On January 25th of 2020, the Chinese Zodiac Calendar flips to the year of the Rat, specifically Year of the Metal (Gold) Rat. I’m not sure why they call it the Year of the Rat, but from everything I have read on the internet, the Year of the Rat is supposed to be good for making money for those who are well prepared and work hard. Since this is the Year of the Metal Rat, let’s start by looking at what commodity prices are doing and the possible ramifications for investors.
Chart 1 Anybody who has been in the investment business long enough knows the futility of forecasting financial events – especially when looking way out into the future. For instance, at this time last year who would have thought that Donald Trump would be our current president-elect, that the UK would have voted for the Brexit and that the price of crude oil would go from the low 30’s into the 50’s. Back when I used to be a stock broker, I remember reading a research repo
A well constructed bond portfolio can stand-alone as a total portfolio or as part of a broader asset allocation strategy. There are many reasons that an investor might choose to allocate some or all of their investment capital to fixed income securities. Investors usually invest in bonds to either provide a predictable stream of income, fund a known liability at a known future time or as part of an overall asset allocation strategy that is designed take the volatility out of
Some years back I used to enjoy reading a research report that was published periodically by Credit Suisse called “Better than Bonds”. The concept of the report was fairly straight forward as I remember it. At the time, dividend yields on many high quality stocks were the same as or greater than the yields on the same bonds. Therefore, if an investor was willing to buy a portfolio of the corporate debt of these financially sound companies, why not just buy the same stocks
Since a bond is by definition a loan to an entity such as a government (U.S., agency or foreign), a corporation or a municipality, investors should want to know the risk of being paid back their principal investment and their interest payments in a timely manner before investing. The risk of not being paid back is known as credit risk. There are many factors that should be analyzed to determine credit risk like leverage and cash flow metrics as well whether the specific bon
It’s taken me awhile to get here but I do believe that the Great Recession caused by the housing crisis of 2007 - 2009 is behind us and a new Secular Bull Market in U.S. and Global Equities is well under way. However, not everybody shares this point of view. After all, the S&P 500 has increased in price by over 200% since the March 2009 lows with only one correction that came close to the 20% drop that most people use to define a bear market. And that event was way back in