any of the ETF's listed in catch's post nor any of the dividend focused mutual funds. The yields are too low and I don't like paying an ER when I can build my own fund, collect the income and pay myself.
I did hold a position in DGRO (iShares Dividend Growth) which I recently swapped for DIVO (Amplify CWP Enhanced Dividend Income). It's just a way for me to diversify the sources of the dividend income I collect by way of sector choices. I own no financial stocks and only one energy stock.
The Merrill Lynch Option Volatility Estimate (MOVE) Index is a yield curve weighted index of the normalized implied volatility on 1-month Treasury options which are weighted on the 2, 5, 10, and 30 year contracts. This Volatility Index shows the market's expectation of 30-day volatility. It is constructed using the implied volatility of a wide range of S&P 500 index options. This volatility is meant to be forward looking, is calculated from both calls and puts, and is a widely used measure of market risk, often referred to as the "investor fear gauge."
https://raymondjames.com/davidolnick/david-chart-of-the-week/2016/11/18/the-move-indexMany of us are familiar with the VIX Index, commonly referred to as the “Fear Index”. The VIX Index is a measure of “fear” as that relates to equity markets and typically rises during periods of falling prices, sometimes sharply during more precipitous declines.
Did you know that there is a similar index that measures fear within the bond market? That index was developed by Merrill Lynch and is referred to as the “MOVE” Index. The index rises as concerns grow that interest rates are on the march higher. The index will rise more sharply when there are fears in the market that rates may be headed significantly higher as was the case during the 2013 Taper Tantrum.
u-s-feds-powell-faces-political-test-on-bank-capital-relief-questionOn March 31, an emergency pandemic regulatory relief measure that for the past year has allowed Wall Street banks to hold less loss-absorbing capital against certain assets is due to expire.
Appearing to yield to the industry could put a second term in jeopardy for Powell, who was appointed Fed chief by former Republican President Donald Trump, because anti-Wall Street progressives control the Senate Banking Committee, which vets Fed nominees, and hold sway over White House financial nominees, analysts said.
“Powell (is) in a politically precarious position,” said Isaac Boltansky, director of policy research at Washington-based Compass Point Research & Trading. “This decision will leave someone politically important unhappy with him.”
https://pragcap.com/why-stocks-and-bonds-are-the-core-of-any-portfolio/...we all have specific time horizons on certain liabilities – your rent, your mortgage, your credit card bill, etc. And the key to good financial planning is matching those liabilities with certain assets that are very likely to provide liquidity for those future expected expenses. Your biggest asset is your labor and the predictable income stream that it generates for you over time. But you also need a portfolio of other assets that are likely to provide you with supplemental cash flow streams over time. Especially if you ever want to retire.
This is why stocks and bonds play such an important role in your portfolio. Most of us won’t generate predictable cash flows from owning real estate, cars, art, Bitcoin and other non-cash flow generating assets.¹ So stocks and bonds play a crucial role in asset allocation specifically because they provide those predictable cash flow streams.
A Ray Dalio Take:pension funds, insurance companies, sovereign wealth funds, and savings accounts cannot meet their financial needs with these investments so holding bonds assures their failure to meet their obligations. At the same time, while there is some room for diversification benefit, because of limitations of how low interest rates can go, bond prices are close to their upper limits in price, which makes being short them a relatively low-risk bet.
bondetf.net/short-bond-etf.htmIf you ever wondered how to short bonds in an ETF then you will be glad to know that there are currently several short bond ETFs. "Short" here does not refer to the duration of the bond (short-term) but rather the fact that it is a bearish or inverse bond ETF or exchange traded fund.
The current inverse bond ETFs available are mostly short treasury ETFs but they include an inverse high yield bond etf and they are issued by either ProShares or Direxion. The short treasury ETFs go up in price whenever Treasury Bonds go down in price and vice versa.
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