Down goes the Dow

I get that journal. It has some pretty decent articles and also small cap stock picks based on value. Very strict criteria.

topcat,

I thought the article was a good summary on how market interest rates influence bond valuations. The risk to high quality bonds is mostly in interest rate risk. However, market, industry, and company risk can influence valuations. For these reasons, in my view, a slant toward short duration and high quality makes the most sense. High yield or junk bonds, face rising risk due to covenant light provision, reach for yield, cycle high for the business and poor business models able to receive funding. Of course some of these businesses have rollover risk in the coming years if rates rise.

Igy

High yield or junk bonds, face rising risk due to covenant light provision, reach for yield, cycle high for the business and poor business models able to receive funding.

By definition, junk bonds are high risk. The reasons you cite are secondary.

Hellooooo,

The question to you would be: do you consider junk bonds more or less risky than stocks? Standard deviation would suggest stocks are more risky? The point was junk bonds contain more risk in this cycle than what is typical. I believe the same is true of REITs, MLPs, utilities, and dividend paying stocks. These assets being viewed as bond proxies.

Igy

Thank you for your question. The answer is that bonds are less risky than equities due to the lack of volatility.

U.S. stock futures were locked in a holding pattern with just a few hours to go before a much-anticipated address by Federal Reserve chief Janet Yellen.

Dow Jones Industrial Average futures shed 2 points, or less than 0.1%, to 18,446, while S&P 500 futures inched up by 0.15 point to 2,173.75. Nasdaq-100 futures fell 2.75 points, or 0.1%, to 4,779.50.

In a speech scheduled for 10 a.m. Eastern Time, Yellen may signal the Fed is ready to raise interest rates next month. Some analysts are sounding downbeat ahead of her address in Jackson Hole, Wyo.

"Today's Jackson Hole gathering could be quite critical, with expectations heightened over if Yellen will provide clarity on when the Fed may break the trend of central bank caution," said Lukman Otunuga, an analyst at FXTM, in a note.

"If there is a further disconnect between markets and the Fed then jitter and risk aversion could leave stocks vulnerable to heavy losses," he added.

On Thursday, the S&P 500 closed 0.1% lower, while the Dow shed 0.2%, as investors seemed reluctant to make big bets on the eve of the Fed chairwoman's speech. The S&P is down 0.5% for the week, as of Thursday's close, and the Dow is 0.6% lower.

Gold has Bullish News for the a Stock Market

The stock market's intermediate-term prospects are brighter today than at almost any other point in the last five years.

That is the surprising conclusion of a new stock-market indicator that Darien Huang, a finance professor at Cornell University, has found to have a better track record than nearly all of the many others he studied.

https://research.tdameritrade.com/grid/public/markets/news/story.asp?docKey=1-SN20160826006776

"If a person can be too smart for his own good, as the aphorism goes, portfolio manager John Hussman may be feeling the agony of high intelligence right about now....Hussman’s persistently poor performance is an object lesson in the futility of trying to outsmart the market, a temptation to which some very smart people succumb either through security selection or market timing."

From "Hussman's Returns, Like His Forecasts, Are Dismal"

Research Magazine

...not any more dated research...

http://www.morningstar.com/funds/xnas/hstrx/quote.html

Thanks for helping to prove my point.

No K.

So sorry....the times are a change....innnngggggg

Changing indeed. That fund, which lost a boatload of money and investors in recent years, did have a nice little run a few months ago. In fact, it almost got back to where it was 5 years ago....almost. But the last 3 months it has returned to form and is once again underperforming.

Like I said, thanks for helping to prove my point.

He'll be right...and you'll be....so sorry....

Of course he'll be right. Everybody knows the market will crash at some point. It doesn't take any special insight to predict market crashes or recessions.

That is, unless one predicts a date! But that never happens. We see predictions including words like "soon", or "before the end of next year", or "at the end of the cycle". Those are cop outs.

I can do it too. Here are my predictions:

1. The stock markets will crash.

2. There will be a recession.

3. The stock markets will recover and set new record highs.

So now I guess I'm a financial genius like John Hussman. The only difference is I said it in fewer words.

Joe,

If it was that simple why is the S&P 500 up less than 5% the last sixteen years, including dividends? Why are the average investors returns less than that?

I said it in even fewer words.

Good luck though.

Igy

Read my post again. I gave you the answers.

My answer to you....

https://mobile.twitter.com/hussmanjp/status/768881226472194048/photo/1