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What Is The Bond Yield Curve?
Understanding the relationship between bond risk and time to maturity and duration of a bond provides the basis for understanding the bond yield curve. The yield curve shows the yields to maturity for a series of bonds — typically U.S. Treasury bonds — with the same credit quality but different maturity dates, along with the…
Read MoreReview: Individual stocks don’t even beat Treasury bills: James Saft
We all know diversification is important. But it’s always nice to be reminded just how important it is – and even better when you have news articles linking directly to academic papers like this one does. Hendrik Bessembinder, a researcher at Arizona State ran a really interesting analysis. If you look at individual stocks in…
Read MoreReview: The fate of the stock market rests on Tom Brady’s shoulders
Investors can find signals anywhere, for better or worse. Apparently one of the better ones out there is the Super Bowl. Since 1967, when the AFC wins, the markets are down for the year. Unfortunately for me, I live in New England. I’m not sure what I’m supposed to do… At least this time it seems…
Read MoreWhat is a Reverse Mortgage, and How Does It Work?
Reverse mortgages have gotten a bad rap, and admittedly, a lot of it was deserved. However, a bad rap doesn’t just happen without something to base it on. But a lot has changed since Fred Thompson was selling them on daytime TV. Now, reverse mortgages are tightly regulated at both the federal and state levels,…
Read MoreWhat Bond Liability Means For Your Retirement Plan
Bond prices are sensitive to interest rate changes, and bond duration is a measure of just how sensitive. For instance, if a increase in interest rates from 2% to 3% caused a bond’s price to fall by 8.5%, the bond would have a duration of 8.5, meaning that a 1% rise in interest rates leads to an…
Read MoreHow To Make Sense Of Bond Pricing
As a bond provides a contractual right to a series of future payments received at specified points of time, the price for a bond is simply the present discounted value of the future cash flows. The face value of a bond will be repaid at maturity. A zero-coupon bond provides only a bond’s face value,…
Read MoreYour Retirement Number Is Meaningless
A lot of financial marketing pushes the idea that there’s a single “retirement number” you need to hit, making it sound like the key to a secure retirement is finding and reaching this magic number. While this idea is appealing, the truth is that retirement planning isn’t a one-size-fits-all approach. There’s no right number that ensures you…
Read MoreReview: Markets Are Right More Often Than You Think
This article let’s me get on my soapbox about one of my favorite topics: markets don’t need to be right to be efficient. Oftentimes, people equate market efficiency with “right” or “perfect” market prices. That’s simply not true, and in fact, it doesn’t even mean anything. The folks who are advancing these arguments are either misinformed or…
Read MoreReview: Legendary investor Jack Bogle’s advice for Trump: 7 reforms investors need now
Jack Bogle has done more for investors than almost anyone. He popularized passive investing, and founded Vanguard. Everything he has done hasn’t happened by accident. When he talks about the financial services industry people should listen, and think carefully about what he says. He isn’t always right about everything, but he knows what he’s talking…
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