Elevated Premiums in Mortgages

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Bondmaggeddon

The Chart of the Day is from S&P Global. As eternal optimists, which has worked for our clients over the last 20+ years, we like to say, “It could always be worse.” Though the United States equivalent investment grade bond index in the US is down 20%, the iBoxx GPB (which stands for the Great Britain Pound) bond index is down 28%, which is the worst in 25 years.

They are calling it “the Bondmaggeddon.”

Though we may have some of these US equivalent bond ETFs in the portfolio we manage, they are more than offset by many shorter-term bonds, which in most cases have resulted in a total loss of only 6%. Still not great, but it could have been worse.

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The Ebb and Flow

The following Chart of the Day from State Street Global Advisors shows the flow of funds in investments going all the way back to 2001.

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Washington Makeup

Today's Chart of the Day is a second chart from the Capital Group article called “Can midterm elections move markets?”

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Midterm Swings

Today’s Chart of the Day comes from a Capital Group article called “Can midterm elections move markets?”

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Less, but Still a Fat Tail Risk

Today’s Chart of the Day from Bloomberg shows that though there are less nuclear stockpiles than the 1980’s, there are still too many. There is an increased focus on this topic due to Putin’s threats and a hope that someone would come to their senses before anything gets out of hand.

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Stocks After Inflation Peaks

Today's Chart of the Day is in a BlackRock article. This is the organization who issues the iShares Exchange Traded Funds (ETFs) in our portfolios.

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More Than a Sense of Hope: Unity in the Midst of Disaster

Life-changing events have a way of narrowing one’s perspective on what is actually important. The recent hurricane that took the path of the Crews family of banks has done just that for all of us here.

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Faith in the Long Run

Today’s Chart of the Day shows the S&P 500 index with recessions marked in red going all the way back to 1928.  

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The Crypto Hedge?

So far this year, we have experienced the longest “downturn” in terms of time since our last record high during The Great Recession.

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Beyond Profits

Today’s Chart of the Day shows the price of $100 invested in Beyond Meat, Inc. when the company went public in early 2019.

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Mid-Year Index vs. Active Update

Twice a year, S&P Dow Jones updates their SPIVA (S&P Indices Versus Active) report.

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Inflation vs. Stocks and Bonds

Today’s Chart of the Day comes from S&P Dow Jones Indices.

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45% to 59% Overvalue of Real Estate?

Today’s chart comes from Fortune, which shows the real estate markets that are “overvalued” based on the area's local incomes and construction costs.

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With Bonds All Things Are Equal

Today's Chart of the Day comes from an article in AAII.com (American Association of Individual Investors) and shows the average cumulative global corporate default rate from 1981-2021 in seven year spans.

A common misconception is that the yield you see from a bond portfolio is what you can expect to earn. However, this is a best case scenario as some of the bonds will ultimately default, causing a loss that reduces the yield.

In rough figures, if you take the weighted average default rate of all speculative/junk bonds and assume a 50% loss of principal of those bonds, over seven years this can reduce your total return by 2.9% annually.

The current yield to maturity on speculative/junk bonds is 7.6%. When you add in the historical loss of 2.9%, this reduces the total return to 4.7%, which happens to be the same yield of 4.7% in an investment grade bond with a similar maturity.

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