In this article we are going to discuss our outlook on the 2023 bond market and the key dynamics in play.
How does the change in yields to maturity impact the expected returns of bonds in the next 12 months? The yield to maturity is the average annual yield of the bond until it becomes due.
Longer term bonds are more sensitive to interest rates
The shorter the average life of the bond, the closer the yield to maturity is to the actual annual interest paid on the bond. However, longer duration bonds are more influenced in the short term...
It has certainly been a rough year in the market. In fact, the first six months of 2022 was the worst start to the year for both stocks and bonds in decades. We believe that when markets fall, good opportunities may avail – this time in the bond market.2022 Market ReviewThe S&P 500 has fallen by about 18% and the NASDAQ by around 27% through the end of October this year. Over the same time, the yield on investment grade corporate bonds has risen from 2.6% to 6.1%, causing bond prices on 10-year corporates to fall by about 20% YTD for the year (please...
A minor news item that one may have missed is that El Salvador’s new president, Nayib Bukele, announced (by video link to the 12,000 attendees of Miami’s Bitcoin 2021 conference) that his country would make bitcoin legal tender. The country plans to introduce legislation to make it the first sovereign nation to adopt bitcoin as legal tender, and is partnering with a digital wallet company to build modern financial infrastructure using bitcoin technology.Bloomberg reports that the largest crypto currency did not rally much on the news. It currently trades...
Alot of you have asked about inflation. And the economists will say there really isn’t inflation because even though the government is printing money, the banks are not lending so you don’t have the multiplier effect.
But let’s face it there is a recovery and there is supply side inflation - think about some of the things that have become a lot more expensive or in short supply. That causes inflation.
Our analyst Neil Saft came up with a list and some of the things are quite interesting.
There’s a shortage of aluminum so therefore Diet Coke and...
President Biden recently launched his ambitious $2 trillion infrastructure plan. Prior to this announcement, the financial media teemed with suggestions about which companies were poised to benefit from this spending within the infrastructure space. However, on the day of the President announcing the program, the market hardly budged. It appears that the plan was already priced into the market. There is also a current shortage of semi-conductors, but this too is already priced into the stocks.One of the evergreen market maxims is to “buy on the rumor...
In this article, we will discuss pandemic recovery stock trends. Markets started 2021 off strongly, with a continuation of the Corona-related “work and play at home” themes that have dominated since March 2020. Since mid-February however, they have cooled off somewhat and we are seeing a more range-bound environment, albeit with formerly out-of-favor stocks playing some catch up. There is sector rotation on certain days, only to see the opposite trend the following day. The tech-laden NASDAQ is now 7% off it February highs, while the more “old school’...
Exchange traded funds have become more popular over the years at the expense of mutual funds. Unlike mutual funds that trade once a day, exchange traded funds trade like stocks, and are essentially baskets of stocks, bonds, or other assets. They are also more tax efficient than mutual funds, as investors only pay capital gains tax on sale of the ETF. One is not subject to an annual distribution tax on net assets sold from within the fund, as is the case with mutual funds. Most ETFs track passive indices, although more creative products such as active...
The financial news this last week has been dominated by the short squeeze activities in stocks such as GameStop, AMC Entertainment, Bed Bath & Beyond, and Blackberry. Retail investors are aggressively buying options on these and other stocks which have been shorted in large volume by hedge fund managers. It’s billed as a David versus Goliath phenomenon.
To such a degree that when on-line brokers such as Robinhood limited trading in GameStop, there was an outcry by left-wing congresswoman Alexandria Ocasio Cortez and conservative senator Ted Cruz...
Growing up in South Africa during the apartheid years has made the issue of equality regardless of race, gender or sexual orientation, important to me. The events in DC this week remind me of 1994 South Africa, where Nelson Mandela went on to win the first free one-person one-vote elections. There was fear that white extremists would take to arms. In the end a few did in what is known as the “Bophuthatswana AWB Crisis.” The AWB (Afrikaner Resistance Movement) militia came to the aid of a vassal “bantustan” leader, who aimed to boycott the new elections,...
In this blog we will discuss how COVID-19 impacted 2020 stock market trends, and the issues surrounding the question of whether the vaccine is likely to reverse pandemic stock market trends in 2021.
In this blog we will discuss our thoughts on investing in anticipation of the COVID-19 vaccine given the changes in US stock market.
In this blog we will discuss how the US election results and Biden tax plan will possibly US impact taxpayers, including US persons living overseas (the US taxes its citizens on a personal basis regardless of their domicile).
