UPDATE 8.22.23: With bond yields rising higher than they've been for some time, it's a good time to review duration. Bond duration is a measure of the change in price for a bond given a one percentage point change in interest rates. Every time interest rates rise, bond prices fall, and vice versa. Different bonds respond with greater or lesser volatility to changes in interest rates, and the magnitude of that change is measured by the bond's duration. Below is an update to the interest rate table I posted back in March 2022. Look how rates have changed. Investors in bonds today are actually … [Read more...]
Preparation and Experience Can Help, But at What Cost?
With everything that’s going on in the world today, Your Survival Guy is concerned about your safety. Stuff happens, and before you know it, you’re stuck in the fog. You know from here and here about my own experiences in fog. It happens fast. You deal with it. Because living life on the dock is no way to live. Preparation and experience can help. But at what cost? You know this market is foggy. You know our government is in debt up to its eyeballs. Remember the government bailout of GM, leaving common shareholders, the investing class, in ruins? The more government creep we have in the … [Read more...]
My Favorite Investment Tool, Real Estate, Water, Fog, and More
Happy Friday. Yes, you can sink your teeth into the short-term end of the yield curve, and there’s plenty of other opportunities along the way. Think of me as your guide. It can get foggy out there. Look at my favorite investment tool and the yields you can get today versus only three years ago. I can tell you investing is a lot like boating in the fog. If you have a plan and some experience navigating in it, then it doesn't need to keep you on the dock. If I stayed home every time there was some threat of fog, I’d miss a lot of good days on the water. The key is to become … [Read more...]
Shark Sighted in Block Island’s Old Harbor Basin
Your Survival Guy’s been to "the Block" many times. The Old Harbor basin is where the ferries come and go. Jack Perry reports the sighting in the Providence Journal, writing: A shark paid a rare visit to Block Island's Old Harbor basin over the holiday weekend. New Shoreham Harbormaster Kate McConville warned the public, saying in a Facebook post Monday, "We have had multiple reports of a shark sighting in and around the vicinity of the Old Harbor basin. Please use caution when around the water and report all sightings to the Department." McConville posted a photograph of the shark, … [Read more...]
Fixed Income Investors Happy for a “Return to Normal”
After long years of rates near zero, fixed-income investors are happy to see opportunities as rates on treasuries return to normal. Vivien Lou Chen reports in MarketWatch: Stock and bond markets reacted strongly to the minutes from the Federal Reserve’s July 25-26 meeting on Wednesday because of the signal being provided about policy makers’ views on long-run real interest rates, according to Colas. The minutes suggest the policy-setting Federal Open Market Committee “wants to see higher real yields across all maturities to slow growth and contain inflation,” he said. “All this will … [Read more...]
Investing Mistakes to Avoid: #11 FOG
Your Survival Guy knows a thing or two about getting stuck in the fog. When I was a kid sailing with my family, we were heading home after a weeklong trip, and about halfway through Buzzards Bay, we were engulfed in fog. We held our course and, before long, entered a mooring field holding no boats that we recognized. Realizing land wasn’t far, and that we were in the wrong harbor, we decided not to press our luck. We tossed out the hook and spent a comfortable night right there. The next morning, after the fog cleared, we learned we were a few harbors west of our own. Not long after, a … [Read more...]
World Bond Rates Highest Since 2011
The U.S. 30-year bond yield is the highest it's been since 2011, and globally government bond yields are at 15-year highs. Garfield Reynolds and Michael Mackenzie report in Bloomberg: Global government bond yields extended their climb — with the US 30-year reaching the highest point since 2011 and other benchmarks returning to 2008 levels — as resilient economic data challenges the view that central banks rates are peaking. In early US trading Thursday the 30-year Treasury yield rose as much as seven basis points to 4.42%, slightly exceeding last year’s high. It was below 4% as recently as … [Read more...]
Can America Avoid a China Recession?
If China's economy falters, can America avoid the same fate? China's economic data has been showing weakness, and it's gotten so bad that the country has stopped publishing certain economic data. The economy in China has gotten so bad that Xi Jinping, China's president, has asked the country for "patience." Joe McDonald reports in the Associated Press: Chinese leader Xi Jinping has called for patience in a speech released as the ruling Communist Party tries to reverse a deepening economic slump and said Western countries are “increasingly in trouble” because of their materialism and … [Read more...]
There Is No Miracle More Powerful than This
If you want to get a bird’s eye view of how hard your money works, spend a few minutes reviewing my piece Rich Grandchild, Poor Grandchild. When you start saving early, good things can happen. It’s probably why you’re able to invest today for the retirement you deserve. Accumulating money is work. Literally. You get up every day and do it. You go to work and save ‘til it hurts. Investing money in retirement is a different kind of work. You get up every day and wonder what it’s done for you lately. The reason Your Survival Guy recommends living below your means is because it gives your … [Read more...]
Who Are the Robo-Advisers Working For?
Recently, I was asked about robo-advisors: You set up an account with a low minimum, answer a questionnaire, and an algorithm invests you in a basket of mutual funds, ETFs, and/or stocks. The robos save money on phone reps, have a big marketing spend, and a neat-looking website. But what if there’s a problem? A couple of years ago, when stocks were down 1,600 points, Bloomberg reported that the websites of robo-advisers Wealthfront Inc. and Betterment crashed. This is one of the MANY reasons robo-advisors will NEVER work for investors–NEVER. What a SHAM. Also, it’s been my experience … [Read more...]
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