Understanding Bond Pricing and Yield

This week’s AAII Weekly Digest highlights these “must-read” AAII articles: Dividends Impact Consumption More Than Capital Gains Do Changes in dividends impact household consumption. Capital gains also have an impact, but a smaller one than dividends. The magnitude of the impact depends on household wealth, with consumption rising proportionately higher among comparatively less affluent households….

 

An Updated Look at the Yield Curve and Stock Market Volatility

Last week, the yield on the five-year Treasury note fell below that of the two-year note. Any investor could have realized a higher yield for tying up their money for only two years rather than for five years. The yield curve—which plots the interest rates for Treasuries of varying maturities—is not supposed to work this…

 

AAII Survey: Most Retail Investors Indifferent to Rising Bond Yields

Recently, a lot of attention was paid to the fact that the 10-Year Treasury yield hit 3% for the first time since early 2014. At the shorter end of the maturity range, though, rates have been increasing even faster. The has caused market watchers to fret over the so-called “yield spread.” The spread between the…

 

A Dividend Approach to Judging the Value of Stocks

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   The Effect of Dividend Changes on Expected Cash Flows Dividend announcements and changes are perceived as signaling information about a company’s financial prospects. However, new research points to a link between dividend announcements and future changes in cash flow volatility. A Dividend Approach to…

 

Closed-End Bond Funds Versus Individual Bonds – A Case Study

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   What Bond Calls Mean for Your Cash Flow In a falling interest rate environment, or in one where interest rates have fallen in the not-too-distant past, it is especially important for investors to understand bond calls if they own individual bonds, bond funds, annuities…

 

Finding Stocks With “Big and Safe” Dividends

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   What You Need to Know About Bond Yields to Determine Your Returns Current yield is simplistic to calculate, but other measures of yield can help you make better investment decisions. However, advisers and the media talk about yield on different investment products without necessarily…

 

Nearly 37% of Polled Investors End Year With Expected Allocations

Last month’s Asset Allocation Survey special question asked AAII members how their allocations as of December 2016 compared to what they expected their allocations would look like at the start of the year. Nearly 37% of respondents said their allocations were similar to what they had anticipated they would be. Slightly more than 18% had…

 

Putting the Rise in Bond Yields Into Perspective

Bond yields have suddenly found themselves in the financial headlines. Since Donald Trump became president-elect, the yield on the 10-year Treasury has risen from 1.86% on Election Day to a near-term closing high of 2.22% on Tuesday. That is nearly a half-percentage point jump in just seven days. (The closing yield was slightly higher today,…