What Bonds Can Add to Your Portfolio
Bonds don’t add great returns but rather help reduce risk, provide relative stability to your portfolio’s performance, and add steady income.
The correlation between equities and high yield bonds is quite high, at +0.7. This is because both equities and high yield bonds depend on the well-being of the economy.
The Chinese sell-off sparked concerns about how the crash will affect economies all over the world. China makes up 11.3% of the global economy and is a huge consumer of resources.
Chinese equities in freefall have been worrying investors. The fall has been sudden and steep with the Shanghai Composite Index falling more than 32% from a seven-year high on June 12.
In a statement signaling that US economic recovery is on the right track, the Fed said that the economy is almost ready for gradually higher interest rates at its June meeting.
Changing demographics impact investors in many ways. The demand for bonds could increase, putting downward pressure on yields.
Lost in all the chatter about interest rates is a structural phenomenon that may be of far greater significance: demographics.
So what’s next in the Greek political drama? The next few days will most likely be extremely significant in Europe’s history. It’s finally make-or-break time for Greece.
For the past week, the Greek referendum has been a major source of volatility and worry for global markets. Referendum results came in on Sunday, July 5, and the Greeks gave a resounding “no” to the bailout terms.
Dividend stocks have some bond-like characteristics. Firstly, since dividend stocks tend to be defensive in nature, they give you a cushion during risk-off scenarios…
Looking forward, Greece will continue to be a source of headline risk. My short- and long-term outlook for Greece helps explain why: Short-term outlook: A deal is still the most…
Higher rates could be good news for consumers. Personal interest income has been more or less stagnant over the last few years.
Low rates have helped households. The new home sales figure touched its seven-year high in May when 546,000 new homes were sold.
In the June FOMC meeting, the weighted average forecast was much lower at ~70 basis points. Both stocks and bonds rallied after the meeting.
You should ensure that you hedge your European exposure. Many analysts are predicting euro–dollar parity by the end of the year.
Grexit might not precipitate a financial contagion, but the possibility of a political contagion is very likely. Spain and Italy may decide to follow suit.
The seemingly never-ending Greek debt (GREK) saga continues to play out, complete with twists, turns, and obstacles à la typical potboiler.
The tech sector (XLK) looks to be a good investment opportunity, all things considered. The US tech sector is markedly different from what it was in 2000.
Technological change (XLK) is advancing by leaps and bounds. The adoption and diffusion rates of new technologies has risen over the years.
Recent cybersecurity breaches has fanned paranoia and veered companies towards increased security spending—a major tailwind for US cybersecurity stocks.
But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.