Money and Finance
- Bill Gross – October 2013 Investment Outlook: Survival Of The Fittest?
But if QE is soon to be out, and guidance soon to be what remains, I think investors should listen and invest accordingly. Not with total innocence, but sort of like a totally hyena-aware lion cub – knowing there’s bad things that can happen out there...
- Nightmare On Wall Street: This Secular Bear Has Only Just Begun - By Ed Easterling
Secular bull markets are great parties. Investors arrive from secular bears really wanting to take the edge off. As the bull proceeds, above-average returns become intoxicating. By the time it is over, the past decade or two has delivered bountiful returns. ...
- Ed Easterling On Fair Value
From Probable Outcomes: “The concept of fair value relates to the appropriate value for the stock market given existing economic and market conditions. For example, when the inflation rate is in the mid-range, then bond yields should be in the mid-range...
- Changes In The Inflation Rate Matter As Much To Investors As The Level - By Bill Hester
The topic of inflation tends to be a tool used by both sides of the debate about stock market performance. It's argued that because corporations can pass on rising prices of raw goods to consumers, earnings will keep pace with inflation, so equities...
- 15% Capital Gains Tax Myth
Just for a little perspective I made a quick graph showing the true capital gains tax rate adjusted for inflation. To make the math simple let's assume you invested $100 in a stock and it doubled in value to $200 so the capital gains taxes owed would...
Money and Finance
Bill Gross – January 2013 Investment Outlook: Seesaw Rider
I am amazed at the fascination and emphasis placed on the u-rate during employment Fridays. Bond prices will move (in some cases by points) with a minor up or down change in unemployment relative to expectations, but when it comes to the third little pig of the litter – inflation – no one seems to care. This number – the PCE annualized inflation rate – is released near the 20th of every month but you will not see CNBC or Bloomberg analysts waiting with bated breath for its release. I do. I consider it the critical monthly statistic for analyzing Fed policy in 2014. Why? Bernanke, Yellen and their merry band of Fed governors and regional presidents have told us so. No policy rate hike until both unemployment and inflation thresholds have been breached and even then “they’re not thresholds,” they’re forks in the road that may or may not lead in a different direction. (To paraphrase Yogi Berra, “if you come to a fork in the road, you don’t have to take it!”) At the moment, the Fed’s fork or target for PCE inflation is 2.0% or higher while December’s annualized rate was only 1.2%. Miles to go before Yogi or anyone else has to begin worrying about a policy rate hike. 2016 at the earliest.
If so, then 1-5 year bonds, combined with credit, volatility, curve rolldown, and a dollop of currency should float a bond investor’s boat in 2014 and avoid breaking the buck in total return space. I’m not saying we’ve got a bull market here. That would be like saying the Knicks or the Cubs have got a chance to win the big one. They don’t, and a bull market in bonds is one for the history books. But if PCE inflation stays below 2.0% and inflationary expectations don’t rise appreciably above 2.5%, then a 3-4% total return for 2014 is realistic. Granted, that doesn’t come close to the 11% yields that my mother grew used to years ago, but then she was riding a seesaw and never knew it. Bond investors will be less rich, but more placid in 2014 than when she was teetering and tottering her way to good fortune.
- Bill Gross – October 2013 Investment Outlook: Survival Of The Fittest?
But if QE is soon to be out, and guidance soon to be what remains, I think investors should listen and invest accordingly. Not with total innocence, but sort of like a totally hyena-aware lion cub – knowing there’s bad things that can happen out there...
- Nightmare On Wall Street: This Secular Bear Has Only Just Begun - By Ed Easterling
Secular bull markets are great parties. Investors arrive from secular bears really wanting to take the edge off. As the bull proceeds, above-average returns become intoxicating. By the time it is over, the past decade or two has delivered bountiful returns. ...
- Ed Easterling On Fair Value
From Probable Outcomes: “The concept of fair value relates to the appropriate value for the stock market given existing economic and market conditions. For example, when the inflation rate is in the mid-range, then bond yields should be in the mid-range...
- Changes In The Inflation Rate Matter As Much To Investors As The Level - By Bill Hester
The topic of inflation tends to be a tool used by both sides of the debate about stock market performance. It's argued that because corporations can pass on rising prices of raw goods to consumers, earnings will keep pace with inflation, so equities...
- 15% Capital Gains Tax Myth
Just for a little perspective I made a quick graph showing the true capital gains tax rate adjusted for inflation. To make the math simple let's assume you invested $100 in a stock and it doubled in value to $200 so the capital gains taxes owed would...