FMD Capital Management

Posts Tagged: bond market

The Markets Are Doing That Thing Again

Written by David Fabian, July 18th, 2017

The markets are doing that thing again.  That thing where everything looks easy.  Where the trends are picture perfect.  Where good stocks keep doing good things and bad stocks keep doing bad things.  Where shorting the VIX seems like the easiest money in the world and where commodities are so fractured as to be all but unbearable to own.  Read more

Why Bond Bears Need To Calm Down

Written by David Fabian, December 11th, 2016

Income investors are currently facing an uptick of concern over bond holdings that is reminiscent of the 2013 taper tantrum.  While it was no more than a few years ago, many are quick to forget the terror that resulted from a sharp rise in Treasury yields and concomitant fall in bond prices.  I can also starkly remember just how wrong 99% of economists were on predicting the future direction of interest rates in 2014 and beyond. Read more

The Great Bond Shift Rolls On

Written by David Fabian, September 01st, 2016

If there is one major theme that pervades the financial markets this year, it’s the shift from stocks to bonds.  You can romanticize about the momentum in gold stocks.  You can peek over at emerging market strength, but nothing compares to the pervasive re-allocation of global assets.  Read more

Bond Fund Investors Should Lower Duration

Written by Michael Fabian, September 12th, 2014

If the decline in bonds last summer put a serious dent in your portfolio, it’s time to circle the wagons so that future interest rate leaps won’t leave you scrambling to make changes at the most inopportune time.

The crux of the problem for most bond investors is the difficulty of factoring in the potential percentage change in net asset value for a theoretical change in interest rates. These factors become even more complicated when a portfolio is commingled with different types of bonds. We toss around financial lingo such as: Effective duration, average life, or modified duration. However, the complex calculations that spit out a portfolio’s sensitivity to interest rates are ultimately just a measure of time.  That measure then needs to be put in real terms for an investor that may not have institutional analysis tools for calculating specific risks. Read more

Saying Sayonara to Senior Loans

Written by Michael Fabian, February 28th, 2014

Its been a bumpy road for bond investors over the last 12 months, and while the pavement has smoothed out in the near term, investors need to remain cautious and vigilant with their fixed-income holdings.

Interest rate and credit volatility have largely dissipated following the post-taper announcement reaction, however some sectors of the fixed income market may present more risk than others. In my 2014 introduction to fixed income investing I posited that a well articulated mix of assets that is strategically allocated to undervalued areas of the market would yield better results than languishing in an aggregate fixed-income fund. As part of this approach I suggested several areas that investors can use to more broadly diversify their portfolio, overweight targeted areas, and increase their yield.  Read more