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- General Discussion on IEF
- High Yield Credit Spreads at Post Bear Stearns High [view article]
- Why I'm Against Fixed Income ETFs [view article]
- Fixed Income: Little Value in Treasuries, Preferred Financials Yielding 8% [view article]
- War in Georgia: How Markets May Feel the Effects [view article]
- U.S. Session Wrap: Meredith Whitney Does It Again [view article]
- Bond Ladders vs. Layering with Bond Funds [view article]
- Long and Junk Bond ETFs: Stepchildren of Fixed Income Investing [view article]
- A 360 View of Returns (July 2008) [view article]
- Searching for the Best Bond ETF [view article]
- Bust, Bail, Repeat: The U.S. Enters into an Ever-Worsening Cycle [view article]
- Weekly Review and Outlook: Deleveraging's Not Just for I-Banks [view article]
- Stock vs. Bond Valuations [view article]
loading ...Recent IEF Articles
- High Yield Credit Spreads at Post Bear Stearns High
- Wednesday Outlook: Bear Attack?
- Tuesday Outlook: Ain't No Sunshine
- Friday Outlook: Ignoring Inflation
- Thursday Outlook: Range-Bound Two-Step
- U.S. Session Wrap: Meredith Whitney Does It Again
- Tuesday Outlook: Georgia On My Mind
- War in Georgia: How Markets May Feel the Effects
- Fixed Income: Little Value in Treasuries, Preferred Financials Yielding 8%
- Friday Outlook: Still a Bear
- Full List of Articles »
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High Yield Credit Spreads at Post Bear Stearns High [view article]
Good post on high yield credit spreads.......please continue such posts and their associated charts. ReplyHigh Yield Credit Spreads at Post Bear Stearns High [view article]
Inverse correlation is not causation. I suspect that both credit spreads and the SPX are both responding to perceptions of risk. Stocks fall when credit risks rise. The fear of more financial write downs is likely the lynch pin. Are you men economists, or just sensation seeks? Poor post. Z ReplyHigh Yield Credit Spreads at Post Bear Stearns High [view article]
Looks like the stock market is leading the bond market in this pic... ReplyWhy I'm Against Fixed Income ETFs [view article]
All Index funds are risky, especially income funds. Use Managed Closed End Funds instead. Here's some recent research with real ife investment portfolios:Good News For Income Investors
Looking for good news in today's markets is like searching for the proverbial needle in a haystack. Needless to say, practically all investment grade equities and nearly all closed end funds that specialize in providing regular recurring monthly income have been reduced in market value by this prolonged correction. The quake has spread in all directions from its financial epicenter, and the mounting doom and gloom has taken its toll on even the most rational investment decision makers. Try to keep in mind that the purpose of income investing is the income that your portfolio produces not an increase in the securities' market values---
So here's the good news (and for anyone with a 40% or higher income asset allocation, or an income portfolio being used for living expenses), it really is very good news. Base income levels, from the beginning of the stock market correction in June '07 until mid-July '08, have barely changed at all. In fact, they have probably risen in properly asset allocated portfolios. I have examined the regular recurring monthly income distributed by 56 taxable income CEFs and 61 tax-free income CEFs, and the conclusions are pretty remarkable.
In spite of the fact that the vast majority of my favorite monthly income producers are lower in market value than I would like, the amount of income they are distributing to shareholders has not moved lower meaningfully--- even though the Federal Reserve has reduced interest rates by approximately 60% during the past twelve months. Here are the numbers: (1) 48% of the taxable-income CEFs are distributing precisely the same amount per share as they did a year ago. Fourteen issues have increased their payouts and fifteen have reduced them.
The net result is a decrease of just fourteen cents (2.5% of the total monthly payout). The average current yield on the portfolio, as of mid July '07, is 9.86% without considering any capital gains distributions. Additionally, the group is selling at market prices that reflect an average discount of nearly 11% from NAV. Is that special or what? The bonds, preferred stocks, government securities are priced 11% below their current market values.
(2) The numbers are similar with regard to the 61 tax-free income CEFs: 46% have not altered their payout over the past twelve months; eighteen have reduced their payout slightly, and 15 have increased the monthly dole. The net difference for the group over the past year is less than one cent, or a percentage change of two-tenths of one percent. Remarkable. This group is selling at an average discount from NAV of 9.1% and has a current tax-free yield of 5.51%.
(3) Of 117 individual issues, about half have produced stable income. The others have accounted for a total payout reduction of less than 15 cents--- a measly 1.7%. Why is this amount of little consequence? Two reasons really.
First of all, a properly asset-allocated income portfolio does not disburse all of the base income it receives, so there is income available to reinvest in more shares of income producing securities. This process assures a growing cash flow to calm your fear of rising prices. The other reason is a bit more hypothetical. The Fed has lowered rates significantly, a process that normally produces higher prices for income securities. Eventually, those lower interest rates (even if global pressures convince politicians to take back some of the reductions) should produce higher prices (i.e., profit taking opportunities) in these securities.
Admittedly, even if your asset allocation has been fine tuned for years, lower portfolio market values in this area make stock market valuation shrinkage feel even worse. But the value of stable cash flow becomes painfully clear for investors who misguidedly depend on capital gains for their spending money. Properly asset allocated portfolios contain enough base income generators to pay the bills. The purpose of capital gains is to produce proportionately more base income generators.
The purpose of this email is simply to bring some needed sunlight into an investment environment that is far gloomier than I think it needs to be. If you want the details, you'll have to request them personally.
Steve Selengut
www.sancoservices.com
www.kiawahgolfinvestme.../
Professional Portfolio Management since 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"
Reply
Fixed Income: Little Value in Treasuries, Preferred Financials Yielding 8% [view article]
thoroughbred,Yes, it makes sense for now.
Also, nice article.
CrossProfit Reply
Fixed Income: Little Value in Treasuries, Preferred Financials Yielding 8% [view article]
Dunn, I had both the GM pfd as well as the F pfd, I just have zero confidence in either, and beside that, those 2 have gotten many recommendations as a better place to hide if you want long term exposure to GM and F so I think there are many novice investors there, if it starts to drop I don't believe they will hold for the long term and would make the drop much worse than it would need to be. Does that make sense? ReplyWar in Georgia: How Markets May Feel the Effects [view article]
I support Georgia too. I wonder what the US would do if the state of Georgia, where I live, seceded. ReplyQueens
U.S. Session Wrap: Meredith Whitney Does It Again [view article]
I think you are missing the point here--the LFB seems to be supplying a lot of economic info and they also made an important point.Everyone is consumed with the dollar's connection to oil, but they;ve pointed out that the dollar was able to decline even after oil fell because the financial sector weighed on the overall indexes.
Much of there info seems to be taken right from the source, and they break it down in a way that paints a total picture of the market. I think it's a very handy resource. Reply
U.S. Session Wrap: Meredith Whitney Does It Again [view article]
How somebody comment on everything,FX,Oil,Gold if one doesn't have any position in derivatives he writes about.I am a trader and watch markets every day and have a feeling for it as my account goes up and down in regard to the market movements.
All the commodities bulls become bears suddenly,it proves again nobody have an idea what is happening.
From traders perspective,for short term I can see that Crude Oil have strong support at 113$ as rising price have good volume while declines are made by pikers.I am positioning for rebound in Crude Oil and Nat Gas (I don't trade metals and don't have an opinion on that) as big balls guys are accumulating now and the ood thing is that this kind of biggest Oil/Gas traders don't buy it to make a buck,they must see the market to the future as liquidating big position in energies is not economic,with big selling volume prices will crash.They can sell only when prices go up 5-10% or more as then pikers already get bullish news and buy so big funds are nicely selling some of their positions.
Look what happened when the main traders started to sell Crude Oil from 145$ it took prices more than 30$ down,I think more than is accepted by their valuations.So I think their selling will come at 135$ at least as accumulation happened to build at around 125-115$ level.
Even if Oil may decline more in the future,first the Mafia will make their money from your shorts.
Don't listen to any analyst/expert who writes about things he don't knows about and don't trades.If would not advise a driver how to drive if would not have a driving license.
Good trading day everybody,follow your killer insticts. Reply
War in Georgia: How Markets May Feel the Effects [view article]
A missile defence? You really think that would solve 18 year old conflict? All that would do is trigger another war, that is exactly why you- with your missiles are sitting on your bottom with your hands crossed hoping for the best. Russian nuclear arsenal is twice as big as US, needless to say more advanced- no one wants missiles to fly both ways.As for the real matter, Saakashvili should stop relying on the US for nothing. Ofcourse Russian hasn't done anything good as well, but come on guy you really wanna be in NATO now?
I support Georgia though, wrong believes on Russian part, and there are other ways to reply. Reply
M. Hunt
War in Georgia: How Markets May Feel the Effects [view article]
Several comments were deleted in error from this post. Our apologies to those of you whose fine efforts were removed; please feel free to resubmit your thoughts. - SA Editors Reply2020
War in Georgia: How Markets May Feel the Effects [view article]
What can you expect you you send a checkers guy to a chess match?Geopolitical risks were not counted when it was decided to put our "observers" in Georgia, and to put our missile defense in former Warsaw Pact nations. Reply
Fixed Income: Little Value in Treasuries, Preferred Financials Yielding 8% [view article]
thoroughbred, do you have GJM- GMAC preferred around 11.75, yielding 16%? Are they going away? ReplyBond Ladders vs. Layering with Bond Funds [view article]
Am I missing something? If I want bonds I just buy nuveen muni-bond closed-end etf's that now yield 5.5-6% federal tax free--like nqs. I think I have seven or eight of them. Avg duration about 7 years. They have some problems with leverage/auction-rate stuff but nuveen will cut through that I think---they've been around awhile. ReplyFixed Income: Little Value in Treasuries, Preferred Financials Yielding 8% [view article]
so remind me why anyone would not do a simple etf like TIPS which is AAA instead of something with less yield? Reply