How Bond Investing Can Still (Sometimes) Fail | WSJ
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- เผยแพร่เมื่อ 14 พ.ค. 2024
- Buying U.S. government bonds is among the safest investments you can make. In fact, people often put their college funds and retirement savings into bonds. In the midst of recession fears, bonds are often referred to as “risk-free” because there are only two ways you can lose money:
1.) The government defaults, which is almost certainly not going to happen, or
2.) You sell the bonds early at a loss, which contributed to the collapse of Silicon Valley Bank
This might make you wonder how safe bonds really are, so WSJ explains why they’re still a good investment.
0:00 Recession fears have caused investors to flee to safe investments
0:46 Savings bonds, the primary market and government defaults
3:36 Other government bonds, the secondary market and selling at a loss
WSJ Glossary
Markets and economics are complex. It's easy to be overwhelmed by a sea of wonky indicators and lose track of why they matter. This series breaks down the basic terms and ideas that move the markets.
#Bonds #Investing #WSJ
The most significant lesson I learned in 2023 from the Bond market is that predicting the future is uncertain for everyone. Therefore, it's essential to embrace humility and adopt a strategy focused on long-term advantage.
Nobody knows anything; You need to create your own process, manage risk, and stick to the plan, through thick or thin, While also continuously learning from mistakes and improving.
Uncertainty... it took me 5 years to stop trying to predict what’s about to happen in market based on charts studying, cause you never know. not having a mentor cost me 5 years of pain I learn to go we’re the market is wanting to go and keep it simple with discipline.
Could you kindly elaborate on the advisor's background and qualifications?
The advisor that guides me is Sonya lee Mitchell, most likely the internet is where to find her basic info, just search her name, She's established.
The most important thing that should be on everyone mind currently should be to invest in different sources of income that doesn't depend on the government. Especially with the current economic crisis around the word. This is still a good time to invest in various stocks, Gold, silver and digital currencies
The key to big returns is not big moving stocks. It's managing risk in relationship to reward. Having the correct size on and turning your edge as many times as necessary to reach your goal. That holds true from long term investing to day trading.
Even with the right technique and assets some investors would still make more than others, as an investor, you should’ve known that by now, nothing beats experience and that’s final, personally I had to reach out to a market analyst for guidance which is how I was able to grow my account close to a million, withdraw my profit right before the correction and now I’m buying again
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I personally work with 'Julie Anne Hoover’’ she covers things like investing, insurance, making sure retirement is well funded, going over tax benefits, ways to have a volatility buffer for investment risk. many things like that. Just take a look at her full name on the internet. She is well known so it shouldn't be hard to find her.
@@theresahv thank you for this Pointer. It was easy to find her handler Julie Anne Hoover , She seems very proficient and flexible. I booked a call session with her.
It was a very bad decision to remove the Glass-Steagall Act in the late 1990s, which led to the spectacular failure of huge banks during the financial crisis of 2007-2008. To prevent another disaster, Dodd-Frank and this statute both need to be reestablished right away. What happened with SVB is only the beginning of what will happen if nothing is done to address the current situation.
In my opinion, SVB was attempting to restructure their bond portfolio, which involved selling their low-yielding bonds despite the potential loss, and compensating for it by buying higher-interest-rate bonds on the open market.
Despite the economy's resilience thus far, the SVB scenario cautions that the effects of Federal Reserve rate hikes persist. During such periods, investors must remain alert to anticipate what comes next. It is not necessary to act on every prediction, so I recommend seeking the guidance of a financial advisor, which has been my go-to advice for some time now.
@@maiadazz I'm intrigued by your experience. Could you possibly recommend a trustworthy advisor you've consulted with?
@@tatianastarcic An experienced coach, such as Laurel Dell Sroufe, can provide valuable guidance in navigating volatile markets. Information about her can be easily found online.
@@richardhudson1243 What? lol. No they were just simply buying bonds becuase they don't know what else to do with the money. When interest rates go up, the value of bonds go down. They grew too fast for their own good. The only stupid mistake they made was that they bought long term bonds which caused a liquidity crunch.
It is a government inspired crisis this time. The Treasury have to sell Bonds to cover the trade imbalance and the government spending imbalance. In order to sell them they have to raise interest rates and the old long-term, low risk, low interest, AAA investments (including Treasury Bonds), held by the banks (often due to government regulatory policy), become next to worthless. The next milestone is the 15th when the government issue a new batch of Bonds. I have approximately 350k stagnant in my portfolio that needs growth. What is the best way to take advantage of this downturn?
Indeed, you are correct! Economic downturns offer numerous prospects for ordinary individuals to create wealth from the ground up. Nevertheless, seeking guidance from an investment planner might be necessary if you desire a more assertive return.
In the world of finance, rece-ssions are prime opportunities for wealth creation. When my port-folio suffered a significant loss in April of last year, I realized the need to enlist the expertise of a financial consultant. With her guidance, I have not only recovered from my losses but also generated a profit of 250k. The knowledge and skills I have acquired through this experience have been inval-uable in my journey towards finan-cial success.
@@duane_29 That's fascinating. How can I contact your Asset-coach as my portfolio is dwindling?
@@berkrix4312 My Financial adviser is ‘’Christine Jane Mclean’’ she’s highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market
@@duane_29 Thank you for this tip. It was easy to find your advisor. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
The FED raised interest rates, not the treasury
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.
For a successful long-term strategy you have to seek guidance from a broker or financial advisor.
With the help of an investing advisor, I diversified my $400K portfolio across markets, and I was able to earn over $900k in net profit from high dividend yielding equities, ETFs, and bonds.
Please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with them?
I just checked her up online, and I must admit that she has an extremely outstanding experience in investment. Thanks for sharing. I'm going to send her an email right away
I feel the bond between us
Even if bond yields are increasing while stock prices are decreasing, the markets are still skeptical whether the Federal Reserve will stick to its goal to raise interest rates until inflation is under control. While I'm still debating whether to sell my $401k worth of equities, what is the best way to profit from the present down market?
I advise you to seek professional advice because building a strong financial portfolio is more challenging. Your long-term objectives and budgetary preferences can be catered to in the ideas you get after that.
The best market strategy at the moment is working with a respected investment coach. I've been in touch with a coach for a time now, mostly because I lack the depth of understanding and mental toughness to deal with these ongoing market conditions. During this recession, I made about $700k, proving that the market is more complicated than most people think.
@@harod033 I need suggestions to assist me recover my portfolio and create more effective strategies because of the huge dips. How do I locate this coach?
@@harod033 Given that my stock portfolio dropped $390k only last week, this advise definitely came at the perfect moment. It is ludicrous. Ruth’s qualifications were recently the subject of some web scrutiny. I wrote to her detailing my objectives for the financial market because she looked to be highly knowledgable.
Nice video but to clarify, the treasury doesn’t increase interest rates. That’s the responsibility of the federal reserve.
So, just don't buy a bond you can not afford to hold to maturity?
That's why when we draw capm, the starting point is always on the y-axis above the origin.
You've taught me something I never understood how it worked.
Great introductory explanation of how bonds work. This should be taught in junior highs across the United States. It’s a great intro to risk and investing.
This is an excellent, well-accessible introductory video.
Thank you.
Thank you for video 😊
best video explaining
Do people say treasury bonds have no risk? SVB were holding long duration bonds wth no hedge (if I remember correctly). A poorly managed bank with no chief risk officer for the longest time. Entry level finance classes discuss the inherant risks associated with bonds compared to tbills. 0:30
didn't they hold near zero interest rate bonds that no one wanted after the Fed raised rates.. I guess that's the risk.
Commenting to appreciate your quality reporting and presentation style, WSJ. You guys rock. Keep up the great work!
This is a nice explanation. Thank you. Maybe explaining the world of bond trading could be next?
At 5:16, the journalist notes "the Treasury increased interest rates" which is not correct. The Federal Reserve, a separate and independent body, increased interest rates. Otherwise a great summary of the bond market and some Bond 101!
Nobody can become financially successful over night. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking bold steps we need in other to reach our goals.
BRIC'S isn't helping matters. According to some analysis, the United States and other regions of Europe may have a recession in 2023. Because china and emerging countries frequently grow faster than more developed economies, a global recession, which is defined as a decline in annual global per Capita GDP, is more uncommon. Fundamentally, if economic growth lag's behind population growth, the global economy is said to be in recession.
I will be glad if you can recommend your your financial advisor to me.
@@Wilfred_Bahman My financial advisor is 'MARIAM SANDRA MILNER'. I found her on a CNBC interview where she was featured Afterwards I reached out to her. she has since then provided me with entry and exit points in securities I focus on.
BRICS isnt a real group, keep falling for rightwing propaganda
BRICs simply isn't going to happen. A lot of the countries involved are at war with each other off and on
3:15 It sounds like the Ponzi Scheme
@Maline Maximus it isn’t.
There’s obviously risk, but as long as everyone doesn’t redeem at the same time, you’ll get your money
They own the prisons so issokay
The difference is that the US government has the power to keep them valid, not so much for the rest of the world.
Pretty much like every bank.
Even banks in best financial shape will collapse if everyone decide to withdraw their money at the same time.
@Maline MaximusNo there is actual investment and money coming back in from this. A Ponzi lacks this critical feature. In a Ponzi the schemer does not invest the money dies not generate a return they just put it in a big pot and use that to both keep the scheme running and pay themselves some money. That is the key difference.
In a Ponzi the pot is only filled with victim deposits where a bank or investment fund or what not has underlying assets that are filling up the pot ideally faster than customers withdraw if the pot gets empty it will eventually refill from investment gains or the underlying assets can be sold to fill it. But in a ponzi if the pot gets empty it all goes kaput.
Check out the story of how the Government of Ghana defaulted on its bond debts and bond holders had to suffer . Very Sad. Had me rethinking about investing in bonds
You're talking about a developing country, Ghana. If you're investing the majority of your net worth in a developing country that is rife with corruption and will likely have a coup, then you deserve to lose your investment..
This was helpful
bonds are worthless if the bond yield is lower than the inflation rate.
We must inspect the corporation to determine the homeland securities
The biggest problem here was why did Silicon Valley Bank feel that it had to sell the bonds and that was because they had made loans to people who could not pay them back because those companies were high risk or fraudulent
Volume?
The main goal is the services to each other in order to receive legal tenders
It is about the projects and developments must proper to earn big. They reckless in earning
SVB got greedy! They bought long term bonds while they should have bought short term ones!
3:33 that can’t really raise taxes, or decrease spending to where they would not have to print bonds
The Federal Reserve is not the Treasury. Was that a Freudian slip?
It is about the workers and the productions and services and education. That why we lend monies to let the government handle. There are short term bond and long term bond and mid term bond. It is not for bankruptcy
Great explanation ❤❤❤❤
Enough about government bonds. Time to talk about James Bond. 😎😎😎
This is a masterful creation; akin to a book that was lauded for its storytelling. "The Art of Meaningful Relationships in the 21st Century" by Leo Flint
The corporation and the health these are the main goal that why we do the funding.
You must choose right in order control inflation and earn and security. These 3 must in plan. It is the goal. It must be in set
So... correct me if I'm wrong but if you always need new money coming in to pay the old investors interest/mature bonds... isn't that a ponzi, I'm not trying to be smart, so.eone correct me here isn't that the exact definition of a ponzi???
yes, how do u think this world can going into this rapid growth without debt
The stock we trade for monies but we also need supplies. If trade huge lost we deal with debts
Guess what a Federal Reserve dollar bill is an I O U as well!
Nube here..
Why does the bond value drop when interest rates go up?
Let's say you have bond A is trading at $1,000 and the coupon rate is 5%. Fed increases interest rate. A new bond also trades at $1,000 but yield 5.25%. Now you can't sell your bond for $1,000 anymore because someone else can use the same $1,000 to buy something yielding higher return. so you have to lower your price to maybe $950. Value and yield of a bond have an inverse relationship.
2:58 yes just as everyone thinks congress has your best interest in mind.
Volatility of the gold market is oblivious . A Bond is another good investment scheme
Our corporation they have mission. Our leader we elect has purposes.
we love bonds
how? if there are no wars
There are lots of reasons to borrow
The workers fund the corporation. Because the workers and the communities have the need.
All of those it is no absents services
If you treat them as fixed term, you have nothing to lose
Wow
The interest rate rise the public obligation to protect the treasury department and the federal reserve
The federal reserve hold bank notes
Even it is the Pennie investment
Keep it printing it ! And endless cycle
Sounds like a Ponzi Scheme.
Within 9 hours!
Fun fact: The Captain America character was invented to sell war bonds originally
3:19 has the hallmarks of a ponzi
Time is money, friends.
Because we need reorganizing
Shut up
So it sounds like the only reason that SVB failed was because it made poor investments. When my business made poor investments it closed. Why is SVB open, and when were these decisions made not to close?
Because SVB was sold and the new owner covered the obligations
At 3:15 to 3:26 doesn't that sound like a Ponzi scheme?
true
Only if you can’t raise taxes or cut spending on your people. New treasury buys are one way of income, but gov have other ways. Like taxes or selling off military equipments.
The bond protect corporation but it is a so protect retirement group
all empires collapsed due to overspending
Without corporation and treasury department and federal reserve. We have inflation.
While we encourage the federal go after the crime as well
You can earn big but fail supplies as well as fail homeland security
We do plan military and job training and corporation and bank these things can not because the Bric we fail
The Enron before the company bankruptcy it is have huge earning It use the huge earning to gift to someone. Now it is going to bankruptcy.
They just described a ponzi scheme and makes it sounds like its ok and safe.
Government “cut spending” 😂😂😂😂😂 where did this kid get his education.
Because if it is weak our corporation also weak
Why not buy bond from corporation.
About the current bank situation, I'm really concerned. I am worried about a lot more if a bank the size of SVB may fail. I have a friend who manages a fast-growing startup and was severely impacted by the bank run. I have taken more than $840k out of my bank. Since the FDIC only provides coverage up to $250K, an implosion could have negative consequences. presently want to invest in the stock market. Does anyone have any ideas on how I might proceed?
You are late. All the bots finished up early and went to the 🍿 movies.
The bond it has corporation the goal to save corporations
0:23 "somewhat you take a bit of a gamble" what sentence structure is this
Some let*
Cheers
What can you do better. If you do not want to go after the crime
Long LIVE Indian American Friendship And Mutual Understanding
We will print monies if bank cheat if corporation cheat if industries cheat or if investors cheat
Svb it is support the network corporation. They stop support we have homeland securities more mess up. And businesses more mess up
They open corporation to raise fund.
To protect the federal we expect must go after the crimes
They just want the currency but no services
As corporation fail and bankruptcy too many the retirement all no fund
3:11 A bit Ponzi scheme-like.
Only if you're Lebanon
Inflation is the real risk to bonds.
Yes, but the point of the video is to explain why some banks are having a problem
Inflation is a risk to every asset class.
@@spacetoast7783 Yeah, but it's said that over the extreme long term (centuries) bonds and stocks are all the same because inflation and market crashes and taxes and such.
There’s no denying that bonds are safER but with the amount of debt that the US have and the real possibility of a default or if they don’t raise the debt ceiling this summer (having to raise it is bad enough). Well they are not as great as they used to be
The U.S. is one of 2 countries with debt Ceiling in the world.
The rest of the world don’t have it
So u don’t hear of it even if the countries have gone over their budget.
Most of US debt is treasuries by foreign governments & foreign nationals which means people & governments around the world trust the dollar
Not being an expert I think that right now the dollar will still be the most important currency, it doesn't mean that it is safe though
I'm also concerned about the level of debt of my country (Spain), which I think that is 113'2% (1.502.543 millions of €). That is NOT sustainable. A bit of debt is good for the growth of countries, business, etc, too much of it becomes a liability
From my "non expert" point of view having that much debt (expending recklessly) can't be what governments continue to do because it will get out of control sooner than later. I'm ashamed of how the governments of my country (of EVERY party) have mismanaged the economy until this point and I think that ALL the countries MUST put their numbers in order to prevent a catastrophe
@@lopezjuan316jl very well said & good points.
@@KCKnowsBest Thank you :)
Those are not my points, it is what I understand from experts talking about the matter
Most people aren't concerned about this and I think that it would lead to it not being "properly attended", the snow ball will grow, etc
According to them this will not explode in the near future but it will and as I'm still young it will be my problem (as well as other people problem) and it would be easier to be solved If we start controlling the debt now
The reason why the US will never default is because of this; the US owes all its debt in US dollars, which they can always print more of. So the risk isn’t if the US will default or not, it’s how high inflation will be when they need to pay back this debt.
Another thing is that people honestly don’t want the US to pay back their debt. Institutions, individuals, and foreign governments love owning US debt because of the interest it gives them. So it’s not like people are going after the US trying to get them to pay their debts. They’d rather holds the bonds and collect the interest from a stable government (relative to the rest of the world) that has no risk of collapsing any time soon.
This is how I see it as an economics major but I could be wrong so lmk what you think.
I find myself at a crossroads, uncertain whether to liquidate my $150,000 stock portfolio. I'm seeking advice on the best strategy to capitalize on this current market.
Well the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals
Yes true, I have been in touch with a financial advisor. With an initial starting reserve of $80k, my advisor chooses the entry and exit commands for my portfolio, which has grown to approximately $550k.
who is your coach if you don’t mind me asking.. heard a bit about coaching where investments are done in personal trading account with the help of a license advisor, is this right?
Absolutely, Monica Amanda McClure is my portfolio coach, and my trading account basically mirrors that of hers, it's quite transparent and automated, so I don't have to be active during trades. You can vet her if you like.
I searched her name and her website popped up immediately on google, interesting stuff so far, about to schedule a session with her.
This explains that bonds are a pyramid scheme but still safe...😅
So someone betray make fail or liar. We are in huge problems
This guy just woke up before the video
That’s what you get for asking such softball questions.
We have company bond they raise fund and support. We have government bond because we deal with crook and crime. We better follow up to know who they are or they repeat cheat and rob
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Then we never have recession
That Sam Goldfarb sounds like a typical establishment pundit.
If no services then no care in trading that the cause recession
lol