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High Yield Investing in a World of Default

Options Trading — Tue, 09 Nov 2010 15:26:33 +0000

High yield investing exists principally because of default risk. That isn’t any great surprise to people who have been around long enough to know what a bond is. The credit rating of the average joe or company is based on a number of factors, not the least of which is total amount of debt outstanding and debt load relative to income. None of this should come as news to you if you are reading my column. I only say it to lay the foundation of where the rest of this economic commentary is coming from. Duh Moment: High Yield Investments Have High Risk of Loss While high yield investors continually scan the financial pages for the next good bond deal or CD to buy, how many of them really just think about the number to the left of the percent sign and don’t take serious time to evaluate the possibility of the company or individual of going belly up and defaulting on payments. Seriously, didn’t we just go through this with regard to the mortgage crisis? Didn’t an entire industry participate willingly (due to commissions/bonus/production incentives) in the creation of debt securities (whether knowingly or not) that were certain to [...]

Forex Trading Signals Cold Open

Options Trading — Mon, 08 Nov 2010 14:18:06 +0000

Pre-open forex trading signals a cold open on Wall Street, much like the dreary weather outside. Although the market numbers point decidedly downward, the consistent Fed action over the last week suggests a different ending to today’s story. Forex Trading Fed (FedFX??) Gassing Asset Bubble I don’t know how else to say it other than the Fed’s behavior will extend the painful readjustment to a lower standard of living for Americans rather than simply taking our medicine and being done with it. This choice to extend and pretend fails to lean on the greatest strength of Americans – the ability to rebound quickly from adversity. Now instead of bouncing back, we’re taking a slow series of steps to try to make the medicine less painful to take. The end result will be the same – more Americans below the poverty line. Unfortunately for the rest of the world (given the size of our economy) a shaving or two in America’s standard of living is like a tsunami elsewhere. Emerging Markets Continue to Succeed Overseas emerging markets have seen a great deal of money poured into them, much in part due to the Fed making US assets pricey but also because [...]

High Rate Investments | Get the Most Return in the Least Time

Options Trading — Sat, 12 Sep 2009 10:31:41 +0000

Isn't the goal of high rate investments to provide a high rate of return for a given amount of risk? Why is it these days that so many investors (myself included) have vested our money into mutual funds, index funds, and all sorts of employee stock option plans only to be shafted in the end and completely fleeced by market forces and corporate malfeasance. Logic here says this was bound to happen - the party got too good and we decided to stay to the end instead of getting out while the getting was good.