5 Tax Errors That Rob Your Portfolio…Nevada Booze Bonds…Read Before Selling Treasuries…and more!February 19th, 2013 by Simon G
The Chestnut: – 5 Tax errors that rob your portfolio of returns. – How can an investor minimize taxes and maximize returns? Lesson for bond investors; don’t keep your REITs, Bonds, and other yield-generating investments in a regular brokerage account or taxable portfolio.
Bloomberg: – Nevada booze bonds seen overcoming worst housing slump. – Nevada Governor Brian Sandoval, whose borrowing ability has withered as the state suffered the nation’s biggest drop in property values, wants to tap a revenue stream that emerged from the recession unscathed: liquor taxes.
Plan B Economics: Why Treasury yields could stay low for a long time to come - 2 reasons you have probably seen before, but explained in a way you haven’t.
Insider Monkey: – Stay away from corporate bonds! – This race after anything that resembles yield has made bonds extremely expensive and yields extremely low. Various mega companies with piles of cash on their balance sheets, strong earnings power, and a very deep business moat are taking advantage of this opportunity. These companies are now able to sell their bonds at absolutely ridiculous yields to investors hungry for yield.
Plan B Economics: – If the S&P 500 is in a bull market, how will bonds perform? – There’s tons of talk about the ‘great rotation’ and how a massive re-allocation into risky assets (i.e. stocks) is taking place. The biggest question from investors holding bonds and gold is this: how will these assets perform if stocks continue to rise?
Learn Bonds: – CenturyLink joins the dividend-cutting club. – A few days ago, CenturyLink joined the February 2013 dividend-cutting club by slashing its quarterly payment from $0.725 per share to $0.54 per share. Other companies also announcing dividend cuts in early February include Exelon and Cliffs Natural Resources. But unlike with Exelon and Cliffs Natural Resources, Moody’s reaction to the dividend cut was quite negative, placing the CenturyLink’s debt ratings on review for downgrade. What makes CenturyLink different from Exelon and Cliffs Natural Resources?
FT: – Funds in two minds on junk bonds. – Europe’s top fixed income fund managers are increasingly concerned about the credit fundamentals for global “junk” bonds but are still optimistic that prices have further to rise due to ultra-loose monetary policy, according to Fitch Ratings.
About.com: – Barron’s ranks the best fund families for bond investors. – Barron’s is out with its rankings of the best mutual fund families based on their performance in 2012. On the bond side, Barron’s split out its rankings between the taxable and tax-exempt categories.
Advisor.ca: – Bond indices don’t accurately gauge markets. – There’s quite a difference between equity and bond indices. Bond indices, offer a snapshot of their associated bond markets; but many investors don’t like bond index data since it doesn’t accurately gauge the overall bond market.
Bloomberg: – Junk bond froth leaks into emerging market debt. – Junk bonds of companies in emerging markets are the most expensive in seven years relative to the US, underscoring concerns by policy makers from Mexico to the Philippines who say the threat of asset bubbles is increasing.
Investment Europe: – Alternatives set to gain as bond markets are challenged. – Willem Sels, UK head of Investment Strategy at HSBC Private Bank, believes that alternative investments will gain in attraction as bond markets become increasingly challenged this year.
Business Week: – BlackRock sounds covered bond collateral alarm. – The world’s biggest investors are warning that a plan to introduce new collateral into the $3.5 trillion covered bond market risks undermining the safety of securities pioneered in 18th-century Prussia.
WSJ: – Calling time on the corporate-bond party. – The party is winding down in the European corporate-bond market. Euro-denominated investment-grade debt has churned out reliable returns since 2009; last year, the market returned a stellar 13.6%. But returns so far this year are minus 0.5%. Investors shouldn’t expect the dancing to start again any time soon.
Pensions and Investments: – High-yield bonds continue reign amid low-interest-rate environment. – Long-term bonds have dominated the fixed-income managers rankings for four straight quarters but were overtaken by high-yield strategies in the year ended Sept. 30.
ETF Trends: – Fixed-Income ETFs vs. Individual bonds. – Bond exchange traded funds have been popular for some time; however, the demand for these products is skyrocketing on speculation of rising interest rates. They provide a low-cost, transparent savings strategy, but are also coveted for their flexibility relative to individual bonds.
ETF Trends: – Some ETFs for rising interest rates. – Investors with exposure to traditional Treasuries will take a beating if bond prices begin to dip off their three decade long run and yields start to rise. Nevertheless, there are exchange traded fund options to help cope with the shifting tides.
Minyanville: – Bond market convexity: Objects in mirror are closer than they appear. –US bond futures continue to vibrate the 143-00 level. 143-00 is a huge number. It was a climax top in 2008. It was made support in 2011 and 2012, and it’s very close to two standard deviations in the rising channel. If violated to the downside, a bond market top could be in place, but don’t expect it to go quietly; it will likely put up a tough fight.
FT Adviser: – Managers shun high yield for fixed income value. – Discretionary managers are abandoning high-yield bonds as part of a range of shifts in fixed income allocation as they struggle to find value in the asset class.
Index Universe: – Franklin Templeton plans short bond fund. – Franklin Templeton, the San Mateo, Calif. based mutual fund firm, filed paperwork with US regulators to market its very first ETF, an actively managed fixed-income strategy that’s designed to cater to investors’ appetite for income.
CNBC: – Worst trade of the year? Bet against bond market. – While going long the stock market has been a great trade so far in 2013, betting that the bond market would suffer as a result could be the worst.
Gross: Gresham’s Law –Bad money drives out good Gresham Jr.’s Law–Cheap (zero bound) money cripples savers, savings & ultimately investment
— PIMCO (@PIMCO) February 19, 2013
One at a time every firm is walking back their great rotation calls. BAC & DB so far today.
— no bid. (@cr3dit) February 19, 2013
$AIG 8.175′s (due in 2058) up a few points on news of the tender offer… PIMCO largest owner of the debt w/ over $1.3bil bonds
— David Schawel (@DavidSchawel) February 19, 2013