It is not quite 6am on Saturday morning. How did I start my day? The same way I start every Saturday morning. I just read my favorite columnist, The Wall Street Journal’s Jason Zweig. Long ago I inducted Zweig into the Sense on Cents Hall of Fame. He earns that honorable distinction regularly. How so? Zweig takes his readers into corners of Wall Street not often traveled. After reading his work, I always come away impressed and more informed. For example, over the last few weeks, Zweig wrote of a portfolio manager at Blackrock who perhaps had “too much skin in the game”. That is, “investors’ skin” in “his game”.Conflict of interest, perhaps? If there is any doubt that Zweig is an impact player, do you think it is pure coincidence that after Jason Zweig broke this story two weeks ago, the PM just stepped down from his responsibility managing the fund.
I strongly recommend you read A Fund Manager’s Home Cooking.
On another topic, why might interest rates stay lower than otherwise expected for a protracted period? A bubble perhaps or are there other factors at work? Jason Zweig provided fabulous insight on this topic in another recent commentary.
…much of the demand for U.S. debt comes from “uneconomic” buyers who scoop it up—and hold on to it—at any price. Only 23% of Treasurys are held by individual and institutional investors—down from 55% in 1982 and 31% a decade ago. Today, foreign holders—largely central banks desperate to stabilize their currencies and banking systems—own 34% of Treasury debt. That is up from 13% in 1982 and 18% a decade ago. The Federal Reserve, meanwhile, holds 11% of Treasurys, twice its share in 2008.
With so much demand from price-insensitive buyers, “Treasurys are priced like fire insurance gets priced after the buildings are already burning,” says Dan Dektar, chief investment officer at Smith Breeden Associates, which manages $6.4 billion in bonds in Durham, N.C.
Zweig provides a level of detail and analysis not often found today. Read more of why Zweig questions, Are Bond Rates on a Road to Nowhere?
I strongly recommend you add Jason Zweig to your weekly reading. You will be more well informed and prepared as you “navigate the economic landscape.”
I know I am.