Yesterday a slew of junk bond funds closed at all time highs on a total return basis. The proxy index for junk bonds closed at 1343.59 vs its May 1 all time high of 1344.07. Prior to that May 1 top, junk bonds had been making all times highs on a seemingly daily basis since mid February. Unless there is some reversal in today’s trading (anything is possible) the junk bond index will also close at all time highs.. How can this be? If you read the commentary below you will read that the macro and micro economic data continues to deteriorate.
https://www.marketwatch.com/story/this-big-wall-street-bear-warns-his-bleak-scenario-for-2019-is-taking-shape-2019-06-10
Comments
Here is one of the articles that talks about some of the cracks in the dam some people are currently noticing....
https://bloomberg.com/news/articles/2019-06-11/regulators-alarmed-by-risky-loans-but-don-t-know-who-holds-them?srnd=fixed-income
Here's a few selected excerpts from davfor's Bloomberg link, just above. The entire article is well worth a read. Comment: Well, it certainly won't be this administration that tells anyone to put their toys down.
Regards,
Ted
That Boeing thread has now run for over three months, with over twentyseven hundred views. Your typical quantity vs quality posts barely last one day, and are lucky to get 27 views. How would you have any idea what "the majority of MFO Members" eyes are looking at? In any case, certainly not at your links.
By the way, I note that linter has just posted a comment in the Boeing thread which you might find of interest.
Regards,
OJ
Regards,
Ted
Lipper: U.S.-based investment-grade bond funds post inflows for 3rd straight week:
https://www.reuters.com/article/investment-mutualfunds-lipper/update-2-u-s-based-investment-grade-bond-funds-post-inflows-for-3rd-straight-week-idUSL2N23R1EN
Your words: " peak Before crash"
Absolute.
You may tell any family and friends who are invested in the markets that "Catch" says so, on this 20th of June, 2019. He/she/they should take action now to position their assets accordingly.
The below is to be considered an electronic signature and valid in some U.S. states.
Catch
Looks like Ted linked a thread on that topic a month ago. Appears there were no responses from the board. https://www.mutualfundobserver.com/discuss/discussion/49979/what-to-throw-away-in-may
The article is from Forbes and is titled : “What to Throw Away in May.”
A few snippets from the linked column follow:
- if the first half of May’s decline “gets legs” and is more a beginning than an end, don’t count on finding too many stock market areas that buck the downtrend. Utilities, REITs, and Consumer Staples stocks are typical outperformers when the market’s first knee-jerk reaction occurs. But as declines deepen, these tend to be treated not as conservative ways to still own stocks, but as part of the club…a club that is out of favor.
- Gold and gold stocks, like Utilities and REITs, probably feel good for a little while amid the equity market carnage. But my chart work shows me that the upside is likely limited.
- “Credit” Bonds – to paraphrase a famous movie line…I see dead asset classes. I have written to you for some time about my deep concerns for investors who have been “chasing yield” the past several years, trying to make up for paltry income returns from CDs, T-bills and Money Market Funds. This happens in every cycle, and it is happening again. High Yield Bonds, Convertibles, Bank Loan Funds, Closed-End Bond Funds (which are typically full of leverage) are all flirting with trouble right now.
- U. S. Treasury Securities / This is a tool for traders and investment managers, but I fear that too many investors and financial advisors have shoved long-term bonds into portfolios to boost the yield, but are not considering how much risk they are taking if they view it as a “buy and hold” position.
The "Sell in May" axiom has many spins to it. Below is mine.
Generally, Old_Skeet does a portfolio review and a calendar rebalance in May and October and at other times if felt warranted. My asset allocation threshold is 20% cash, 40% income and 40% equity. I allow for a 2% + (or -) movement from the threshold for my income and equity areas while I generally let my cash area float. In addition, I can, if felt warranted, tactually let equity bubble up to +5% from it's threshold. With this, the cash area can float from a low of 13% up to a high of 24% depending on where my income and equity allocations bubble.
As we entered May I was equity heavy; and, I reduced my allocation to equities raising my allocation to cash. As equities pulled back in May I did a little buying but staying well within my asset allocation ranges, of course. So, thus far, this has worked well for me playing the swing so-to-speak. My market barometer is a tool that I developed and I use to assist me with market calls along with using it to help me throttle my equity allocation. As of market close June 20th, it scored the S&P 500 Index as extremely overbought. Perhaps, now might be a time, for me, to take a little off the table and book some profit since the S&P 500 Index reached a new all time hight.
The Sell in May and Come Back After St. Legers Day axiom is one that my family has followed for a good number of years. For us this has worked well through the years; but, like most everything else it does not work every year.
It will be interesting to see how stock valuations bubble as we approach fall. For me, the Sell in May theme simply reflects calendar times to review and, at times, to rebalance my portfolio, if warranted. After all, most of the gains in the stock market have historically taken place during the fall and winter months. It is during these times that Old_Skeet chooses to be equity heavy and then light to normal during the other periods.
So, with this, I am, in general, a subscriber to the Axiom.