Run Awayyy!!!

[veremchuka]

Thanks Brewer. I'm surprised at how much the Vg HYCBF yield has dropped recently. It was in the 5.9X% range not too long ago but now down to 4.64% for the admiral shares. It's in my Roth and it's a small allocation about 4 1/2% of the total. I don't mind if the nav dropped as I could go back $1.50 to my purchase point but I'd expect the yield to increase at least to 8-9% then. It was around 12.3% when I bought them IIRC so if it dropped to $4.50 and went up to 9% I'd still be ok. OOTH, if the nav drops and the yield remains in the 5-6% maybe it's time to call it quits. Stay the course for now.

 

[bssc]

Saw this from yesterday. Bonds are dead says Merrill Lynch. BofA Outlines 2013: The Great Rotation from Bonds to Stocks - 24/7 Wall St.

Of course, ML will get a commission every time you sell a bond and again when you buy a stock so they have a vested interesting in pushing the Great Rotation.

 

[HFWR]

...the Great Rotation.

The only Great Rotation I see is swirling around the toilet bowl...

I'm about 5% each HYG (junk) and LQD (corp). Been thinking about taking my money and running, though I've liked the divvies. But I don't see the psychology, cloudy crystal ball notwithstanding, for a stampede into stocks.

 

[Chuckanut]

Saw this from yesterday. Bonds are dead says Merrill Lynch. BofA Outlines 2013: The Great Rotation from Bonds to Stocks - 24/7 Wall St.

Business Week, August 13, 1979 - The cover story declared that Equities Are Dead!!! The Dow was about 875 at that time.

Sometimes it's good to be [-]an old curmudgeon[/-] a wise and experienced elder who remembers the past.

Really, is this news to anybody? With interest rates at record low levels, is not it obvious that bond appreciation will be tough to come by in the next few years?

What I want is not to be told the obvious, but rather to get a copy of the October 11, 2017 WSJ on my door step tomorrow.

 

[brewer12345]

This will end well:

Bolivia Hires Goldman, BofA for First Debt Sale Since 1920s - Bloomberg

"
Emerging-market countries that have never sold debt or last did so years ago are issuing bonds to take advantage of the lowest borrowing costs on record. The yield on emerging-market debt fell to a record low 4.68 percent last week, according to JPMorgan Chase & Co., as investors looked for alternatives to near-zero interest rates in the U.S. and Europe.
“People are looking at countries off the beaten path to pick up some yield,” Alejandro Urbina, who manages and gives advice on $800 million of emerging-market assets at Silva Capital Management, said in a telephone interview from Chicago. “They’re coming at a good time.” "

 

[Surfs_Up]

This will end well:

Emerging-market countries that have never sold debt or last did so years ago are issuing bonds to take advantage of the lowest borrowing costs on record. The yield on emerging-market debt fell to a record low 4.68 percent last week, according to JPMorgan Chase & Co., as investors looked for alternatives to near-zero interest rates in the U.S. and Europe. .” "

How might this end for countries such as Panama (where I live)?

Panama has a massive number of infrastructure projects going on now: Widening the Panama Canal, hydro electric plants, mining, tons of new roads... GDP is projected to grow at 11% here this here. Inflation running about 6%. They can't get enough warm bodies here to fill the open jobs.

Is this the economic hitman senario, where you load them up with debt that they can never repay and then take back the canal or ?

Surf

 

[M Paquette]

Yeah, baby! Bolivian Bearer Bonds are back!

This will end well, of course. I eagerly await the first bank offering of CDs tied to these.

 

[Gumby]

Synthetic CDO's with these as the reference obligation. What could be better than that? I'm sure AIG will be happy to write the necessary CDS.

 

[HFWR]

Yeah, baby! Bolivian Bearer Bonds are back!

This will end well, of course. I eagerly await the first bank offering of CDs tied to these.

Bolivian Beever Cheese futures...

 

[FinanceDude]

The bond fund I own myself is has only 9% in high yield, so I am not too worried..........

 

[clifp]

Bolivian Beever Cheese futures...

Here let me help you sell more of these. Lets issue bonds on the producers of Bolivian Beaver Cheese (BBC). Which instead of paying interest in the form of $ will give you future contract on BBC.
Next we'll package all of the bonds of the various BBC companies, and securitized them.
Divide them into tranches and sell them to public pension funds desperate for more yield. In the meantime lets create a synthetic index so that banks can bet on BBC Future contracts using their FDIC insured deposits.

Who needs another housing bubble to help stimulate the economy, Bolivian Beaver Cheese,is the next Facebook.

 

[brewer12345]

Of course Bolivia is an emerging market compared to the more established Venezuelan market.

Funny, I just bought a book on cheese making yesterday.

 

[Nords]

Funny, I just bought a book on cheese making yesterday.

In about six months we're going to look back on this post as the equivalent of "Wheeeee!"...

 

[bamsphd]

The junk bond market has just completely jumped the shark. New issue: CCC-rated bonds that are pay-in-kind (means the issuer can at its option pay coupons with more crappy bonds instead of cash) and with the proceeds paid out to shareholders. Investors really are idiots.

TEXT-S&P assigns Petco Holdings 'B' rating | Reuters

I think this is the first time in all my years of reading this forum that a posting has actually prompted me to take action and change my investments. I've kept about a year's worth of "cash" in Vanguard's Short-Term Investment-Grade Fund for many years. However, I was unpleasantly surprised at how much the NAV dropped (roughly 9%) during the Great Recession crash. At the time I resolved to move the money to something more stable "after it recovered." Based on Brewer's post, I finally decided it was time.

Since I'm not retired yet, I chose the Vanguard Short-Term Tax-Exempt Fund as the new home for my emergency/liquidity stash. Now I get to watch inflation slowly eat it away, but can expect the NAV to be a bit more stable the next time the stock market goes on sale.