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Month: December 2015

2015: The Year in Charts

These are the charts and themes that tell the story of 2015. I. The Great Divergence After seven years of 0%, the Federal Reserve at long last increased interest rates by 0.25% in December. Remarkably, they did so against a backdrop of easing by virtually every other major global central bank. Australia, Canada, China, Denmark, […]

When to Fear High Yield

In recent weeks, high yield bonds have traded lower and their spreads versus risk-free Treasury bonds have widened to their highest levels since 2011. The financial media responded as expected, with fear-inducing coverage warning of impending doom. The entire junk bond asset class was maligned, along with the ETF structure, with Carl Icahn leading the charge. […]

  • Posted in Bonds, Markets
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High on the list of investor fears heading into 2016 is a “rising rate” environment. Déjà vu indeed. This has been a concern among investors for years now. With the Federal Reserve increasing interest rates this month for the first time since 2006, these fears have only been exacerbated. When it comes to investing in […]

  • Posted in Bonds
  • Comments Off on No Pain, No Gain: The Only Cure for Low Bond Returns is Rising Rates

Does the S&P Really Need Higher Oil?

The steady drumbeat of lower and lower Crude Oil prices continues. Oil’s fall from its peak in 2014 is up to an astounding 67%. This is fast approaching the largest decline in history, the 68% drop during the financial crisis of 2008-09. With the S&P 500 struggling to hit new highs in 2015, much of […]

The efficient-market hypothesis (EMH) assumes that investors have “rational expectations.” This is the idea that, on average, the population is correct and whenever new information appears, expectations are updated appropriately. Wonderful in theory, but in the real world investors are anything but “rational.” As human beings, we tend to overreact to new information, behaving in an irrationally […]

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  • Comments Off on CUBA and the Long Road Back to Market Efficiency