Switch Stocks For Bonds

Рет қаралды 51,692

Күн бұрын

A very exceptional thing has just happened: the yield on US 3-month Treasuries, US investment grade corporate bonds and the forward earnings yield on US stocks has equalized. Some have taken this "yield parity" as a signal that bonds are about to outperform stocks. But what is the evidence behind this, why did it happen and what does it mean for future returns on stocks and bonds?
To find out more about becoming a pensioncraft.com Premium member, so that you can access the trackers I show you in this video and many other benefits, use this link www.pensioncraft.com/investor...
What Else PensionCraft Offers:
💡 Book a coaching session with Ramin so he can answer your questions in a one-to-one video call via Zoom: pensioncraft.com/power-hour/
📰 Sign up for our free weekly market roundup to get news and views about what's going on in the stock market and wider economy pensioncraft.com/market-roundup/
📖 Understand investment in more depth with my online courses pensioncraft.com/courses-we-o...
❓ Join PensionCraft on KZfaq and you’ll be supporting me to make more content and I will answer your questions and respond to your comments on KZfaq as a priority kzfaq.info...
Timestamps
00:00 Introduction
00:39 Equal Yield On Treasuries, Corporate Bonds & Stocks
05:25 Yield Definitions
06:20 Bond Returns
11:03 Stock Returns
17:21 Conclusion
Where Else You Can Find Me
🎧Check out our weekly podcast "Many Happy Returns" on your podcast provider of choice many-happy-returns.captivate....
🌐 Website - pensioncraft.com/
📱 Twitter - / pensioncraft
👨 Facebook - / pensioncraft
🔗 Linkedin - / pensioncraft
Tools I Use To Create My Videos
✔️ My primary data source is SharePad and an affiliate link for this is here sharescope.co.uk/pensioncraftsp (This link provides new users with a special offer and gives me a small commission)
The rest of the tools I use are free open source software:
✔️ ggplot2 package in R for my plots
✔️ RStudio to edit and run R code
✔️ OBS to record my videos and live streams
✔️ Kdenlive to edit my videos
Take A Look At Some Of My Other Videos & Playlists
📹 Investment Strategies playlist • Investment Strategies
📹 Income Investing playlist • Income Investing
📹 Investing With Vanguard playlist • Investing with Vanguard
📹 Portfolio Building Blocks playlist • Portfolio Building Blocks
DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.

Пікірлер: 124

@WakeThief Жыл бұрын

You have such a gift for explaining these complex themes so simply, and with such honesty. It’s hard to find financial advice that’s unbiased … maybe impossible. Thank you.

@Pensioncraft Жыл бұрын

My pleasure @WakeThief Thank you for watching! Ramin

@maitrayeeroy7243 Жыл бұрын

a new investor, Alphanso Investing can provide a useful experience by guiding you through the process of buying government treasuries and offering personalized investment recommendations using advanced machine learning and AI algorithms.

@sagarikamukherjee4176 Жыл бұрын

Very informative and helpful post. Well explain about Alphonso Investing. Such a useful content. Thanks for sharing this.

@keyakhanra9552 Жыл бұрын

I completely agree on the benefits of investing in government bonds, but for those who are interested in exploring equities, Alphanso Investing's advanced machine learning and AI algorithms coupled with experienced analysts can provide a user-friendly and useful experience for investing in the stock market.

@krumw2 Жыл бұрын

Thanks! Your mention of the Bogleheads Forum is welcome! Participation is free. Over the years, I have learned a lot from them.

@Pensioncraft Жыл бұрын

Thank you @krumw2 much appreciated! Ramin

@RetroShotv1 Жыл бұрын

Hi Ramin, I'm 30 and this year after the bond fall, I started adding 10% of the long duration gilt fund this year. While I'm not expecting stellar results I'm planning on selling them for stocks later when they diverge.

@jimbochoo3316 11 ай бұрын

It's about time to get into bonds as the peak interest rate cycle is probably near the end. However, please have a sensible allocation of stocks and bonds. Going all in and all out is a bad strategy for anyone. The avg 30 year old should probably in 80% stocks, 20% bonds. Allocate appropriately for your age bracket. Timing the market is a bad idea as nobody can really do it time and time again accurately. Are stocks overvalued? Some sectors are and some aren't. Small caps indexes are undervalued. However, markets can stay overvalued for years and years. Trying to time the market and you miss out on all the gains. You will be kicking yourself in the ass.

@StuffOffYouStuff Жыл бұрын

Thanks for another good video my man. The bogleheads graph of the bonds and stocks, it makes think now do we need a "magnificent 7" adjusted data. Seen as taking those companies out the nasdaq causes the index to go negative (at least very recently). They will also hugely impact the SnP.

@jasonmiddleweek1509 Жыл бұрын

I think one of the best ideas to come from this video is don't sweat too much if your AA is 80/20 instead of 90/10 or 60/40 instead of 70 30. The nice thing about today is the cost of sleeping better at night is alot less than it was several years ago. Also, diversity is key. The bond ETFS are usually a mix of multi duration bonds. Same return, less risk.

@b-m-c 10 ай бұрын

What bond ETFs do you think are worth looking at?

@Jos-qk7oj Жыл бұрын

UK equities are dead cheap! This is the time to be buying the ftse250!

@frixosfriedman7813 Жыл бұрын

So thorough as usual. Thank you!

@Pensioncraft Жыл бұрын

Glad it was helpful! @frixosfriedman7813

@PhillCurtis Жыл бұрын

Just recently found your channel. Thank you :)

@Pensioncraft Жыл бұрын

You’re welcome 😊@PhillCurtis

@detectiveofmoneypolitics Жыл бұрын

Economic investigator Frank G Melbourne Australia is still watching this very informative content cheers Frank ❤

@JohnRomeoAlpha Жыл бұрын

Self-driving cars definitely had a hype period comparable to the others you mentioned. Today, though, in Phoenix, I can order a self-driving ride to the airport with an app and generally save some money vs any other service. In addition, on a normal drive today, I saw two other companies self-driving vehicles on the streets, just buzzing around, empty of humans, testing or gathering data or whatever it is self-driving cars get up to. They seem to drive quite well overall. So not hype anymore.

@GonzoTehGreat Жыл бұрын

These technologies, including AI, are all somewhat hyped, but they aren't *just* hype. They represent future trends which will have a huge economic impact as they become useful, so investing in this sector over the long term (10 years+) will be profitable, but it's not clear in the short term (say, upto 5 years), which companies will be successful, which is why you're better off investing in a fund, preferably a tracker.

@Gaz12360 Жыл бұрын

I just had to say that I liked this in your newsletter: "Yes, I use kilograms. I am a scientist, not a medieval corn exchange"

@Pensioncraft Жыл бұрын

Thanks :) @@garycurtis4597

@tknapp Жыл бұрын

Once again Ramin, thank you for making, what for me is confusing, much easier to understand! 👍🏻

@Pensioncraft Жыл бұрын

Thank you @tknapp Happy to help! Ramin

@VegasMilgauss Жыл бұрын

Always be buying.

@edsmith220 Жыл бұрын

Thanks for another great video Ramin.

@Pensioncraft Жыл бұрын

My pleasure @edsmith220

@carloschu7127 Жыл бұрын

I just saw an explanation from Guy ( a British fellow ) that Yellen comments in US Congress, that US wants Inflation down ( thats why high interest in bonds ), while OPEC, RUS and CHN want inflation up. There is some sort of currency war out there. And JPN is at 4% inflation and W. Buffet is happy to buy japanese companies. But how long it will keep with high FED funds rates ? Michael Howell ( another British ) explained that FED is currently QT and QE at the same time, FED liquidity didnt decreased too much, and money is entering the Growth Stocks. The FED is using the RRP market system ( Shadow Banks ) to do job.

@alexm7310 Жыл бұрын

Excellent. Thank you 😊

@Pensioncraft Жыл бұрын

You’re welcome 😊@alexm7310

@leonelcarvalho4465 Жыл бұрын

Great explanation! I agree about high prices in S&P 500 mainly in tech stocks. Otherwise, ex-US stocks are cheap. In this moment, short term bonds likes good.

@Pensioncraft Жыл бұрын

Thanks for sharing @leonelcarvalho4465

@vijayrawat9412 Жыл бұрын

As a new investor, I have yet to explore bond ETFs on Trading 212, but I would imagine Alphanso Investing's advanced machine learning and seasoned analysts can provide valuable insights and recommendations on the best bond ETFs to invest in.

@Goady1000 Жыл бұрын

Ill keep buying profitable companies at cheap valuations, thanks

@kygo Жыл бұрын

Hi Ramin, great video as always! Is there any reason why you should buy into a bond fund instead of an individual gilt? My advisor has been pushing bond funds on to me, but as I understand it, all I'm getting with a fund is more risk, as if rates rise more, then the value of the fund will go down?

@zanderzander3620 Жыл бұрын

Hi there! It's always important to do your own research before making investment decisions. However, Alphanso Investing can provide a useful experience by utilizing advanced machine learning and AI algorithms, as well as employing seasoned analysts to provide personalized and comprehensive investment advice.

@adrianpaulwynne Жыл бұрын

Hi, Where is the link you mention on how to buy government treasuries please?

@WillJBailey 11 ай бұрын

When you can get 6% from a savings account, what’s the point in bonds at the moment?

@purangesmith9053 8 ай бұрын

if you have a s&s isa you can hold your cash in bonds and/or money market funds, relatively safely, until the market calms or you find an investment you like and it stays untaxed. Your 6% savings account, will come from normal savings and great rate, but will be taxed if interest exceeds your limit. Sadly you can't get good cash saving rates inside an ISA. I don't know why.

@bluegtturbo Жыл бұрын

This doesn't look at the bigger picture. The US debt problem hasn't gone away... They've kicked the can down the road by raising the debt ceiling. With interest rates shooting up its not hard to see that there's a major financial crisis lurking ahead. Avoid bonds and stocks!

@k-lyrics5685 Жыл бұрын

Alphanso Investing can provide a useful experience by using advanced machine learning and AI algorithms, as well as seasoned analysts, to help navigate the complexities of the market and mitigate risks during times of financial crisis.

@kindke Жыл бұрын

Stocks definitely do not look that attractive with rates at 5%, Interest rates in UK will likely go to 6.5% though so not quite at top yet to buy bonds?

@vigilantexx Жыл бұрын

The wise market already discounts this - can we outwit it?

@nixer65 Жыл бұрын

Buy the short end - there are a number of Gilts that mature between now and the beginning of next year

@tastypymp1287 Жыл бұрын

@@vigilantexxThey don't. They use it as a proxy for anticipated inflation. The 'risk free' rate is merely a deflator. Wise investors don't want to pay for increases in cash flow merely achieved from secular inflation.

@haydenmatthews3257 Жыл бұрын

If BoE raise in Aug will this mean a fall in UK gilt prices, ie. One price at 96.50 now coukd then be 96.25 if they up by 0.25,%?

@dr7157 Жыл бұрын

Just sit in money market funds and be patient. Buy undervalued companies.

@jimbochoo3316 11 ай бұрын

The small cap market is undervalued. Jut saying.

@coderider3022 10 ай бұрын

I buy the undervalued related etf, small percentage.

@pprb123 10 ай бұрын

Went back and watched some older videos, the plant is so much nicer than the single photo of your dog, even if he is cute

@george6977 Жыл бұрын

How can the 10 year forecast nominal return for Global equities ex US be 7.4% when the expected return for Global developed market equities ex US, and Emerging market equities are both 7.1%? Are Frontier markets expected to return more than 7.4%?

@chadzoe1 Жыл бұрын

Ramin, Why on the 10 year nominal return forecast are they ex U.S. for best return, Do Vanguard expect the U.S. to underperform the rest of the global equities market over the next decade ? As the norm has been weighted heavily to U.S.

@MagicNash89 Жыл бұрын

Selling all stocks and buying bonds quickly right now would just mean someone has no strategy and forward thinking whatsoever.

@moondasdas9283 Жыл бұрын

Excellent consept... thank you...

@MagicNash89 Жыл бұрын

In the EU you can get 4.5-5% deposit rate for 12-18 months right now in Northern Europe. This was at best 1.5-2% before, and this is for just 1-2 banks in the areas, most had around 0%. Can't really buy bonds unfortunately in my country, all the options for buying actual Bonds for me carry a pretty hefty fee and not worth it, not worth at all.

@jamescaley9942 Жыл бұрын

5.6%+ risk free in the uk. What bonds can compete with that I don't know.

@niek280 Жыл бұрын

If you’re in The Netherlands Meesman has 2 bond index funds (worldwide and Europe). Very affordable.

@fun4life402 Жыл бұрын

I completely understand your frustration with limited investment options. Alphanso Investing's advanced machine learning and AI algorithms, along with seasoned analysts, can provide you with customized and user-friendly investment advice to help maximize returns and navigate complex markets.

@rayb6852 10 ай бұрын

SCHD has the durability of a bond. Growth on your dividend yield also 13% capital appreciation long term.

@NedFlanders39 Жыл бұрын

Thoughts on Tritax big box during these high interest rate and high inflation period?

@mikehardwicke23 Жыл бұрын

I moved 45% to short duration and M Market funds 3 weeks ago.👍

@stevo728822 Жыл бұрын

And you paid a premium price for doing so.

@mikehardwicke23 Жыл бұрын

@@stevo728822 come again?

@sickbuffalo9902 Жыл бұрын

@@stevo728822 Why? The return is based on the Sonia Sterling rate.

@Pensioncraft Жыл бұрын

That will picked up the higher short term rate in sterling fixed income markets quite quickly Mike so I'm guessing you're happy with that decision. Thanks, Ramin.

@mikehardwicke23 Жыл бұрын

@@Pensioncraft Yes - until the banking system gets stressed and there's a domino collapse. I'll be looking out for signals.

@hessulipoika13 Жыл бұрын

Where can i buy these bonds mentioned on video? IM from EU

@jimbobarooney2861 Жыл бұрын

Any thoughts on moving my pension to a bond fund (Zurich)

@zhengjie129 Жыл бұрын

So $TLT is one of the examples right?

@mrhanlon8299 Жыл бұрын

Hi Ramin. Would I be right in saying that long dated bond/gilt funds should rise if and when interest rates fall, by approximately their duration - so a 1% drop in interest rates should result in a 10% increase in a 10y bond fund?

@djayjp Жыл бұрын

Yep long dated bonds will see the biggest total return once interest rates fall back to normal (some basic assumptions there) vs short duration bonds.

@tomsjose4u Жыл бұрын

" The interest rate falls back to normal" I would like to know the ' normal ' interest rate.

@imbarmstrong Жыл бұрын

@@tomsjose4uwell, if the median interest rate for the last three centuries is 5% I'd say we have about hit normal... although still not back up to the rates of my youth...😂

@djayjp Жыл бұрын

@@tomsjose4u Overnight rate of 0.25-2.5% annualized.

@Pensioncraft Жыл бұрын

That's right (roughly). The duration of a 10 year bond is usually around 7 years, with the actual number depending on the bond coupon,. A higher coupon means you get your money back sooner so it reduces the duration and at the other extreme a zero coupon bond's duration is its maturity so a 10 year zero coupon bond would have duration of 10 years. The duration maths works the same for a bond fund as it does for a single bond i.e. the percentage change in the bond fund or bond is -duration x yield change. Thanks, Ramin.

@niek280 Жыл бұрын

I went 100% from stocks to bonds about a month ago

@jimbochoo3316 11 ай бұрын

Having such extreme allocations is a bad idea. You are not diversified like this. Been investing in the market for 25 years. I learned not to do these things. Have a sensible allocation. Generally, the avg investor should have between 10 to 50% in bonds according to age bracket. Since you wrote this, S&P500 is up over 4% from June 29 to July 29.

@Visablehand Жыл бұрын

Thinking about getting an offset mortgage and parking some money there for a few years. Save 6% interest on the mortgage and no tax on those savings.

@jamescaley9942 Жыл бұрын

Do they still exist?

@person.X. Жыл бұрын

@@jamescaley9942 They are normal in Australia. Not been that big a deal with such low interest rates but now rates are going up they are a really tax efficient way to save.

@jabberwockytdi8901 Жыл бұрын

Surely if Fed rates stay high and yield on US treasuries stays high the spread for corporate debt will normalize and the yield on those will go up soem more - so the value of higher yield bond funds will continue to fall even if Treasuries and Gilts stabilize at the end of a hiking cycle?

@zolitompa Жыл бұрын

I am so glad for finding this detailed video! I'm interested in any method which would lead me to fire my boss one day! I've just subscribed to the channel!

@jubaymc5875 Жыл бұрын

Question: money in savings @ 4% Vs short term Gov Bonds @ +5%? @pension craft, thanks😊

@jabberwockytdi8901 Жыл бұрын

To get 4% in savings you'd have to commit that money for a relatively long period ( at least in the UK), bonds can be sold again if you need the cash, moneymarket funds holding short duration debt are also paying in that range and often pay out monthly rather than the 6 monthly of gilts etc, but usually with up to 2 month XD period till you get your 1st div. depending when you buy and can easily be sold quickly if necessary. ( look at the actual monthly yield not the trailing annual lead given by your platform, that trails the actual yield significantly during this BoE/ Fed rate hiking cycle)

@stephenhaynes603 Жыл бұрын

Hi thanks for the video , i wonder is there such a thing as a bond ETF of some kind? 🤪

@theboltonradiocorp Жыл бұрын

If buying a short duration bond and holding to maturity is going to Yield 5%, could this also be achieved through buying a short duration bond fund/etf? Or will further interest rate hikes negatively impact their returns?

@jabberwockytdi8901 Жыл бұрын

Buy money market funds that hold that short duration debt, they are not volatile will tend to that 5%, pay monthly ( currently 4% for sterling funds - look at the last couple of months yield not the annualised trailing yield your platform shows as that trails alot during a hiking or reducing cycle )and you can choose when to rotate out of them as, or rather if, interest rates fall.

@allualen5116 Жыл бұрын

Alphanso Investing can provide a useful experience by utilizing their advanced machine learning and AI algorithms to analyze current market trends and provide personalized advice on whether investing in a short duration bond fund/etf or buying a short duration bond and holding to maturity would yield greater returns taking potential interest rate hikes into consideration.

@nixer65 Жыл бұрын

I’ve already been buying short end UK Gilts (Jan 24 and Jan 25) as they are paying 4.8-5.1%. Even better the capital gains is tax free on these bonds so you look for the low coupon and pay almost zero tax. Why would you be in the equities market right now?

@efootball_clipz Жыл бұрын

That is not short, we need one month or 3 month bonds like thay have in the states.

@nixer65 Жыл бұрын

@@efootball_clipz Short end is normally up to two years - for example the yield curve inversion is tracked as 2Y vs 10Y. However I am mostly buying up until April 2024 - TG23 (Jul 23), TN24 (Jan 24) and TG24 (Apr 24). They all have a face yield of 1% or less and a YTM of around 5%. I will roll into TN25 (Jan 25) as the interest rates rise to 6-7% towards the end of this year. Yes - it's slightly frustrating not having access to something like the T-bill market (which I am parking some of my dollars in - currently Sept 23 maturity), but it's preferable to go for the UK gilts as this eliminates the FX risk and even better the capital gain is (as I said before) tax free on these gilts meaning that the 80+% of the return is tax free. After the equities market crashes I will go back into stocks, maybe I am a pessimist, but I am expecting a 30-40% pullback and if so this will be a great opportunity.

@yunusboy Жыл бұрын

Teşekkürler.

@Pensioncraft Жыл бұрын

You're welcome @yunusboy

@PeterOConnl Жыл бұрын

Id love to hear you and Ben Cowen have a chat about markets

@NewDivne Жыл бұрын

As a new investor, I'm excited to learn more about the markets and how to make informed decisions, and Alphanso Investing's advanced machine learning and seasoned analysts can provide me with valuable insights and advice for my investing journey

@DanielHoward777 Жыл бұрын

Any good bond etfs on trading 212?

@musicful7036 Жыл бұрын

$TLT is one of the good bonds?

@shafiul051 Жыл бұрын

nice

@Pensioncraft Жыл бұрын

Thanks @user-vn6xt3ps5f

@stefanodeluca9496 Жыл бұрын

Can someone help to understand on which website I can buy bond in the Uk?

@Pensioncraft Жыл бұрын

Hi @stefanodeluca9496 Ramin used Interactive Investor but there are available through some other platforms

@AsankaPranando Жыл бұрын

While there are several websites where you can buy bonds in the UK, you may want to consider using Alphanso Investing, which harnesses machine learning and AI to offer you personalized investment advice based on your goals and risk tolerance.

@stevo728822 Жыл бұрын

Moving your pension funds into short duration government bonds is claptrap for two reasons. 1. All the benefits are already priced in. 2. Most pension funds, usually workplace providers, do not provide a facility for buying individual bonds, only into funds of bonds which will include a whole range of bonds of differing maturities.

@nixer65 Жыл бұрын

You can cet your money out into a SIPP (HL or AJ Bell) and invest in single bonds.

@stevo728822 Жыл бұрын

@@nixer65 Pay a hefty transfer fee and lose your company contributions.

@stevo728822 Жыл бұрын

@@nixer65 Oh and transfer amounts have dropped significantly since rates have risen.

@chrisf1600 Жыл бұрын

The last three transfers I've done, I paid no transfer fees (I actually earned about £500 cashback from II). Also, nobody's advocating transferring a DB pension to buy bonds, so your talk of "transfer amounts" is irrelevant. And what on earth do you mean by, "all the benefits are already priced in" ? Of course they ! Why would you expect otherwise, in a broadly efficient market ? If you don't like the yield that's on offer, don't buy. It's that simple.

@desiguy995 Жыл бұрын

which uk bond fund do you suggest?

@TheMirekp Жыл бұрын

no fund as you can't control maturity

@fabianaperez9875 Жыл бұрын

AI and machine learning is revolutionizing the way we invest, and Alphanso Investing can provide a personalized and insightful experience in suggesting the best UK bond fund based on your risk appetite and financial goals.

@hughgallagher 11 ай бұрын

But Is AI really the main driver of the Bull market ... surely something else is the main driver?

@robbybroon4904 Жыл бұрын

Bonds vs NVIDIA.. hmmmm, tough one!

@marzy2009 Жыл бұрын

I still don't get how raising interest rates is supposed to help bring down inflation? That seems like an outdated theory to me. Won't it just further increase the cost of living? And why is the aim to slow the economy down when a good economy is not what caused inflation in the beginning but rather rising costs. Please can someone help me understand this?

@mateuszg5 Жыл бұрын

Rising cost is not caused by inflation. Inflation is just a way to measure and report rise in cost of living year over year. It is like a speedometer (inflation) that measures/displays the current speed (rise of cost of living). One popular way of explaining how rising bank rates can reduce prices of goods (measured by inflation) is this. If bank rates rise then mortgage rates rise. Around 38% of UK population has a mortgage. If suddenly your monthly payment rise say for an example from 1500 to 2000 then you have 500 less to spend on other goods. This means the demands for other goods and services will reduce. In turn companies will reduce cost of goods/services to still keep attracting customers and this will be reducing inflation. And in any case this is only a short simplified version that doesn’t not take into account all complexities and interactions happening in our economies.

@jimbochoo3316 11 ай бұрын

Simply, raising rates will slow down the economy and thus slow down demand. This will bring down inflation as the cost of goods and borrowing is too high. People will stop buying more stuff if the cost of borrowing is too much for them to afford. The pandemic supply chain issues and free money given out caused high inflation as people were buying a lot of things. Inflation is the enemy of savers and the cost of labor has raised significantly, but not even enough to keep up with inflation. You have to control inflation.

@Visual_Ghoul Жыл бұрын

What about shorting the FTSE and S&P?

@muffemod Жыл бұрын

Not generally a good long-term strategy, but could work short-term if you can time the market. Good luck with that!

@Pensioncraft Жыл бұрын

Hi @VishalTheMightyRod that's more risky than selling some stocks and buying government bonds as @muffermod says. Thanks, Ramin.

@Jos-qk7oj Жыл бұрын

Shorting the FTSE at these levels is crazy risky!

@sierraecho884 Жыл бұрын

I am in Germany and investing into a $ Bond would not make much sense for me sadly. I would invest in bonds for sure If I were in the US. EU Bonds, are shit in my oponion. They don´t have as great of a return as the US bonds do and I don´t trust the EU long term.