We recently covered a lot of the fallout from Standard and Poor’s recent downgrade of the debt of the United States. The United States has 50 states which also issue their own debt, and get their own credit rating from the credit ratings firms. Luckily (this time) the legwork has been done, and I’m able to just link you to the primary source, the Tax Foundation! So view on to see the credit ratings of the states.
Here at DQYDJ, we retrieved Standard & Poor’s AAA ‘Domestic Ratings’ for sovereign debt on the morning of 8/11/2011. Here’s the list of ‘AAA’ rated sovereign debt issuers you have already seen at our site: Australia, Austria, Canada, Denmark, Finland, France, Germany, Guernsey, Hong Kong, Isle of Man, Liechtenstein, Luxembourg, Netherlands, New Zealand, Norway, Singapore, Sweden, Switzerland, and the United Kingdom. We told you the other day that the only thing that really matters is the yield – the price at which a sovereign can issue debt. Let’s dig into that further!
It’s been two full market days since S&P cut the debt rating of the United States one notch from AAA to AA+… and for one day at least, it was looking like S&P had the stock market by the nose. Two days later we can finally take a look back at what happened since we’ve had two trading days, a rest in between, a Federal Reserve statement, and a speech from the President. To wit: the S&P 500 Index closed at 1199.38 on Friday, 1119.46 on Monday and 1172.53 on Tuesday.
My friend sent me an article the other day which really summarized my thoughts succinctly – he sent me this piece from Evan Newmark writing at the Wall Street Journal. If you haven’t noticed the crazy action in the stock market in recent weeks and days, let me be the bearer of bad news: the major US indicators are down from their yearly peaks. You’ve probably lost some money on paper, even. Between oil in the Gulf, the Greece Drama, and even North Korea, there is a lot to be worried about. Here’s the thing – these are all known unknowns, and generally priced into the stock market already.
What should you make about the Mark Hulbert article claiming that top market timing newsletters are bullish heading into the new year? After a 27.76% increase in the value of the S&P 500 (not counting dividends) in 2009, how much further does the stock market yet have to run? And what does a bullish consensus among market timers mean, exactly?
How did you react to the stock market’s (defined, in my mind, as the S&P 500 index) recent precipitous drop? If you’re like many investors, you moved out of ‘risky’ assets such as stocks and into ‘safe’ assets such as money market funds and stable value funds. Unfortunately, the seeming safety of fixed income investments is a mirage… hidden forces, such as the danger of inflation, make ‘safe’ investments less safe than first glance. Paradoxically, the recent movement to safer portfolios has put many people at risk for a reduction in the real value of their money in inflation adjusted dollars.
As noted in a CNN article today, one way to gauge the market’s reading of current conditions is by reading the bond yields. Twice I’ve taken a look at how you can use Treasury Inflation Protected Securities plotted with the Daily Treasury Yield Curve to get a glimpse at the market’s inflation expectations (TIPS adjust their value due to CPI). Some other interesting ratios are presented, the treasury yield curve on its own, and the spread between junk bonds and government debt.
Ever made a mistake in investing? Yeah, I bet you have. I have too.
The reasons that investors make mistakes are numerous and hard to detail, but the Wall Street Journal took a really good shot at it today. Covering everything from the pain of selling at a loss to mental accounting, it’s one of the best personal finance articles I’ve read in a long time. Oh, and I read a lot. Everyone has biases which make mistakes possible, the question is how can we recognize them and adapt? Read on…
Master Limited Partnerships are publicly traded Limited Partnerships, most often investing in the extraction and transportation of raw materials. A limited partnership is a limited liability corporate structure which contains Limited Partners, and at least one General Partner. This gives the funds great tax advantages with liquidity advantages coming from their listing on a public exchange. The lack of understanding of MLPs also means they are a great place to start looking for market pricing disconnects and investment opportunities.
Unlike the swine flu, the personal finance bug is a relatively hard bug to get. Unfortunately (for them), far too many people avoid putting any thought into their future until that ‘future’ is right around the corner. Investing is a topic that comes up a lot when I talk with people. How you field open ended questions like “How do I invest in stocks?” is a make or break question in which you need to figure out before your trust is deserved. I’ve come up with a step by step method which I use to narrow my confidant’s thoughts and distill their true intentions. Read on, then leave me comments on your style.