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Many junk bond funds are on track for double digit 2016 gains. Who would have thought? And under the radar many bank loan funds ala RSFYX and SAMBX are steadily rising. I have no opinion on any of this. I will let the countertrend rally/relief rally/suckers rally/bear market rally crowd chime in. But would also like to see some true believers chime in.
PRLAX up 6% today, or 32% since I bought it 2 months ago. Heck - my sell-point on this one is at about a 40% gain. So may have to part with it soon. Would get hit with Price's 2% redemption fee, but who's complaining?
Seems to me some were sitting 100% in cash a month ago. Lousy start to the year startled many.
Umm ... Don't know about bull markets. I can't see the future. But, there have been many positive trends over the past month or so. Oil bottomed near $26 in January/February and is around $41 today. Gold started the year around $1100 and is above $1250. The Dow (if memory serves) dipped to around 15,000 in January and is now at 17,500, close to year-ago levels. The wild daily swings have softened.
European, and now U.S., central bankers have softened their stance or even added stimulus. Dollar has been softening for a while (judging by the performance of international bonds this year). But this week's Fed statement added impetus to that softening. EM bonds have been strong this year. Home prices are rising and REITS have been good investments since September. The U.S. oil patch is still a mess. Time and higher prices should help. This should in turn help the junk bond sector - though my exposure there is very limited (only through broader allocation funds).
As I've noted before, Brazil - which comprises most of PRLAX - has been on a tear since mid January. This is a dicey one however, as Brazil is undergoing political trauma reminiscent of our Nixon years and their market is liable to go in any direction day to day as that drama unfolds. However, overall, those EMs with nice reserves of oil or metals should do relatively well as long as prices stay up.
Bull markets? I dunno. But they say the trend is your friend. I think both Junkster and I would agree on that point.
Nice post Hank About the only negative (and there are always negatives) has been the action in small/mid cap biotech and to a lesser degree large cap of the same. Bull or bear, a more than average profitable trading rally in just about everything else under the sun.
I noticed the nice bank loan trend over the last couple months and decided to make my own "Junkster-trend-play" earlier this week. Bought some BKLN, power shares senior loan etf.
I could not have predicted the recovery in Brazil. The iconic ex-president and the current president seemingly about to be thrown in jail and there are more buyers than sellers? Sheeesh!
I noticed the nice bank loan trend over the last couple months and decided to make my own "Junkster-trend-play" earlier this week. Bought some BKLN, power shares senior loan etf.
Mike, hope the trade works out for you. However, if you recall some of my rants against Dex and his HYD. I am outspoken in my dislike of using bond ETFs in the junk space (and for that matter the bank loan space)
Thanks junkster, but I only use the ETF because I can get out quickly (versus a fund). Just watching the trend, this ETF is moving nicely over the last month. What is it that you don't like about Bank loans in general.
Mike, I like the sector. It's just with the junk and bank loan ETFs you get exaggerated daily moves when everyone wants to get out. The open end you normally have a one day lag and you can play that to your advantage when adverse news (or for that matter positive news like late Wednesday afternoon) hits the markets and the ETFs.
I've always wondered: When some indicator confirms a new bull market, does that mean "buy,buy,buy" or "If you are already in that's great, but if you're not it may be too late."
Also , this in only the first part of a Dow Theory Bull Market Confirmation.
@Junkster Can you please explain your reasoning for advantages of one day lag with mutual funds. It seems counterintuitive as you are always late comparing with ETF.
@Junkster Can you please explain your reasoning for advantages of one day lag with mutual funds. It seems counterintuitive as you are always late comparing with ETF.
Exploiting the one day lag in the open end junk finds to news/market action late in the day in stocks and the junk ETFs is simply a variation (albeit not nearly as profitable) of the datelining of foreign funds - a common practice in the 90s. My bad for bringing this up. The fund companies eventually put an end to international datelining. They could do the same to the one day lag.
Thanks junkster, but I only use the ETF because I can get out quickly (versus a fund). Just watching the trend, this ETF is moving nicely over the last month. What is it that you don't like about Bank loans in general.
Mike, in addition to my comments above, today is a good example of why I don't like junk/bank loan ETFs. BKLN was down 0.53% today. On the other hand, in the real world (NAV) the open end were unchanged to up. That is a pretty wide divergence.
Comments
Regards,
Ted
Umm ... Don't know about bull markets. I can't see the future. But, there have been many positive trends over the past month or so. Oil bottomed near $26 in January/February and is around $41 today. Gold started the year around $1100 and is above $1250. The Dow (if memory serves) dipped to around 15,000 in January and is now at 17,500, close to year-ago levels. The wild daily swings have softened.
European, and now U.S., central bankers have softened their stance or even added stimulus. Dollar has been softening for a while (judging by the performance of international bonds this year). But this week's Fed statement added impetus to that softening. EM bonds have been strong this year. Home prices are rising and REITS have been good investments since September. The U.S. oil patch is still a mess. Time and higher prices should help. This should in turn help the junk bond sector - though my exposure there is very limited (only through broader allocation funds).
As I've noted before, Brazil - which comprises most of PRLAX - has been on a tear since mid January. This is a dicey one however, as Brazil is undergoing political trauma reminiscent of our Nixon years and their market is liable to go in any direction day to day as that drama unfolds. However, overall, those EMs with nice reserves of oil or metals should do relatively well as long as prices stay up.
Bull markets? I dunno. But they say the trend is your friend. I think both Junkster and I would agree on that point.
Also , this in only the first part of a Dow Theory Bull Market Confirmation.