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Bonds
Today I was reading an interesting article in the WSJ describing the increased risk-taking that many retirees and near-retirees are taking with their investment portfolios.     For instance, “nearly half of Vanguard 401(k) investors actively managing their money and over age 55 held more than 70% of their portfolios in stocks.  In 2011, 38% did so.  At...
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In our last newsletter we talked about the very exciting and attractive opportunities to invest in quality bonds yielding between 7-11% per annum on a yield-to-maturity basis.  In today’s newsletter, I’d like to discuss some of the high dividend yields that are available currently, which provide both a solid income and appreciation potential.  The stock...
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For over a decade, bonds offered a terrible value proposition as the Federal Reserve’s zero interest rate policy compressed yields, creating a major mismatch between opportunity and risk.  Investors weren’t being compensated for the substantial interest rate risks that they were incurring.  Remember, just two years ago, there were roughly $18 trillion in bonds that...
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Hope you all had an enjoyable and safe Memorial Day weekend celebrating those that paid the ultimate sacrifice for our country!  I’m glad to see a debt ceiling deal seems to have been agreed upon in principle over the weekend, which hopefully will remove a major headline risk.  It certainly doesn’t resolve any of the...
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This morning we woke up to the news that JP Morgan has purchased the vast majority of the assets and deposits of First Republic with the help of the FDIC bank-funded insurance fund.  This deal removes the last lingering overhang from the panic-induced bank runs that we saw in early March, which led to the...
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Investors and market participants often get told that the way to get rich is buying quality companies or properties.  Firstly, it is important to define quality.  For many, quality is conflated with credit risk.  For example, U.S. government debt is often seen as having the least chance of a default than any other bonds, mostly...
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The last two weeks have been about as volatile and fear-driven as we’ve seen since March 2020.  While these crises always seem existential at the time, the reality is that we get these periods of high stress just about every year, and the reasons are always different.  Just last year, the Russian/Ukraine war and rampant...
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Markets remain quite chaotic after the events of the past week lingering in the air.  As more information has come out, the more obvious the problem becomes.  You had 3 idiosyncratic banks that had grown deposits like crazy based on the backs of crypto and venture capital money flowing in.  These New Age banks, invested...
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A decade-long policy of virtually zero interest rates impacted assets globally and built the everything bubble.  It would be naive of us to think that the unraveling of this would not cause things to break.  Last week, we saw it occur with the implosion of two large crypto and venture capital-focused banks.  These institutions (Silvergate...
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Markets continue to exhibit higher volatility due to economic data that indicates that higher for longer Federal Reserve interest rate policies are more likely.  At TTCM, we view predicting macroeconomic data as being a rather pyrrhic enterprise, as success rates for even supposed experts, are far less than 50%.  By focusing on individual securities and...
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