Tag: investing

Abnormal Returns: the education of a young investor

| May 2, 2012 | 4 Comments

Graduation season starts this month. Thousands of young people will soon receive a diploma in one hand, and a notice to start repaying their student debt in the other. (There’s now more than $1 trillion in student debt outstanding.) At the same time they’ll find themselves competing in the jobs market with graduates from previous years: research shows that almost 54% of newly graduated bachelor’s degree-holders under the age of 25 last year were jobless or underemployed, the highest share in at least 11 years. The message is getting clearer by the day: we urgently need to rethink the kind of education that we encourage young people to pursue, and the costs and returns thereof. How do we give young people entry-level access to challenging professions that will allow them to earn adequate lifetime incomes? Technology and entrepreneurship belong to this category. Does investing belong there as well? Continue Reading

The dumb money and the “walking dead”

| February 15, 2012 | 0 Comments

Show of hands: assuming that you have a pension fund, how would you like it if your old age money was invested in something called the “walking dead”? Sound good?

The “walking dead” is how investors are referring to companies that were leveraged to the hilt by a Romneyesque retinue of private equity firms. Their bonds are very much in junk territory, and they’re now rallying because investors can’t find enough returns elsewhere. Continue Reading

Weekend wrap-up: 1/9 to 1/13/12

| January 15, 2012 | 0 Comments

Here were the most popular posts from this week. Check ‘em out, plus our GIF of the week after the jump!

  1. So what’s the dumb money doing right now?  Newsflash: there’s no investment fairy flying from asset manager to asset manager sprinkling higher ABS yields on the undeserving.
  2. Truth and “truthiness” in TARP. The latest TARP report looks at the lifetime costs to U.S. taxpayers and also showcases the Treasury’s naughty side.
  3. How we went from CDO to CD “No!” There’s a new study out that attempts to understand why so many collateralized debt obligations (CDOs) failed so spectacularly.
  4. Is it time for Uncle Ben to raise the roof? Is it time to prepare ourselves for a return to a less accommodating interest rate environment?
  5. The SEC does it again. Is there any government body having a harder time of it these days than the SEC?

Continue Reading

So what’s the dumb money doing right now?

| January 11, 2012 | 1 Comment

By Katcha on Flickr

My eyes started to bleed when they fell upon the following Bloomberg piece:

Sales of bonds backed by everything from timeshare rentals to shipping containers to entertainment royalties are poised to rise this year as investors seek to boost returns with interest rates at about record lows.

So-called esoteric asset-backed securities issuance may soar 12.9 percent to $35 billion, compared with debt linked to more traditional collateral such as auto and credit-card loans, which will grow 8.75 percent to $87 billion, according to a forecast from Credit Suisse Group AG.

Barclays Capital, Citigroup Inc. and Wells Fargo & Co. are directing investors toward the debt[...].

“The ability to pick up incremental yield while not taking additional risk makes esoteric ABS attractive,” [Cory] Wishengrad, [Barclays Capital] co- head of securitized products origination, said in a telephone interview. Continue Reading