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Sat, August 06, 2011

Standard and Poor’s Lowers US Debt Rating For First Time In History

Making good on its earlier warnings, S&P announced after the close of the markets today that it has lowered its long-term credit rating on US debt one notch, from AAA to AA+. Read the full article

Fri, July 08, 2011

Book Review: The $10 Trillion Gamble

iShares chief investment strategist Russ Koesterich has written an engaging, insightful book explaining the magnitude of the problem that the United States national debt presents for investors. The full title of the book is The $10 Trillion Gamble: The Coming Deficit Debacle and How To Invest Now. Read the full article

Thu, October 28, 2010

TIPS Auction: Inflation Expectations Plus Deflation Protections

The persistence of super-low Treasury bond interest rates has led to a new oddity in the Treasury bond market. Monday's Treasury auction of Treasury Inflation-Protected Securities resulted in investors paying a price that results in a negative yield for the bonds. Read the full article

Fri, August 21, 2009

Some ETFs Are Scarier Than Others

Announcements of new exchange-traded funds arrive in my e-mailbox almost daily, but today’s seemed ironically timed: a new inverse ETF tied to the performance of twenty-year Treasuries. Read the full article

Thu, May 28, 2009

It Looks Like It’s Time to Refinance

A couple of items at the Calculated Risk blog caught my eye today; both suggest that mortgage rates might well be headed higher. Read the full article

Sat, May 09, 2009

Investing for Inflation vs. Deflation:Asset Classes (Part III)

At last I’ve gotten to the question I promised to address last month: how do different kinds of investments perform in inflationary environments versus deflationary ones, and is there any way to protect yourself against both risks? Read the full article

Wed, March 04, 2009

Just Add Stock: Dilution and Citigroup

There are a number of differences between stocks and bonds. In addition to those I discussed earlier, the two also differ in terms of the unpleasant things that can go wrong with them. The deal struck between Citigroup and the Treasury recently provides an opportunity to illustrate a few more differences. Read the full article

Thu, February 05, 2009

What’s the Difference between a Stock and a Bond?

Last year, one of my clients asked me this question. He was well-educated, but had simply never had an occasion to learn how investments work. It struck me at that moment that if he didn't know, then plenty of other people probably don't, so I decided to prepare a short introduction to the topic. Read the full article

Sun, October 26, 2008

Fannie and Freddie’s Debts Are Not Explicitly Guaranteed

Last month I wrote that the federal government, in its takeover of Fannie Mae and Freddie Mac, had begun effectively guaranteeing the debt of the two agencies.

But it became clear this week that the government is still hedging about the extent of its backing of the agencies' debts. Read the full article

Tue, October 21, 2008

Markets Wait for Lehman CDS Payouts to Settle

The parties involved in the Lehman credit default swap (CDS) auction are settling up today, and everyone is hoping that none of the participants got too badly burned (even if they're hedge funds). Read the full article

Mon, September 22, 2008

Crisis Equals Opportunity in Some Bonds

The Subprime mortgage mess and its aftermath were partly the result of risks not being priced appropriately. Interest rates for risky mortgages and bonds should have been much higher given the level of risk involved. As financial markets still recover from the aftermath of risk being underestimated, there is a good chance that there are now areas where risk is being overestimated. This week’s issue of Barron’s has two interesting suggestions in this regard. Read the full article

Tue, May 20, 2008

Kentucky versus Davis decision: No Changes for Muni Bonds or 529s

Listen carefully, and you can hear the $2.6 trillion municipal bond market breathe a sigh of relief. Today the U. S. Supreme Court annouced its ruling in DEPARTMENT OF REVENUE OF KENTUCKY ET AL. v. DAVIS ET UX. It concluded, in a 7-2 decision, that it is not unconstitutional for a state to give favorable tax treatment to owners of its own municipal bonds while not doing so for holders of bonds issued by other states. In an earlier post, I discussed how a different decision in this case would have affected not only municipal bonds but also 529 college savings plans. Read the full article

Fri, May 09, 2008

What do municipal bonds and 529 plans have in common?

The Supreme Court is considering an appeal to Kentucky versus Davis, a lawsuit that could have an impact on the state tax treatment of both municipal bonds and some state 529 plans. Read the full article

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