Q3 Update: You’re Up 125% On This Long Play

While reading through the survey responses many of you have sent in, I’ve been happy to hear how many of you have made money on our “big shorts” this year, as well as on our metals plays. That reminded me: it’s time for a quick check-in on our recommendations from the beginning of the year.

Interestingly, my longs are actually doing better than my shorts right now! (And you thought I was a permabear.)

In fact, two of our long plays are up 124% and 125% respectively since December 2015.

If you’ve been following along for awhile, you’ll know right away which ones those are. Congratulations if you own them. Drop a line in the comments to let us know how much you made.

By the way, a couple of our favorite short plays have now dipped 43% and 49%.

Here’s the full rundown… Continue reading…


Here’s Why High Yield Bonds Are Much Riskier Than Most Investors Realize

The high‐yield bond area has been a Petri dish for misapplied financial theories and assumptions for years.

High yield bonds are properly understood as hybrid securities that possess the characteristics of both debt and equity. Yet most investors in this asset class focus on the “spread” at which a bond trades. The spread is the number of basis points (1/100s of a percentage point) above a benchmark yield at which a bond trades. In the case of high yield bonds, Treasury bonds are considered the benchmark on the basis that they are riskless securities (an assumption that itself is questionable in view of the United States’ increasingly precarious fiscal posture). Spread represents the risk premium that investors demand for owning a security that is riskier than a Treasury bond.

And, as a method of measuring risk, it’s all wrong.

Here’s why (and how to stay out of the trap)… Continue reading…


View this page online: http://suremoneyinvestor.com/2016/08/heres-why-high-yield-bonds-are-much-riskier-than-most-investors-realize/