Good reads from around the Web.
A post of the week. Here’s Josh Brown at The Reformed Broker warning about an inevitable crash in the bond market:
I’m going to say this here and now for posterity and I hope you bookmark it:
There’s going to be such a brutal bond investor slaughter at some point over the next decade that the streets of Boston’s mutual fund district will run red with blood, the skies will be shot through with the lightning and thunder of unexpected capital losses and those who manage to survive will envy the dead.
Now a slaughter in bonds will not look like an equity market crash, the volatility characteristics are different and bonds eventually mature. But in some ways it will feel much worse than a stock crash because the money parked in bonds is thought of as low or no-risk.
The fixed income guys know what’s going to happen, too. Why do you think the Bond Kings at PIMCO and DoubleLine are pushing into equity funds? They’re getting three-year track records under their belts for when the big switch comes.
One reason Josh Brown is an excellent writer and pundit is because he doesn’t prevaricate. It may not be good advice – I have no idea about his track record, either way – but it grabs you right in your special interests.
In contrast, while I happen to think Brown is likely right about bonds, I’d feel duty bound to caveat it with warnings about deflation, Japan, market timing, and 20-year bear markets.
In fact, I already did. Some of my readers may have ended up wiser for it, but I suspect a few of them ended up asleep.
Brown’s is the strategy of a Wall Street professional. If he’s right, he can point to his prediction for years to come. If he’s wrong, nobody will ever remember – maybe not even Josh Brown, thanks to hindsight bias.
Perhaps even Google will forget his page eventually.
It’s a great post – and I think likely a good call – but it’s not necessarily correct.
Remember that. Even if posterity does prove him right.
From the blogs
Making good use of the things that we find…
- Do we live in a golden age of investing? – Mint
- Owning all asset classes works – The Capital Spectator
- False tracking error = bad ETF decisions – Index Universe
- Emerging market debt ETFs – Index Universe
- Are target-date bond ETFs on the way? – Abnormal Returns
- Dividends matter, but so does capital growth – Clear Eyes Investing
- The 6.25% St Modwen bond [Closes 31/10] – Fixed Income Investor
- How one successful private investor does it – Financial Free Now
- Market P/E ratios – Part One and Part Two – by Rick Ferri
- Seasonally affected investing disorder – The Psy-Fi blog
- Retirement planning with no children – Oblivious Investor
- Saving money on heating (again) – Simply Living in Suffolk
Mainstream media money
Highlights from the wall of noise…
- Cashing in on the UK dividend boom – FT
- Ted Wechsler: The next Warren Buffett? – Bloomberg
- The rich are bailing out of hedge funds – Reuters
Other stuff worth reading
- Merryn: The cost of growing old frugally – FT
- New rules on interest-only mortgages – Telegraph
- Beware of structured products – The Independent
- Flash crash postmortem: How liquidity collapses – The Economist
- Fear is good business these days – Yahoo
- Ask a banker: What is a derivative? – NPR
- The Zeitgeist Investor [Podcast featuring Tim] – Motley Fool
- Not enough water on Earth for us all to eat meat – Live Science
Book (reader) of the week: Amazon’s gorgeous new Kindle Fire HD readers are now shipping. I still prefer my old-fashioned Kindle, but whatever model you prefer, these e-readers are clearly the future of books.
Like these links? Subscribe to get them every week!
- Weekend reading: Did George Osborne just tell us to sell bonds?
- Weekend reading: Beware of bonds edition
- Weekend reading: Warren Buffett warns on bonds and gold