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Tag Archive: Fixed income


An intelligent investor was once asked what the market was going to do. He replied, “It will fluctuate”. This is wp-1470671868819.jpgthe most important possible truth. We need to get deeply into our bones the sense that any market and the stock market, moves in cycle so that we will infallibly get wonderful bargains every few years and have a chance to sell again at ridiculously high prices a few year later.

Here is some observation how people at different age groups are reacting to the markets now:

People in their 20’s are logging back into their wealth front accounts to dial down their risk setting when they should be dialling up their regular contribution amounts.

People in their 30’s are trying to keep up with what’s going on, even though they are utterly bewildered every time an app on their phone Continue reading

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Yesterday I was going through some of the Indian newspapers and surprised to see some articles on Indian debtblog-3 market, which is a very rare scenario where the Indian market is dominated by equities. May be it was more a tax saving investment as the equity market where more volatile and IPOs were flopped.

Whereas the developed world debt market dominates where the bond market, has experiences gains and losses in response to cyclical interest-rate, It’s like business cycle during which an economy expands, contracts and recovers could be termed as market cycle.

Before getting back to the Indian bond market let’s try to see the key components of Fixed Income securities, it’s the Credit quality, yield, and maturities are key components of fixed-income securities.
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Merger Arbitrage

My question is about arbitrage (tenders and merger arb). I’ve been reading through Buffett’s old letters and in the late images1980’s he had quite an impressive run with his arbitrage investments (I think in 1987 he made around 80% on his arb investments).

Both he and Graham seem to have had long time success for decades using merger arb and other arbitrage techniques. I’m wondering if you ever employ any of these strategies in your portfolio? It seems like a specialized area, but also seems like an area that would add uncorrelated returns to the portfolio, and serve as a great substitute for cash when markets begin to become overvalued. Continue reading

download (1)Today, I was thinking, what to write on and was confused whether to discuss on some current market situation or to go with some basic concept again for our finance freshers.  And, finally decided to write on SWAPTION, so as to add a thought again to our “back to School Series”.

Swaption was first introduced by William Lawton in 1983 while he was facilitating First Interstate Bank in Los Angeles as the Head Trader for Fixed Income Derivatives.

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Before I begin the article would like to share this amazing feeling :-  There are very rare occasions when adults and imagesteenagers can get together and have a good time. When it happens, its magical.

Barclays economists forecast a modest acceleration in world growth next year to 3.3 percent from 3.1 percent. They recommend overweight developed market equities relative to fixed income. They base that on valuation. Bonds are too expensive. Equity still looks cheap, especially in Europe.

And how will Europe fair? Even with anemic growth Continue reading

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