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A Time to Be Thankful and Take Stock…

Top 5 of the Week of November 28

Kicking off this week is our Top Blogger of 2016 Ben Carlson, author of A Wealth of Common Sense and his take on just how bad bond losses could potentially get. David Merkel, writer of The Aleph Blog, writes of investing back during his childhood. And as we’re seeing out November, The Intelligent Investor Jason Zweig looks at what we have to be thankful for as investors.

Fortune Financial’s Lawrence Hamtil uncovers how long-term bonds can act more like stocks than you may realize. And Corey Hoffstein, CIO of Newfound Research asks if we should be worried about rising interest rates or not…

Could We See 2008-Like Losses in the Bond Market?


  • When interest rates rise to 3% or even 5%, investors may react emotionally—having no personal historical precedent to rely upon
  • Because of this they’re potentially setting themselves up to lose as much as 20%, 30% or even 40% in the bond market over the next few years with risky behavior
  • Predicting interest rate movements is incredibly difficult though, and higher inflation is more likely to have a bigger impact on bond performance instead

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Investing Back in the Day


  • People used to survive on an income from interest earned from bonds
  • In the 70s, bonds traded at a discount with low coupons—never over $100—by the late 90s they sold only at a premium and with comparably high coupons
  • Stocks used to be measured by dividend payout ratios but now we measure a company’s performance by their free cash flow
  • Now, dividend stocks are the favored trend of the moment but rising interest rates make them arguable as a source of ongoing significant income

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A Time to Be Thankful


  • With Thanksgiving just behind us, it’s a good time to take into account of what the market has blessed us with; the S&P up by 10% and low costs of investing
  • Back in 1992, 8% sales commissions were charged for mutual funds, with annual fees at 1% of assets
  • Nowadays, exchange-traded funds can be bought commission-free, with annual fees of 0.03%—the costs of buying and selling stocks are near zero

What are you thankful for in investing this year? Share your comments in the section below
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Long-Term Bonds Exhibit Same Degree of Volatility as Equities


  • It may shock investors to discover that bonds aren’t the “risk-free investments” they believe
  • Both long-term and intermediate bonds show similar negative parallels as the S&P over the last 35 years, ending December 2015
  • Investors in long-term bonds have weathered similar equity volatility for only marginally better returns and less diversification gain than intermediate bonds

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Investor Concerns and Interest Rates Are on the Rise


  • The recent leap in 10-year US Treasury rates during November from 1.83% to 2.36% has stirred worry among investors
  • Though some find comfort in the fact that rates have returned to where they were at the beginning of the year, many don’t
  • Despite some effects on short-term profits or losses, long-term investors will not likely be impacted by rate changes that occur during the overall lifetime of their investments

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Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.


Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!

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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.