Category: Investing

Junk Bond Myths

What are high yield bonds? I don’t mean the textbook definition (corporate bonds with a credit rating below BBB), but how they actually behave in terms of risk and return. In attempting to answer this question, let’s address some common myths surrounding the asset class affectionately known as “junk bonds.” Myth #1: High Yield Bonds […]

When Backtests Fail

Let’s say you’re building a diversified portfolio and want to include European high yield bonds in the mix. What are you plugging in for an estimated return today? If you’re like most investors, you’ll look to a backtest to provide the answer, asking the following question: what have the returns been historically? With data going […]

“October: This is one of the peculiarly dangerous months to speculate on stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.” – Mark Twain The words “dangerous” and “stocks” used to be synonymous. That equities were a risky investment was a given. All that seems to have changed. […]

Take a look at the following chart. What is your inclination: long or short? If you said short, you’re in large company, for shorting volatility is in vogue like never before. And this particular product, which uses 2x leverage in going long volatility (ticker: TVIX), has been a favorite among short sellers. Why? Because it […]

Myths, Markets and Easy Money

“Finally, while my observations are uncertain and should be taken with a grain of salt, what I am sure of is that valuations and markets are elevated, and the easy money in this cycle has been made.” – Howard Marks, Oaktree Capital Memo (July 2017) “The easy money has been made.” If that saying sounds […]