Displaying items by tag: income

Friday, 23 August 2019 13:40

Huge Losses are Coming for Bonds

(New York)

Negative bond yields dominate the globe, and US yields are headed inexorably lower. The bond rally that has unfolded year is hard to over-state, with the 30-year Treasury at an all-time low. However, all those gains look likely to reverse sharply, as signs are on the horizon that US inflation is about to jump. The trend in CPI looks likely to show a bump after a series of lower annual highs. The movement is exactly the same as the one that preceded gold’s big jump this year. According to the data, CPI looks likely to rise to 2.5%, which would virtually eliminate the possibility for negative yields on the 30-year bond.


FINSUM: While calling higher inflation is a dangerous game in the post-Crisis world, the general analysis here is reflective of the fact that yields are way too low for how healthy the economy looks in data.

Published in Bonds: Treasuries
Thursday, 22 August 2019 12:03

Check Out Vanguard’s Re-Opened Dividend Funds

(New York)

Vanguard made some headlines earlier this month when it re-opened one of its long closed-to-new-investors dividend funds (VDIGX). However, it was not the only fund to reopen, as a whole suite of Vanguard dividend funds are once again available. The funds come in two flavors, active or passive. VDIGX is actively managed and has the best one-year return, but it is almost the most expensive. Check out the firm’s VIG fund (Dividend Appreciation), which has a 11% one-year return and charges only 6 basis points.


FINSUM: This whole suite of funds has a good track record and some have characteristically low fees.

Published in Eq: Dividends
Wednesday, 21 August 2019 13:07

A Pillar of this Bull Market is Almost Dead

(New York)

Name the two main factors which drove this decade-long bull market. Ours would be the Fed’s easy policy, and huge levels of corporate buybacks. Well, that second one, which has inarguably been at least a core pillar of the bull run, is ending. Companies are pulling away from share buybacks, lessening one of the big price drivers for the market. Buybacks have slipped alongside the market’s trouble, as companies are no longer stepping in to buy shares, sending buybacks to their lowest level in 18 months.


FINSUM: Do you remember the earnings recession that occurred for a few years during this bull market? Buybacks are what kept prices afloat.

Published in Eq: Dividends
Monday, 19 August 2019 12:09

These Recession “Safe Havens” are Not Safe

(New York)

There are a handful of safe haven stock sectors that investors tend to rely on during market downturns. Healthcare, utilities, and REITs come to mind. Lately, some have been saying bank shares may also prove a good defense. However, investors should be very wary of two of those just mentioned: healthcare and banks. While on the surface healthcare stocks look very good for a recession—it is not as if people stop getting sick—the reality is that there has never been more regulatory pressure on the sector (from both sides of the aisle), which means it is far from safe. Additionally, the idea that banks have become safe, utility-like dividend machines is flawed, as bank earnings are very exposed to the economic cycle, and thus will likely see big moves in both price and yield.


FINSUM: We agree with this assessment entirely. Healthcare is more vulnerable than it has been in memory and banks are a long way from being dependable utilities (excellent PR job by Wall Street though!).

Published in Eq: Dividends
Monday, 19 August 2019 12:06

This Flexible Annuity is a Great Option

(New York)

Annuities have come a long way in the last few years, with industry standards and selling behavior becoming much cleaner. However, annuities sales are still a challenge because it is often hard to get an individual to trade a large, liquid lump sum for payments that can often be far in the future. With that said, TIAA has an annuity it debuted last year that might prove quite helpful. The provider’s Income Test Drive program allows buyers of annuities to opt out of their income agreements within two years without any penalty. The program is part of a wider trend in annuities, according a product manager in the space, saying “They used to have one product try to be everything to everybody, and the costs outweighed the benefits. Now there are more streamlined options”.


FINSUM: This TIAA option seems like a very good way to help investors bridge their anxiety about trading a lump sum for future income.

Published in Wealth Management
Page 29 of 39

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