Investors who place their trust in an investment professional face numerous worries. "Style creep" is one of them. If an investor buys a real estate fund are they going to be happy if they find Google as a top holding? Troubling this may be but more so we believe is "philosophy creep" or as one [...]
Last week McDonald's came to market with a $450 million primary offering of 10 year debt securities yielding 3.5%. A similar Treasury backed by the taxing authority and full faith and credit of the US government yields roughly 3.0%. Why does McDonald's get such favorable terms? Strong Demand - Savers averse to equity market risk [...]
Like many disciplines the investment world is full of lingo. Some of it has meaning, most of it can be explained simplistically and 100% of it is hogwash to make folks feel and sound smarter than they actually are! (He who cannot laugh at himself...) One such item of investment-speak is the "reversion to the [...]
Today Treasury auctioned $37 billion in 5 yr securities at a 3.06 bid-to-cover resulting in a yield of 1.79%. Yesterday AT&T came to market with a $2.5 billion 5 yr offering with a 2.5% coupon representing a scant 77 bps above the comparative Treasury. The tea leaves tell a variety of interesting stories. We'll save [...]
Where are US retail investors putting their money? Here's a YTD summary of mutual fund inflows/outflows: Inflow/Outflow ($million) June 2010 YTD 2010 2009 Money Market (30,818) (487,494) (378,362) US Stock (7,518) (16,984) (25,748) International Stock (328) 19,620 25,532 Balanced (706) 7,385 (3,290) Muni Bonds 1,988 19,524 72,123 Taxable Bonds 17,618 119,584 284,465 Commodities 823 [...]
"...and the young they can lose hope ‘cause they can't see beyond today." I don't think Eddie Vedder was writing about investing but he might as well have been if judging by information we received about fund flows during a recent discussion with our friends at Dodge & Cox. Although investors poured $19.6 billion into [...]
Jerry Seinfeld once wondered aloud, "Who are these people who get on a plane without a book? I'll tell you who they are. These are the people who want to talk to you," he quipped. To paraphrase Ayn Rand the best way to knock over a house of cards is to follow a position through [...]
Nothing says "safe and secure" like a muni bond, right? Caveat emptor!
Behavioral finance - the study of how emotions impact investment decisions - has always been a favorite topic of ours. Longtime friends and clients know we love climbing onto our soapbox to rail against short-term, kneejerk, irrational and emotional decisions caused by an overwhelming desire to act for the sake of acting in a desperate [...]
Today the internet, newspapers and TV will be full of stories marking the one year anniversary of the US stock market (as measured by the S&P 500) reaching its low point. We'll hear that the index is 68% higher today than it was 12 months ago. Hooray for investors! - maybe. The pros/cons of market-timing [...]