February 8, 2016
“The whole question for me is when am I going to buy enormous amounts of corporate credit, because it’s crystal clear that that’s the next opportunity that’s out there,” Bloomberg quotes Gundlach as saying. “There’s plenty of things out there that will have 100 percent returns. It’s a whole question of: Don’t tell me what to buy, tell me when to buy it.”
Strikingly then, Gundlach and Inker agree. Although GMO has been a buyer of corporate debt throughout 2015 and year-to-date as well, anyone who troubled to read Inker’s analysis to the end would appreciate that in his last paragraph Inker states his “hunch [that] we are probably getting in a little early” but is likely doing so because of “the fear that we might not get all the exposure we would like” since he views it as impossible to call the turn.
In other words, according to these two distinguished investors, the best time to invest in corporate bonds has yet to materialize but is near at hand.
February 6, 2016
If you look at the long term charts, you will notice that the stock market indices are dropping back toward the levels BEFORE the Fed instituted their stupid Quantitative Easing programs.
Momentum is still in a declining trend and pending introduction of some sort of stimulus program ie QE or negative interest rates, the stock market will continue downward.
We suggest you ignore financial advisors out there that are telling you to continue holding.
It appears that QE was a huge mistake and didn’t do anything productive other than prop up the markets and allow the rich to get richer.
This has been nothing short of a big “round-trip”.
As we have been telling you the big institutions started to SELL last year. They are the smart money.
Another 10% drop is highly likely, getting us back to where we started with QE. But keep in mind this crooked administration will do anything to get the markets going higher as we get closer to the elections…..in order to get Hillary elected, that is if she isn’t in jail first. But of course they will never let that happen either. Trump is a little nutty but he is smart as a fox and hopefully get things back on track after this current travesty of an administration.
Retired folks are getting hit with very low yields in CDs and Treasuries. They simply do not know where to look for higher paying investments.
We buy individual corporates which give you more yield. And we have started to sniff around in the preferred stock arena where the yields can be quite good.
We are doing everything possible to avoid future losses and currently hold bonds, some SELECTED bond funds, CASH and some gold—which is doing well. There are several potential buys that we are evaluating but caution is the word right now.
Feb 3, 2016
This is stunning stuff:
The global economy seems trapped in a “death spiral” that could lead to further weakness in oil prices, recession and a serious equity bear market, Citi strategists have warned…..AND:
J.P. Morgan Chase has turned its back on the stock market: For the first time in seven years, the investment bank is urging investors to sell stocks on any bounce.
“Our view is that the risk-reward for equities has worsened materially. In contrast to the past seven years, when we advocated using the dips as buying opportunities, we believe the regime has transitioned to one of selling any rally,” Mislav Matejka, an equity strategist at J.P. Morgan, said in a report.
February 2, 2016
Gold is heading up. And the yield on the ten year Treasury is heading down: NOW UNDER 2%. Even more GDP is lousy. All are indications that this economy really sucks. (Update: Treasuries now at 1.8%. WOW. Negative signal.) (Update: And now the dollar is collapsing…more negative signals.)
After the huge swing UP last Friday, the markets are tanking today. We are not seeing any confirmation for upward strength. We will continue to follow the charts as we are technicians. We still suggest you avoid stocks right now.
WE ARE IN CASH, CORPORATE BONDS AND SOME SELECT BOND FUNDS, AND A LITTLE GOLD.
January 29, 2016.
Despite a huge upswing (short-covering) today in stocks, we feel CASH IS KING. We remain primarily in bonds and cash. It FEELS like we are heading into a bear market unless they provide stimulus like another quantitative easing. Obammers policies have killed this economy and Sanders would be even WORSE. We continue holding the oil positions as energy appears to be rising from the dead based on speculation that Opec will reduce production: this may not happen . Follow the link to an excellent article:
January 27, 2016
As we have mentioned many times, we are in capital preservation mode…meaning risk aversion. In other words we are conserving what we DO have! So we are essentially out of the stock market.
We have been buying individual corporate bonds and one preferred. Do NOT buy corporate bond FUNDS.
The retail investor knows almost nothing about corporate bonds. Wall Street makes NO money selling you a bond and therefore you never hear about corporates on the tube. They want to sell you annuities (a travesty) and stocks.
Corporates “act like” US Treasuries….you buy it and hold to maturity. You earn the dividends while you wait. Unlike Treasuries, corporates are riskier as they are issued by Companies like Apple and hundreds of others. Public Companies can theoretically go bankrupt…..unlike Uncle Sam. So you want to buy higher quality issues from Companies that you know will be around for the next ten or twenty years.
In this market environment, we feel investment grade bonds are a good choice for retired folks that need income.
We are watching AEP a utility for a possible buy next week when they go ex-dividend.
The momentum for stocks is DOWN and we feel there is a potential for an additional 10% drop. IF……..IF the Fed indicates today they will NOT be raising rates, things will change.
Gold has been moving up and we continue holding GGN with a very good yield. We also continue holding all oil positions.
January 21, 2016
Buying PSAPRB Limit Order at $24.73. Rising interest rates could hurt this but probability of rising rates this year have dropped to zero. Safe and pays a nice yield.
IF you still own stocks, you should be selling into this rally, NOT buying.
January 19, 2016
It looks like they will try to rally off the “triple bottom” that we see in the charts. If they can rally up, the highest probability is a subsequent DECLINE TO BELOW the triple bottom. We would approach any rally as an opportunity to SELL any stocks that you still hold.
Long-term momentum indicators are still DECLINING.
As a reminder to regular readers we are NOT sending out push emails…..we are simply updating this page. You should “favorite” this site if you want to read our thoughts.
Right now we are in capital preservation mode: unless you are an experienced trader, stay out of this market in terms of stocks. We ARE still buying corporate bonds, and are looking at income positions like Treasuries and CD’s….which provide a deplorable yield of almost nothing. But that’s the market, you have to live with it.
It should be noted that we are in retirement mode. So huge capital gains are not the objective. Younger investors can use our commentary for investment decisions in their conservative portion of the portfolio.
RECESSION LOOKS POSSIBLE. EARNINGS SO FAR TERRIBLE.
January 13, 2016
Buying Welltower Individual Corporate Bond #42217KBA 2023 3.76%
Buying Individual Corporate Bond Digital Realty Trust #25389JAK2 October 2022 3.8%
The highly respected Kiplinger is offering a free copy of their income newsletter:
January 11, 2016
We said SPY would hit 1900 by the end of January, but we already got there. It appears we may see a short term rally…but LONG TERM the charts are telling us that the trend is still down. We suggest owning NO stocks.
We continue buying Corporate Bonds: short term and high quality: but low yield.
From the theeconomiccollapseblog.com
“According to the Obama administration, there are currently 7.9 million Americans that are “officially unemployed” and another 94.7 million working age Americans that are “not in the labor force”. That gives us a grand total of 102.6 million working age Americans that do not have a job right now.
That is not an economic recovery – that is an economic depression of an almost unbelievable magnitude.
This is something that my friend Mac Slavo pointed out the other day. I encourage you to read his analysis right here. If we measured unemployment the way that we did decades ago, we would all be talking about how similar Obama’s economy is to the Great Depression of the 1930s.”
January 8, 2016
“Statistically speaking, the odds suggest that cash and fixed income are likely to provide some of the highest rates of return in the next year barring a complete reversal in monetary policy by the Federal Reserve.”
McClellen Financial Publications:
“Whatever may be the real driver of price movement physics, we are seeing the market turn down like it did in January 2008, and not turning up like January 2012. So the presumption is that we are in for a bear market year. It does not have to be of the magnitude of 2008, or 2001-02, but a downward trend is still what is upon us.”
Bought VGR Individual Corporate Bond #92240MBB3 5.5% 2021 Can be called next month but that is highly unlikely. Very stable Company and even if this issue is called you break even.
We like corporates right now. They act similar to Treasuries in that you are paid back your invested money at maturity in addition to the dividends/interest that you earn. It is important that you buy quality issues in that you can lose everything if the Company goes under.
Bought American Axle Corporate Bond #024068AN0 A stable Company but this is not investment grade.
Look like Death Cross may appear again: 50 under 200 moving averages.
Long term trend for stocks is still DOWN DOWN DOWN. The general consensus is for NO additional interest rate hikes. Is another Quantitative Easing in the works??
January 4, 2016
The stock market is falling apart and we have been telling you to get out of stocks for months.
We are in capital preservation mode: searching for short term high quality income investments. Short term high quality also means low yield but we do not care at the moment. We have been looking at corporates but due to various reasons, we have so far only purchased one.
January 3, 2016
Buying Walgreens Corporate Bond #931427AF5 2021 3.5%
January 1, 2016
We will be buying numerous Individual Corporate Bonds next week. Check back if you are interested. We are a big corporate bond investor as the Core Portfolio illustrates. There are so many advantages to this segment. We are also very nervous about the stock market going into January and we expect a significant decline. We would be out of stocks right now BUT having said that keep in mind that they will do everything possible to make the economy look good to ensure Clinton gets elected.
December 30, 2015
We are HOLDING OIL POSITIONS:
See a pattern? When the hedge funds have added to the short position, oil prices have fallen. When they have covered the short, oil prices rose. With the short position now at a record size of 325 million barrels, oil is more than due for a short-covering rally.
When this rally could start is uncertain. Though, these traders are likely going to want to take some profits soon. Once that happens, it could end up being a stampede, much like what occurred during the last few rallies.
As was saw in back in September, oil prices are capable of putting up a 4.6, 3.7, and 3.8 standard deviations movements in less than one week. All I can say is to expect tons of volatility is the next few months for oil prices.
Yes Bill really is sleazy:
Some of the sexual stories and allegations Trump may bring up, besides Bill Clinton’s affair with his former intern, include:
- Eileen Wellstone’s claim that Clinton raped her in 1969. The two allegedly met at an Oxford pub.
- Juanita Broaddrick’s claim Clinton raped her April 25, 1978.
- Gennifer Flowers’ claim that she was Clinton’s mistress for 12 years.
- Kathleen Willey, a former White House aide, claimed Clinton sexually assaulted her Nov. 29, 1993.
- Paula Jones sued Clinton for sexual harassment in 1994. The lawsuit was dropped in 1998 after an $850,000 out-of-court settlement was reached.
December 16, 2015
NOTICE: Since starting this blog back in 2012 we have posted many hundreds of financial posts with readers from almost 100 countries world-wide. For old fogies like us, it is truly amazing how anyone can now have world-wide reach.
We have tried to provide advice based on our experience in addition to investment advice. But due to increasing time commitments on other projects going into 2016 we are temporarily suspending update of this site. If time permits in early 2016 we will start posting. If something truly groundbreaking happens in the financial markets we will post our thoughts.
If the Fed raises rates tomorrow, the highest probability is for a stock market decline. The institutions have been selling all year which is a negative indicator. In addition the decline in the junk bond market is another bad sign. You may want to sell any positions in which you have a profit…or at least have sell orders in place to protect yourself.
RAISING CASH IS THE PRUDENT PATH RIGHT NOW.
Banks will go higher with an increase and this presents an opportunity.
December 14, 2015
WE SOLD ALL OF THESE: HDLV PRH SGZA TCRX VRP TDA TANO CHSCL JMPC COWNLThere is too much turmoil and risk in the markets right now for our taste.
With oil collapsing and the Fed announcement this week which may increase rates (and hurt the stock market), we would rather be raising cash. As some point in the future we may, or may not, buy back sold positions.
We may sell more positions on Tuesday. We plan on HOLDING the corporate bonds to maturity, and holding the other bond funds that are in the Core Portfolio.
We had a number of buy orders in place. WE ARE CANCELLING ALL BUY ORDERS. We suggest doing nothing in the markets until the Fed speaks this week.
With economic growth currently running at THE LOWEST average growth rate in American history, the time frame between the first rate and next recession will not be long.
However, as I have stated many times in the past, it is quite likely the Fed is already well aware that we are very late in the current economic cycle. For them, the worst of all possible outcomes is being caught at the “zero bound” of interest rates when the next recession begins which removes one of the more effective policy tools at their disposal.
For investors, there is little “reward” in the current environment for taking on excess exposure to risk assets. The deteriorating junk bond market, declining profitability and weak economic underpinnings suggest that the clock has already begun ticking. The only question is how much time is left.