Henry Blodget says Bill Gross has his Math Wrong on Stocks….and more!

Best of the Bond Market for August 1st, 2012 

Business Insider: Henry Blodget says Bill Gross has his math wrong on stocks – Why is Gross wrong? Because stocks actually have not “appreciated” at ~7% a year.  Again, stocks have not, in fact, “appreciated” at ~7% per year for the past couple hundred years. Stocks have only “appreciated” about 2% per year.  The rest is dividends.

CNN Money: If his past stock market calls are any evidence little attention should be paid to Bill Gross’ latest.  – chart showing other stock market calls by Gross.

Learn Bonds: Even if Bill Gross really did make $200 Million last year, that still may not be enough. – there is a strong argument to be made that even if Bill Gross made $1 billion per year that he would be undercompensated by several measures.

Money and Markets: Last week’s “weekly outside reversal” could signal trouble for the long bond. – Treasury bonds completed what is known to technicians as a “weekly outside reversal.” That means Treasury bonds made a new, 52-week high last Wednesday, but finished the weeklower thanks to Friday’s big decline.

Reuters MuniLand: Cate Long on why the recent SEC report means the municipal bond market is about to change for the better. – The report recommends that the rules be changed to require these systems to publicly disseminate the bid-offer prices for securities they have on their platforms. Furthermore, the report proposes that the MSRB could compile the bid-offer prices across these alternative trading systems into a quote feed, making the systems more like equity markets.

Felix Salmon: Why there may not be a direct correlation between increases in a company’s CDS price and their perceived risk of default – reporters should be very wary indeed of drawing too many conclusions from movements in the illiquid CDS market. Sometimes, they really don’t mean anything at all.

Bloomberg: Stockton CA’s former Police Chief’s $204,000 pension is a sign of where the problems in many municipalities lie.  – He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 — the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries.

WSJ: Phil Izzo breaks out his highlighter and shows changes in today’s Fed statement – acknolwedges economy is slowing but does not take new action ie no QE3.

MarketWatch: The Treasury is going to start issuing a new type of debt security for the first time in 15 years.  – The Treasury Department announced Wednesday that it plans to sell floating-rate notes, with the first auction estimated to be at least one year away.

Martin Tiller: The traditional relationship between stocks and bonds has broken down.  Are things different this time? – If there is an increasing amount of money chasing a steady amount of paper (i.e. stocks and bonds) then the price of all of the paper is pushed up.



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David Waring

David Waring was the founder of LearnBonds.com and has been a major contributor to the extensive library of investing news and information available on the site. Until the launch of Learnbonds.com in late 2011 there was no single site on the internet catering exclusively to the individual bond investor. This was true even though more individuals own stocks than bonds. Learn Bonds was launched to fill that gap.

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