On January pills online without prescription 9 , Silagra I provided a pessimistic assessment of prospects for the stock market, and Viagra online focused on bonds as a reasonable investment vehicle (My cheap Amoxil amoxicillin amoxil 2009 Investment Outlook – Part II). Events have shown my pessimism on the stock market justified. With respect to bonds, I cautioned against long Treasury Bonds (interest rates at an extremely low levels, making for undue risk). I also Buy Antibiotics medications was concerned about high-yield ("junk") buy buy viagra online discount cialis internet bonds. Even though they had performed outstandingly in the recent past, I felt that the market was not yet fully lasix amoxil buy online appreciating upcoming financial and economic and political risks. If these risks rose to the fore, Buy cheap Propecia Online as I anticipated was a real possibility, the riskiest asset classes, such as high-yield bonds, would suffer the most.
I did not review purchase viagra online | where to buy cialis | order online levitra tax-free municipal and Cialis Jelly state bonds, though thi
s would have been a good thing to do.
At least until recently, they have performed very well. I focused on Investment Grade corporate bonds, and I opined that propecia brand they represented a reasonable acomplia cheap buy amoxicillin online ampicillin buy balance between risk and reward.
My key conclusion:
"Though there are
risks, they can you buy viagra in stores seem reasonable compared levitra brand vs generic to the potential return from high-grade bonds. buy cialis tablets Historically high rates of default would need to occur to offset the difference in yield between corporates and Treasuries."
It is time to revisit the recommendations given then, cheap levitra generic especially in light of my recent research into the holdings of such bond funds. The risks of default for such bonds may indeed viagra sales be "historically high."
First, let’s look at the relative performance of the 3 types of bond funds since January 9:
Yellow= Long Treasuries Red = High Yield Corporates Blue = Investment Grade Corporate Bonds
First, buy cialis soft none have made money this year, but the losses of all have been much less than in Brand Levitra the stock market. Second, Treasuries did cytotec asthma relatively poorly in the early part of the period,
but have done relatively well as risk aversion has grown in recent weeks. Corporate bonds have declined somewhat more than the other bond groups buy penicillin in the period. What is noteworthy
is that they have declined significantly relative to Treasuries in the last few weeks.
When this last relative decline began, it finally occurred to me to ask "What percentage of the corporate bond funds are in banks and Financials?" It occurred to me because, as my regular readers know, I’ve been increasingly convinced that the only way out of the banking crisis is to restructure banks, including reducing the value of the bonds of these banks and financial firms (giving the bonds "haircuts", in the vernacular). Cialis Professional But, if bank bonds are marked down, this will seriously impact where can buy viagra the values of such bonds held by the big bond funds. I realized that my buyviagra | buy cialis overseas | buy levitra drugs view on the likely evolution of the banking crisis was inconsistent with my recommendation to hold corporate bond funds, if buy ampicillin cheap such funds held more that a few percentage of its assets in bank price levitra bonds.
I looked first at Vanguard’s Investment buy real viagra without prescription | buy cialis fast shipping | low price levitra Grade Bond fund, but could only find data for last August, an eon ago in the financial crisis timescale.
Still, what I found certainly caught my attention, because 25% of the fund’s assets were in the online ampicillin bonds of big banks — the banks that are now teetering Buy 0nline pharmacy Viagra, Buy Cialis, Buy Levitra Without Prescription on bankruptcy. This was enough purchase Order Kamagra online levitra online to make Viagra Jelly me not want to be in this fund.
Today, I looked into the holdings of iShares Investment Grade Corporate Bond Fund (LQD), Viagra Jelly perhaps the Buy VPXL Online Pharmacy No Prescription Needed most popularly traded such fund.
It had up-to-date holdings information (available here as an Excel file). The findings were shocking: a full 37.5% of LQD’s bonds were from major banks and financial institutions!
When one looks at what the generic nolvadex market thinks of the prospects of these companies surviving (many have stock prices in pennies and most of the others have prices in the single digits — down from over $100 in many instances), one can only throw up one’s hands in dismay that their bonds are still rated "investment grade." The rating agencies buy amoxicillin are a bad joke.
It seems highly imprudent to be holding one of the big, diversified investment grade bond funds at this time.
? Does the government have enough resources to accompl ish
it? I have serious doubts.
Is the Financial-Bond Time Bomb about To Explode? | Roylat.com // Mar 12, 2009 at 2:42 pm
[...] institutions are at a high and growing risk of forced markdowns in value (see my post, "The Financial Time Bomb .."). Analysts at BNP Paribas SA, as reported by Bloomberg, published the striking chart [...]