iShares Lehman Aggregate Bond (AGG)

All Comments on AGG

  • commenter
    Shiv
    Oct 05 01:09 PM
    My Website
    Global Market Roundup: Will the Bailout Work? [view article]
    The rescue package will take time to work its magic. And while people watch for indicators of success from implementaion of the rescue package, there is a possibility that better opportunities might emerge. This is time when perceived risks are higher than real risks. In the short term, corporations may well find earnings potential fall below long term earnings potential; and this might cause better entry points. However several economic risks are already priced in. This is a market for long term investors (5/6 years). Sector allocation is important, overweight positions need to determined based on which sectors will benefit most during the next cyclical upswing; also to consider is over-weighting the presently undervalued sectors; and finally consider the sectors which outprform based on where we are in the economic cycle today. Investors should also not forget to rebalance portfolios more frequently than in normal times. Finally, do not forget diversification across asset classes. Its a good market for traders too; volatility is high which is good for day traders. Positional traders can also look forward to an up quarter followed by a re-test of lows. This is one of those times when there is opportunity for everyone, regardless of style - short term/long term/trader/bull/bear. The only styles I would say might feel a bit left out is growth; because I think this is a time value will outperform and off course, small caps should lag large caps. Reply
  • commenter
    Bill James
    Oct 05 09:00 AM
    My Website
    Global Market Roundup: Will the Bailout Work? [view article]
    End government control over rights of way, implement Performance Standards for power generation and transportation and in 6 years. seekingalpha.com/artic...

    Building the Physical-Internet will likely working family disposable income can increase by $3,200 per year. www.jpods.com/ar_Burde...     Reply
  • commenter
    User 179191
    Oct 05 08:55 AM
    Global Market Roundup: Will the Bailout Work? [view article]
    Excellent review! The Doom & Gloom scenario seems almost universal - indicating that perhaps the worst has already been discounted. But "hold on" for more volatily until the dust settles and investors begin looking past the devastation to the inevitable economic and market recovery. Reply
  • commenter
    Owen
    Oct 02 06:24 PM
    Bailout Cost, per Taxpayer, by Income [view article]
    Nicely put, Smarty_Pants!

    However, keep in mind that most of the losses have already been accounted for due to mark-to-market principles, so anything paid above market value will appear as a profit on the next quarterly report for the company.

    Also, normal supply and demand rules still apply, so when the Treasury starts buying $850B of these toxic assets at market price, this market price will rise sharply.


    On Oct 02 02:17 PM Smarty_Pants wrote:

    > Purchasing bad debt won't eliminate the losses that it represents.
    > At best it will transfer them.
    >
    > Three cases:
    >
    > A) Treasury buys toxic securities at original values - original owner
    > avoids losses, taxpayers take them.
    >
    > B) Treasury buys toxic securities at true value - original owner
    > forced to realize the loss NOW, taxpayer avoids loss.
    >
    > C) Treasury buys toxic securities between full value and true value
    > - original owner forced to realize partial losses NOW, taxpayer gets
    > partial losses.
    >
    > No matter what, any schedule 3 asset that is not bought at full value
    > will put an immediate loss in the company's bottom line (which is
    > the fact we're trying to avoid right?). This still leaves the original
    > owner with the same problem NOW instead of later.
    >
    > Any other option requires the taxpayer to take the hit instead.
    > Blather about "holding until profitable" is just that, Blather.
    > If that were truly the case, Warren Buffett would be buying level
    > 3 assets instead of loaning money to Goldman and GE at 10% interest
    > with warrants.
    >
    > The reason Warren Buffett isn't buying toxic assets is that there's
    > no way to make money on them without risking a huge loss.     Reply
  • commenter
    Smarty_Pants
    Oct 02 02:17 PM
    My Website
    Bailout Cost, per Taxpayer, by Income [view article]
    Purchasing bad debt won't eliminate the losses that it represents. At best it will transfer them.

    Three cases:

    A) Treasury buys toxic securities at original values - original owner avoids losses, taxpayers take them.

    B) Treasury buys toxic securities at true value - original owner forced to realize the loss NOW, taxpayer avoids loss.

    C) Treasury buys toxic securities between full value and true value - original owner forced to realize partial losses NOW, taxpayer gets partial losses.

    No matter what, any schedule 3 asset that is not bought at full value will put an immediate loss in the company's bottom line (which is the fact we're trying to avoid right?). This still leaves the original owner with the same problem NOW instead of later.

    Any other option requires the taxpayer to take the hit instead. Blather about "holding until profitable" is just that, Blather. If that were truly the case, Warren Buffett would be buying level 3 assets instead of loaning money to Goldman and GE at 10% interest with warrants.

    The reason Warren Buffett isn't buying toxic assets is that there's no way to make money on them without risking a huge loss.
    Reply
  • commenter
    Atlas
    Shrugged
    Oct 02 12:05 PM
    Bailout Cost, per Taxpayer, by Income [view article]
    It isn't a bailout, it's what is referred to in the venture capital industry as a "cramdown". The US Treasury, and therefore the taxpayers, will make a profit on this cramdown. Reply
  • commenter
    phdinsuntann
    ing
    Oct 02 07:07 AM
    My Website
    Bailout Cost, per Taxpayer, by Income [view article]
    probably the US economy will grow more than 7%, even 14% in next years, but only in dollar terms, not in hard currency... Reply
  • commenter
    BrunoT
    Oct 01 10:27 PM
    Bailout Cost, per Taxpayer, by Income [view article]
    JasonC.

    Interesting point. But did you stop to realize that aggregate GDP is not spread uniformly? What if most of the gains/benefits accrue to the top 5% (those who own stocks of these companies and others) yet the bonds are repaid by a broader spectrum? (those who consume most of their income)

    And more things come to mind that should be considered. What of the costs of inflation caused by injecting dollars into the economy, which is born more heavily by "working class" people, as the costs of necessities is a higher percentage of their income. And what of the intangible costs of the moral hazard created? Put a value on that one! And from what I'm reading $700B is not the end of it. What happens when CDS and credit card and auto loans are added to bailouts? Where does it end? And once we're in for $700B, there would be severe pressure to "protect our investment" with further cash outlays.

    I think the calculations required here are beyond any one page column.     Reply
  • commenter
    kurt walter
    Oct 01 08:31 PM
    Bailout Cost, per Taxpayer, by Income [view article]
    The more money congress takes from taxpayers, the more money they spend. We don't have a revenue problem. We have a spending problem. But what the heck does congress care. It is easy to spend money that is not your money. I could do the same, too. I would like to see every incumbent in the house of representatives get voted out of office in November. All of them need to go. Also, get rid of 1/3 of the Senate that is up for vote in November, too. VOTE FOR NO INCUMBENTS IN NOVEMBER. Sent a big message to the fools. Reply
  • commenter
    Mr
    MarkToMarket
    Oct 01 05:17 PM
    Bailout Cost, per Taxpayer, by Income [view article]
    Glad to see some discussion of mark-to-market...an indepth examination of what would happen if it was suspended temporarily or phased in while abusive CDS practice is phased out would be interesting. Reply
  • commenter
    JasonC
    Oct 01 05:06 PM
    Bailout Cost, per Taxpayer, by Income [view article]
    No, we will grow 6-7% per year long term average after all the noise.

    The market dropped 777 points on Monday. But the same index was *worth* 777 points at the 1982 low, 26 years ago. In 26 years, a day's hard fluctuation is the size the whole market was then.

    The permabears will be screaming "doom, doom" when the market drops 10,000 points in one day, 26 years from now. All the way down to 175,000.

    Perhaps it won't be quite that good, and perhaps it will meander around for 5 years before taking off again. Or perhaps it will take off within 6 months after a bailout bill passes. Nobody knows, and I for one don't much care. As long as we don't deliberately nuke the golden goose that is our financial system, a generation from now every doom mongering short today, will look as dumb as the doom mongering shorts of 1982. Who all said that recession was Hoover all over again and Reagan was a dunce, etc, etc.     Reply
  • commenter
    Smarty_Pants
    Oct 01 04:00 PM
    My Website
    Bailout Cost, per Taxpayer, by Income [view article]
    iThinkBig:

    Too bad the world is going to end on December 21, 2012, per the Mayan Calendar. We'll never see the start of the next bull market. :-)

    Seriously though, you're right. Things will get worse before they get better. ARM resets will continue until at least 2010 and foreclosures will follow the resets. Housing prices will continue down until the excess inventory clears. New building will slow to a crawl and economic activity with it. Hunkerdown and look for bargain basement prices on things of value to build your net worth on. Until then, protect your savings and add to them every chance you get.     Reply
  • commenter
    iThinkBig
    Oct 01 03:52 PM
    My Website
    Bailout Cost, per Taxpayer, by Income [view article]
    What was the economy like in 1980? Did we use the Efficient Market Hyposis then? No? Then perhaps as an economist I take into consideration what an entire economic model the USA has run with the last 25 years. Then I will consider if the USA will remain the global currency peg in the foreseeable future Jason C.

    Yes, we'll move on and grow the economy yet again. But are we still a $14 T economy? I don't think you or I could answer that at this time.

    Will we grow 6-7% a at some point, sure. But your information is providing false hope for investors and citizens alike.

    Here is my advice since 2007 which has remained consistent and has been accurate as all can click on my screen name and see since then: We are going into a depression. Our 25 year economic model has failed. Inside greed from Washington and Banking accelerated this process.

    Prepare for a Depression. Plenty of ways to make money and buy up great assets cheap during one. People will become fabulously wealthy or fabulously poor in short spans.

    The start of the next sustained stock market and Bull will be 2013. I can click on your comments Jason C and see many, many incorrect forecasts. But on financial knowledge you are very bright in general, just over-optimistic about the short and mid-term.

    Hey, I want it to be wonderful too, but I am a realist not a cheerleader and as such I have a responsibility to advise those I care for about the realities I mentioned. Much of it is simple common sense and fundamentals.     Reply
  • commenter
    Socialism
    cannot
    compete!
    Oct 01 03:52 PM
    Bailout Cost, per Taxpayer, by Income [view article]
    "P.S. We don’t know all the history behind mark-to-market accounting rules, but wouldn’t temporarily creating more asset valuation flexibility in this locked-up credit market improve capital ratios and reduce the capital infusion requirements, reducing the size of the needed bailout, and grease the wheels of credit a bit?"

    Absolutely correct!! We leveraged this stuff up with more flexible models of valuing it...we cannot deleverage it with a strict mark-to-market model, without taking a huge hit. The hit will be hardest upon the buyer who gets in while the market is least functional and therefore paying worst-possible-case prices...and that stands to be the U.S. government! (i.e. taxpayers)

    Just Say No to the "bailout."
     Reply
  • commenter
    Owen
    Oct 01 03:31 PM
    Bailout Cost, per Taxpayer, by Income [view article]
    Good comment, JasonC! Nice to see someone who understands real life economics.


    On Oct 01 03:16 PM JasonC wrote:

    > The UST collects 20% of national income regardless of policies, tax,
    > spending, funding, investment, any of it. That is the econometric
    > reality.
    >
    > Therefore, the only question and I mean the only question on the
    > cost of this policy is whether it will raise or lower future GDP.
    > If it will raise it, it will pay for itself many times over. If
    > not, it will cost something.
    >
    > But a very modest something. Our actual collective wealth is not
    > the money lying around, or the inventories, or even all assets at
    > their current prices, let alone the prices they would fetch in a
    > general deflationary smash. Instead, it is our entire future income
    > stream, also known as the economy. Which is $14.3 trillion a year
    > and rising 6-7% a year forever.
    >
    > Nobody debating the subject is remotely sane or thinking like an
    > economist, and it show. One entry accounting and tendentious spin
    > is all you see.     Reply
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