FMD Capital Management

Posts Tagged: rising rates

My Favorite ETFs Have Nothing To Do With Trump

Written by David Fabian, April 29th, 2017

The first 100 days of Donald Trump’s presidency has been good for the stock market.  Whether you agree with his policies or not, there is optimism for the future of the global economy that is being reflected in the recent price action.

Now, of course, that doesn’t mean we are going to see a straight path of gains for the next four years.  There are going to be a myriad of stumbling blocks, uncertainty, and possibly even a bear market that will creep up when we least expect it.  Those declines will be opportunities for those who are ready to take advantage with cash on the sidelines and a well-tuned watch list of solid funds to buy. Read more

Second Quarter Outlook: Trends, Risks, and Opportunities

Written by David Fabian, March 30th, 2017

Forecasting the direction of the markets on a quarter by quarter basis is no easy feat.  There are simply too many unknowns to determine exactly what will happen and how investors will react to future events on both a micro and macro level.  Nevertheless, a look back at recent price action and examining seasonal trends can be helpful to frame expectations.  It may also elevate the need for closer examination of your existing holdings and offer consideration for changes to reduce risk or capitalize on fresh opportunities. Read more

Preferred Stock ETFs Face New Test

Written by David Fabian, March 13th, 2017

Preferred stocks offer the distinction of being unique hybrid instruments with qualities of both stocks and bonds.  In that manner, they offer healthy dividend yields alongside a favored position in the capital structure of many companies that issue these securities.

The reason company’s issue preferred shares are to raise capital from investors that are seeking an attractive yield without adding traditional debt (bonds) that carry strict maturity dates and covenants.  Preferred stocks can also be “callable” from the issuer, who has the right to redeem them at a certain price or time at their discretion.   Read more

3 Core Bond ETFs That Are Coping Well With Rising Rates

Written by David Fabian, January 06th, 2017

A reader recently sent me a question asking why you would own a bond fund when interest rates are on the move higher.  This type of sentiment is more than likely on the minds of many investors as they prepare for 2017 and evaluate adjustments to their asset allocation.

The short answer is that every diversified portfolio should have bond exposure to balance out the risk of other asset classes – i.e. stocks and commodities.  Bonds have historically provided a shock absorber for the equity side of the portfolio and have not shown any signs of relinquishing that trait.  Simply letting go of all your bond exposure will unnecessarily tilt your risks and returns towards a single outcome.  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