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Lethal cocktails rarely end well

By Vern Gowdie - posted Monday, 4 November 2019

The following charts from the IMF report highlight the domino effect of negative rates.

Almost 30% of global bonds (red line referenced to RHS) are now paying NEGATIVE yields.

How can an investment manager make a positive return in this market?

The answer?

Lower your standards and increase your risk.

Look at the increase in the red bar — Not Rated securities — over the past four years. That’s not good.

In case you’re not familiar with the Credit Rating system, this is from Investopedia (emphasis is mine):

‘The bottom tier of investment grade credit ratingsdelivered by Standard and Poor's include:

‘BBB+

‘BBB

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This article was first published on Rum Rebellion.

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About the Author

Vern Gowdie has been involved in financial planning since 1986. In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners.
His contrarian views often place him at odds with the financial planning profession today, but Vern’s sole motivation is to help investors to protect their own and their family’s wealth. Follow him on Twitter @RumRebellionAus