Do you need a chuckle? Apple Friend Bar

New Apple Friend Bar Gives Customers Someone To Talk At About Mac Products

Earnings Season Almost Here

Interesting chart from Bespoke Investment Group showing stocks during off earnings season periods and earnings season . CLICK CHART TO ENLARGE
Earnings season starts on Monday with the release of Alcoa's results. Expectations are not as strong for earnings overall as they been in the recent past. This is a good thing. If they are even a little bit better than expected, it could push prices higher.

Guidance, where companies look down the road a bit, is also important. That's where investors will get clues on how the recovery (or lack of recovery) is proceeding.
Buckle up...it could get bumpy.

Disclaimer: Information is for educational purposes only. Investors should do their own homework or consult with an investment professional before making investment decisions.

Buy Maryland Bonds?

Maryland residents in the highest tax brackets may be curious about how to go about investing in Maryland municipal bonds. Here is an upcoming issue. Go to Buy Maryland Bonds and click on the "Enter site" button at the bottom of the page (after reading the page of course - assuming the first two paragraphs don't put you to sleep!) to get to their disclaimer page. Read the disclaimer.
Next, click the "I AGREE AND UNDERSTAND BUTTON".

This takes you to a description of an upcoming offering.: General Obligation Bonds, State and Local Facilities Loan of 2010, Second Series A.

The bond sale is expected to begin for the public on 7/23. At the bottom of the page is a link to a list of the underwriters of the bonds. To buy these bonds at the sale at no commission an account has to be opened with one of the securities dealers listed. Maturities range from 2013 to 2018 and come in denominations of $5,000. Preliminary talk is that the tax free yields may be as high as 3.50% on the longer maturity issues.

CAVEAT These are not discount brokers. Check all fees before opening an account.

Disclaimer: I am not affiliated in any way with any of the brokers/security dealers listed. This post is intended for informational purposes only. To determine if these are appropriate investments for you, consult a financial advisor.

Warren Buffett gives the key to successful investing

Are you investing in "low-cost index funds?" If you were writing rock-and-roll songs, wouldn't you listen to Paul McCartney? In trying to understand investments, shouldn't you heed the words of the world's greatest investor? The sad state of affairs is that millions of Americans are throwing away a good part of their nest eggs on which their retirement depends by overpaying charlatans who pretend to be market gurus!

Listen closely as the master recommends "low cost index funds."

How to Buy Bonds

How to Buy Bonds

The questions I am getting most often from investors these days are (aside from "Is now a good time to get into the market?") about how to buy bonds.

At the outset, it is worth noting that yields are low today; and most experts believe they will rise. When yields rise, bond prices drop. This is not much of a concern to many investors because they will still get their principal back ( there is, however, an opportunity cost) as long as they hold the bonds to maturity. And that is their main concern.

The process that will follow is covered in my 3 day face-to-face course . If it would help you to sit down with me to go over this, please give me a call.

The Process

You should begin by looking at the inventory that is held by your broker. For example, if you use Charles Schwab, putter around on their site until you find their inventory. If you can't find their inventory, call your rep and get help. If you're still stuck, drop me an email and I'll tell you what to click on.

Here we'll look at Zion's Bank. You should know I am in no way affiliated with Zion's Bank and receive no compensation from them. They are a source of bond inventory and, because the bond market is an over-the-counter market, it is always good to have alternative sources.

Begin by going to Zions Bank. Click "Investments." Click on their logo "ZIONS DIRECT." Click "BOND STORE" and then "SEARCH BONDS." Note that there is a $10.95 transaction fee to buy bonds--worth comparing to the fee charged by your broker.

At this page, you see a wide range of bond categories including "Municipal Bonds," "Investment Grade Corps.," "High Yield Corporates," and even "Treasuries." Incidentally, if you are interested in buying Treasury issues on an ongoing basis, you may want to check out Treasury Direct, where you can set up a commission-free account to buy Treasury issues in their regularly scheduled auctions.

Click on "Investment Grade Corporates". You come to:

CLICK IMAGE TO ENLARGE

Note the boxes I filled indicating desired maturity range, price range, etc. You can obviously put in other desired characteristics. At the bottom, I filled in all of the "exclude " bubbles; but, if you want to include callable bonds etc., you can do that as well.



Bond Inventory

Next click "Search." This produces:


CLICK IMAGE TO ENLARGE






You can edit your search and eliminate bonds, etc. One thing you want to do, just for edification purposes, is to click on "Build Ladder." There you will find interest payments specified, etc. This is almost equivalent to constructing your personal annuity.

Follow Up

Play around with the specifications. Look at the below investment grade offerings, and compare yields for different maturities. Follow bonds over time and see how their prices change as yields change. Go to the Fidelity site and see if you can find their bond inventory.

Disclaimer

This information is intended for educational purposes only and is not a recommendation for any specific investor.

Blue Bayou

Linda Ronstadt covers a Roy Orbison classic, as we reflect on the market.

YTD Performance-Blackrock Diversified Portfolio

In previous posts, we have looked at returns over the last 20 years for parts of the capital markets including international, growth, value, fixed income etc. as provided by Blackrock.

The value of the Blackrock data is it provides long term results, shows volatility explicitly, and illustrates the value of diversification.

The following table extends these results by showing year-to-date returns on the sectors of the diversified portfolio: Click to Enlarge.




The table shows the volatility of various sectors and the dampening influence on returns that results from diversification.

For the year-to-date period, the international sector has had the greatest underperformance at -13.14% followed by growth stocks at -7.71%. Bonds have played an heroic role achieving a return of +5.24%.

Overall, the portfolio is down -3.1% calculated as follows:

.3* 1.0524 + .11 * .8686 + .11 * .988 + .24 * .9229 + .24 * .9483 = .969 and

.968 - 1 = -.031

The returns are based on net asset value as reported by Morningstar.

To me, a benefit of simplifying and using exchange traded funds is the ability to easily track performance on an ongoing basis. Also, by playing with the numbers, it is easy to see the impact of altering the allocation by, say, moving 5% from international to bonds.

Disclaimer: the information here is intended solely for instructional purposes. Investors should consult an advisor or do their own research before investing. I hold some of the exchange traded funds mentioned.