On September 28th , we wrote “…Ironically, the MSCI World Index dividend yield is currently the same 2.60% as 10 year US Treasury note yields. Essentially, you get the upside of stocks while earning a relatively competitive income stream.” In the succeeding months leading to today, 10 year US treasury yields have gone up approximately … Read More.
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Almost every year during the 3rd quarter, the State of California will come to market with securities called Revenue Anticipation Notes (RANs). In good times and bad, the state has recurring cash flow timing mismatches between its tax receipts and various disbursement obligations. The majority of the state’s receipts come near the end of the … Read More.
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“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.” – Warren Buffet Markets can be manifestations of human emotion, especially when those emotions are acute. Greed and fear can violently move price levels to … Read More.
Posted in Equities, Fixed Income, Newsletters, Portfolio Management | Comments Off
I spent part of the 4th of July weekend reading a book written by journalist Scott Patterson called The Quants. The book is another finance work that chronicles some of the interesting events and participants that collectively helped contribute to the global economic meltdown and resultant mass de-leveraging climate that exists today. The combination of finance theory, … Read More.
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President Obama would like to have a comprehensive Financial Regulatory Reform Bill approved by both Congressional chambers before this weekend’s G20 meeting. The House and the Senate will try to come to some form of consensus that will be widely trumped as a necessary step to getting the country out of the current economic malaise. … Read More.
Posted in Economics, Newsletters, Politics | Comments Off
British Petroleum (BP) has a mother lode of public relation problems with which to contend. A major market for its product is threatening to bar them from future business. The company has a growing contingent liability on its balance sheet covering cleanup costs, reimbursements, lost business claims, and an orgy of litigation expenses that should … Read More.
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The euro has been in relative steep free fall for the last six months. The currency trades at around $1.20 US$ for every pretty Euro$. The exchange rate stood at 1.50 US$/EU$ in December 2009. For much of the time frame, the currency has been inversely correlated with the level of global anxiety associated with … Read More.
Posted in Currencies, Newsletters | Comments Off
The CDO has been getting a lot of press lately. For those just arriving to the party, a CDO is an abbreviation for “Collateralized Debt Obligation”. The traditional, basic concept behind a CDO is to create a structured finance entity in which long-tailed assets are financed by using comparably long-tailed term funding. Think of a … Read More.
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For a corporation, there is a financial condition which is quite simply the “point of no return.” This is the point where existing liabilities become so large that the service of these liabilities overwhelms the income statement and the entity enters into a downward spiral of even greater liabilities. Eventually, the entity has no choice … Read More.
Posted in Inflation, Newsletters, Portfolio Management | Comments Off
A quick thought on interest rate expectations… We see so many fixed income investors make the same mistake. They think rates are going up and therefore refuse to take any duration (maturity) risk. Well, pssst…. Mr. Investor… you are right and the market has priced in much of the rise. How much is priced in? … Read More.
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