You are crazy to invest in bonds perhaps of interest; taken, though not verbatim, from email and docs making the rounds at GS
Subject: Some assorted market stats and anecdotes about what has happened in the last months
It has been a few months of records. They say a lot about the relationship between risk-taking by economic policies and financial conditions.
1. 2020 has likely featured the sharpest -- but the shortest -- recession in US history (certainly since the 1850s for the US, and since WWII on a global scale).
2. in turn, we’ve just seen the strongest rally out of a bear market since ... 1932.
3. the US alone had conducted $2.3T of QE in the past three months (Treasuries + mortgages). For those keeping score at home, that’s an average of around $35B of bond buying per business day since mid-March.
4. GIR expects zero interest rates in the US for several more years -- until the economy reaches 2% inflation and full employment -- which is perhaps not until 2025.
5. largely thanks to fiscal support, GIR expects US disposable income to grow 4.0% in 2020.
7. USTreasury planned to borrow $3T in Q2 alone; despite that supply glut, we’re just off the alltime low yields in US 2y notes and 5y notes.
8. in that same general context, US 30yr mortgage rates are down to alltime lows .
9. the past six weeks have seen the largest amount of global equity issuance on record, at $205B.
10 and 11 are driven by the Fed purchases of corporate bonds:
10. March saw record outflows from corporate bond funds (-$42B); we’re now witnessing record inflows to corporate bond funds (+$85B since the start of April).
11. it’s not just that we’re witnessing record new issue in the credit markets, it’s that we’re also seeing record low corporate financing costs (e.g. AMZN raised $10B of capital at the lowest 3/5/7/10 and 40y yields ever).
What is the rationale for buying 40y bonds now? Don't they want more flexibility? Don't they think that there is a high probability that underlying conditions will change well before 40 years?
One possible explanation: as yields get lower, investors have to go out the yield curve (thus take more duration risk) in order to obtain higher yields (think of a pension fund that needs to generate a fixed return). This would be one example of the portfolio-rebalancing effect of QE. Also note that few investors ever hold bonds to maturity, and a 40y bond would "enjoy", because of its longer duration, a large price appreciation should interest rates fall further (of course the opposite is true if rates increase). Recall that, in 2018-19, the Austrian 100y bond doubled in price as yields declined from 2 percent to 1 percent.
So this would be investors betting that interest rates will not increase from here and may decline further.
12. March saw record outflows from equity mutual funds and ETFs; one can argue we’re now seeing legitimate signs of retail investor euphoria (e.g. a record # of account openings at US retail brokers).
13. subject to interpretation: the market cap of MSFT is larger than the entire US HY market.
To Succeed at Investing, Do What Yale Does I have read all of Swenson's books ie "Pioneering Portfolio Management" and worked very hard at trying to find funds or ETFs that could possibly duplicate his "private equity" and absolute returns and venture capital.
In a word there is no retail alternative. sure now a days you can find funds that mange these strategies, but you can't find ones that produce the results Yale can demand.
One of my son's friends dad worked with Swenson and he explained their due diligence to me once a while ago. It is extensive and lengthy and they have resources to find the best mangers that you and I can not even dream of.
Maybe prompted by intense interest from individual investors, Swenson wrote a book with asset allocation advice for individual investors "Unconvential Success"
It has good advice ala Buffet. Index funds wide diversification and as I remember mostly SP500 REITS Treasuries. Worth reading but it will not let you invest like Yale
I am not sure why you would want to because their recent returns have not been stellar ( 6% in 2019) , but then unless you are buying FANGMA you are in the dust like everybody else.
Here Are 12 Investing Superstars in 2020, According to Morningstar Please read the whole tragic story:
https://www.cnbc.com/2020/06/18/young-trader-dies-by-suicide-after-thinking-he-racked-up-big-losses-on-robinhood.htmlQuoting the article:
"It was less than 24 hours after Alex had checked his account at the wildly popular trading app, Robinhood. In his note, he said he thought he had quickly racked up a negative $730,
165 cash balance. But Alex may have misunderstood the Robinhood financial statement, according to a relative.
“He thought he was exposed, he thought that ending his life would protect his family from the exposure,” Bill Brewster, a cousin by marriage and an analyst at Sullimar Capital, told CNBC in a phone interview. “He got on his bike and never came home.”
Stock-market legend who called 3 financial bubbles says this one is the ‘Real McCoy,’..‘crazy stuff'
President Trump is great for your 401(k): strategist https://finance.yahoo.com/news/president-trump-is-great-for-your-401-k-strategist-162344939.htmlPresident Trump is great for your 40
1(k): strategist
The verdict is far from certain here, but Wall Street strategists continue to believe President Trump winning re-election would be better for your longer-term investments than a president Joe Biden (and most definitely, a “blue wave” sweeping through the House and Senate).
Does anyone know of Biden's 40
1K, lots pundits are guessing more Taxations?
IMHO we are at 20
16 crossroads again, two candidates that not many folks are enthused about. Wish We had Pete in there, maybe much better
At the end of the days, nothing much would change voters' minds given these crisis situations
2020 Viper/Dumper debate:
"Trump would have trouble getting down the ramp. Biden would just smell his hair"
Brother, can you spare a dime? +1. Indeed!
Brother, can you spare a dime? +1.
Brother, can you spare a dime? It is pretty wild for sure. COVID-19 were found on paper currency and coins. Older paper currency were incinerated and new ones are printed. Credit cards are used these days in stores and online shopping. We use Apple Pay with our phones so to eliminate touching the card readers.
Brother, can you spare a dime? Once I built a railroad, I made it run
Made it race against time
Once I built a railroad, now it's done
Brother, can you spare a dime? Memorable lines from well known Depression era song.
Complete lyricsThe Latest Pandemic Shortage: Coins Are The New Toilet PaperStory from NPR
MEGMX Matthews EM Equity Andrew Foster was a former manager of Matthews Asian Growth & Income and he was also the Matthews CIO at one point. If I remember correctly, Mr. Foster wanted Matthews to broaden their investment universe beyond Asia. Since Matthews refused to venture beyond Asia, Mr. Foster eventually left and founded Seafarer in 2011.
Causeway Global Absolute Return Fund to liquidate Right you are,
@msf. That class of the fund has lost an average of 4.
18% over the past three years. Even FMI Common Stock has barely broken even.
Dividend Kings
You are crazy to invest in bonds Are you joking? Since when have the wealthy not managed to water-down the dollar and kick the can down the road in terms of paying their fair share of taxes? Since when did growing an already-"YUGE" national debt matter to the Repugnant Party? Raise tax rates? They'd rather take a bullet. "Let the next 12 generations worry about it."
