Learning Center

Oil Isn’t Doomed To ‘Contango’

Date07 Jul 2014

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The Wall Street Journal reported that, as of June 10, speculators (emphasis mine) held a near-record bet worth $35.7 billion that oil prices would rise on the New York Mercantile Exchange. In the debate about whether investors should consider including a portfolio allocation to commodities, one of the main arguments against doing so has been the huge amount of...

Do Lower Investment-Grade Municipal Bonds Add Value?

Date07 Jul 2014

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The Federal Reserve’s zero-interest rate policy is now well into its fifth year, probably far longer than most – if not all – investors were expecting. This persistence of low interest rates has pushed many investors to stretch for greater yield from their bond investments. One way to achieve higher yield is to take on...

The Role Of Credit Risk In Exchange-Traded Notes

Date07 Jul 2014

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The financial crisis of 2008 underscored the role that credit risk plays in many investments. And while counterparty risk has been in the spotlight with such derivatives as credit default swaps, comparatively little attention is paid to its impact on exchange-traded notes (ETNs), a type of tracking product. ETNs are relatively new — but rapidly...

Structured-Portfolio Advantages

Date07 Jul 2014

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We now turn our attention to another way in which structured portfolios can add value over index funds; namely, by creating “core funds.” Core portfolios combine multiple asset classes into one fund. The following provides a good example of why a core approach is superior to a component approach, and is the most efficient way...

Why We Love Premium Bonds And You Should Too

Date07 Jul 2014

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A common error made by many bond investors is to avoid purchasing premium bonds – bonds that trade above their face value (or par, typically 100). A bond will trade at a premium when the coupon (stated) yield is above the current market rate for a similar bond of the same remaining term to maturity....

The real risk of rising interest rates

Date07 Jul 2014

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More than three years ago, the bond “king,” PIMCO’s Bill Gross, announced that the world’s biggest bond fund had reduced its U.S. government-related debt holdings from 22 percent in December 2010 to just 12 percent in January 2011, at that time its lowest level in two years. Shortly thereafter, PIMCO announced it had entirely eliminated...

Why Good Things Sometimes Happen After Bad News

Date07 Jul 2014

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One of the secrets to being a successful investor is the ability to keep your head during a bear market while everyone else around you is losing theirs. To do that, you have to understand that bad news doesn’t necessarily mean stock prices will fall. While this may sound strange, it’s important to understand that...

My Take: In Honor of the World Cup, a Look at Goaaals!

Date07 Jul 2014

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Neal Merbaum Meet Ben, the CEO of a fictional company. One day, he calls his employees into a conference room for a meeting and starts to assign tasks. “Mark, start typing a letter. Marge, create a spreadsheet. Frank, organize a team.” And so on. But Ben doesn’t tell anyone why they’re doing these things or...

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