Sentences with phrase «equity yields because»

Specifically, the «Fed Model» — the notion that equity earnings yields and 10 - year Treasury yields should move in tandem — is an artifact restricted to the period between 1980 and 1997, when both equity and bond yields fell in virtually one - for - one lock - step — bond yields because of disinflation, and equity yields because of what was actually a move from extreme secular undervaluation to extreme secular overvaluation.

Not exact matches

Most investors shy away from bonds because they yield (or return) less than equities and tend to be more complex in nature.

This is especially true on the downside because high yield investors typically are «privy» to bank credit information — trust me, this is true, as our high yield desk was next to the bank debt trading desk and we were very friendly with each other — and can see when corporate numbers are deteriorating well in advance of equity analysts and investors.

In addition, dividend stocks often cause a stock to fall far less than non-dividend paying equities because they become «yield supported».

Their cost of capital is a function partly of low interest rates and part of the implicit share price is a function of the fact that investors have looked at equities for dividends rather than bonds for yield because the bond market is so expensive.

Also because of regulations, smaller retail investors have effectively been blocked from participating in higher - yielding investments — namely, private equity and venture capital, whose 10 - year compound annual growth rates have averaged 11.8 and 11 percent, quite a bit more than Treasuries, equities and other common asset classes.

Putting aside the performance of bonds during the bear market beginning in 1980 (both because the starting yields on Treasuries were so high but also because the bear market was relatively mild as the decline began from relatively low levels of valuation), what's interesting about the above chart is how dependably bonds protected a portfolio during equity bear markets.

The answer is: because rising yields on credit instruments have begun to put downward pressure on equity prices.

High yield bonds are interesting because they have some properties of Treasury bonds, and some properties of equities.

With fully two - thirds of its money invested in domestic and foreign stocks, private equity and «absolute return strategies» (i.e., hedge funds), the New York State pension fund has a risky asset allocation profile typical of its counterparts across the country — because chasing risk is its only hope of earning 7 percent a year in a market where the most secure long - term bonds yield barely 2 percent.

High yield bonds are interesting because they have some properties of Treasury bonds, and some properties of equities.

At present, the relationship between earnings and bond yields seems tighter because of the large substitution of debt for equity going on, but that's not a normal thing in the long run.

Because they are more equity - like, high yield bonds have intrinsic risk that is independent of the level of yields in high quality bonds, the leading example of which are Treasury bonds.

Color me neutral now, because the supply of cash to invest in high yield bonds, stock IPOs, and private equity is substantial.

International equities are the least tax - efficient (because they are not eligible for the dividend tax credit and they have a higher yield than US equities), so they should be the first candidate.

Because high - yield bonds generally have a substantial correlation to equities, it could be expected that the portfolio's beta would be approximately between 1 --(0.15 + 0.10 + 0.05) = 0.7 and 1 --(0.15 + 0.10) = 0.75, which it was at 0.73.

Over the (very) long run, equities out - perform bonds and cash, as is evident below, but may not be practical alternative to bonds for many investors, because of investment horizon, risk - tolerance, dependence on yield, or all the above.

Returning to Mr. Hibbert, he would appear to share this view: «Given that the starting valuation for equities is now very low, then if those companies can continue to increase their earnings profile I think you will see very strong returns because you will get both capital growth and dividend yield.»

We have high yield dividend equities — this is unique to Rebalance IRA — that we use a proxy for a bond fund because interest rates are artificially manipulated by the government and kept artificially lower than they normally would have been if the market had set those rates by its own market forces.

Because dividends from U.S. and international equities are fully taxable, you generally want to tax - shelter foreign stocks with high yields.

In hindsight, not a good argument, not because Treasury yields fell, but because junk credit spreads are more critical to private equity than treasury and high - grade yields.

Because they are compared some investors are led to believe that the equity owners» expected return can be estimated as the sum of the earnings yield plus earnings growth.

A Review of the Evidence, in which Fernando Duarte and Carlo Rosa argue that stocks are cheap because the «Fed model» — the equity risk premium measured as the difference between the forward operating earnings yield on the S&P 500 and the 10 - year Treasury bond yield — is at a historic high.

Also, like the Fortune column points out, the thesis that interest rates will inevitably rise, so bonds are a bad idea but stocks are now undervalued because of wide premiums over bonds is seriously flawed because if bond yields rise, it will be bad for bonds but the equity premium will drop as well, so it may not be necessarily good for stocks.

Putting aside the performance of bonds during the bear market beginning in 1980 (both because the starting yields on Treasuries were so high but also because the bear market was relatively mild as the decline began from relatively low levels of valuation), what's interesting about the above chart is how dependably bonds protected a portfolio during equity bear markets.

For them the negative yield isn't a big issue because the real value of the bond investment is not in generating yield, but in reducing risk by allowing them to get out of equities.

3) In any case, the idea that equity markets are currently risk free because the yield curve is not inverted is not supported by history, most recently in 2011.

Because I still have plenty of other potential buys lined up, both cheap & interesting, and I suspect we have a QE / bond yield - induced blow - off phase to come in the developed equity markets.

When yield spreads are very high, future equity returns are high, because returns come as spreads tighten.

Equities futures were pointing to a higher opening for U.S. stocks Tuesday morning as the 10 - year Treasury yield paused close to a level that apparently has concerned some market participants because of what it says about inflation expectations and the potential to dent corporate borrowing...

«That has really brought REITs back into the spotlight, largely because of their strong underlying performance and operating fundamentals providing the type of yield that a lot of investors are looking for right now,» says Edward Mui, a REIT equity analyst at research firm Morningstar.