- Monevator - https://monevator.com -

Weekend reading: Oops, bonds did it again

What caught my eye this week.

The 10-year UK government bond yield has fallen back to barely 1%. [1] Indeed yields are down again everywhere [2], as Bloomberg reports:

Bond yields around the world are tumbling to multi-year lows as the global shift by central banks to a more accommodative stance has put the kibosh on the oft-predicted but still-unrealized end of the long bull run in government debt.

Among the superlatives hit this week:

– Japan’s 10-year yield slid to its lowest since 2016 on Friday
– New Zealand’s equivalent slipped below 2 percent for the first time earlier in the day
– Yields on benchmark Treasuries have dropped this week to the lowest in more than a year
– Those in Australia are just three basis points from a record low
– The global stock of negative-yielding debt hit the highest since mid-2017

A quick way to be called a moron by people who know more than they understand over the past 5-10 years has been to suggest that bonds still have a place [3] in most portfolios. A wealth-destroying crash was “obviously” imminent, you see.

But markets often move in the way that surprises commonplace assumptions, and that’s certainly been true of bonds.

[4]

(Click to enlarge)

Source: Bloomberg [5]

This low yield era almost certainly won’t last forever. However a bit of humility is in order from all of us (including me [6]!) about the timing of any long-lasting reversal.

Of course this is exactly why most people are best off investing passively [7] and getting on with other things in life. (If you want to try to outsmart the unthinkable, there’s always Brexit.)

Have a great weekend! (Hope to see some of you on the march [8]. 🙂 )

From Monevator

Why the 4% rule doesn’t work – Monevator [9]

From the archive-ator: Wealth preservation strategies of the rich – Monevator [10]

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [11]

40-year mortgages are becoming the norm – Moneyfacts [12]

UK interest rates on hold amid Brexit impasse – BBC [13]

Government borrowing falls to fresh 17-year low after surge in tax receipts – City AM [14]

Regulator in spotlight over mini bond scandal [Search result]FT [15]

Just 112 retirement interest-only mortgages have been sold in first year – ThisIsMoney [16]

Employment growth fastest for women aged 65+, but it’s not always a positive – Guardian [17]

Tech investors are asking for #MeToo clauses in start-up deals [Search result]FT [18]

The start-up that looks into the future for the Next Big Thing – ThisIsMoney [19]

[20]Want kids? It’ll cost you [US but relevant]The Basis Point [21] [with a h/t to Abnormal Returns [22]]

Products and services

Coventry BS axes the top cash ISA deal – but Nationwide launches a 1.4% ‘loyalty’ rate – ThisIsMoney [23]

Peer-to-peer pressure: Do the risks outweigh the rewards? [Search result]FT [24]

Persimmon homebuyers can withhold 1.5% of property value until faults are fixed – Guardian [25]

Shop loyalty cards ranked and rated – ThisIsMoney [26]

Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter [27]

HgCapital Trust: A [costly!] tech-heavy private equity investment trust – IT Investor [28]

One investor’s hunt for green investments arrives at iShares’ Clean Energy ETF – DIY Investor [29]

…more on this theme: Clean, green, but will it offer investment returns? [Search result]FT [30]

How to use a floorplan to check the valuation of a potential house purchase – ThisIsMoney [31]

Castles for sale [Gallery]Guardian [32]

Comment and opinion

Is your strategy to have a bunch of money? Or is it to not need a bunch of money? – IBJ [33]

The market won’t provide high returns just because you need them – A Wealth of Common Sense [34]

New video explaining evidence-based investing in a nutshell – The Evidence-based Investor [35]

We ignore the index providers’ power at our peril [Search result]FT [36]

There’s no such thing as ‘the number’ [He concludes the same as me [37]]Rad Reads [38]

We all make mistakes – Of Dollars and Data [39]

Head games – Humble Dollar [40]

Death, taxes, and a few other things that are inevitable – Morgan Housel [41]

Get rich with recycling – The Escape Artist [42]

Twitter thread on simplicity versus complexity by an investing great – Jim O’Shaughnessy [43]

Valuation is a better guide to future returns than hemlines – The Value Perspective [44]

The trials and tribulations of ISAs, platforms, anti-money laundering – and Brexit! – S.L.I.S. [45]

Angel investors are being squeezed out by institutional seed financiers – Tomasz Tunguz [46]

Your home may be an investment, but don’t expect it to fund your financial goals… – Abnormal Returns [47]

…more on the same research that found similar returns from housing and equities – Bloomberg [48]

A commendably deep dive into a failing stock pick in the UK restaurant sector – Maynard Paton [49]

What is ‘fair value’ for an equity, and why is it so misunderstood? – Jason Voss via LinkedIn [50]

Brexit

“Has anyone learnt? Has former Brexit secretary David Davis worked out that his plan to leave the EU while retaining “the exact same benefits” as staying the single market, was a little ambitious? Or that the Germans actually care more about the integrity of the EU than about selling Brits BMWs? Has Michael Gove finally noticed that we did not after all “hold all the cards” the day after we voted to leave? Has anyone worked out that frictionless trade is quite complicated, and that the dreary Brussels machinery does a good job for us?”FT [51] [Search result]

May’s appeal falls flat as EU seizes control of Brexit date – Guardian [52]

If on balance you’d rather not Brexit, sign the petition to revoke Article 50… – UK Government [53]

…it has hit surpassed three million names at the time of writing… – Independent [54]

…and email verification means the e-signatures are genuine – BBC [55]

For Theresa May, “I’m a tin-eared lunatic” seems to be the hardest word – Guardian [56]

Top Tory donor: Form unity government to solve the Brexit crisis – Guardian [57]

When will Brexiters accept they were conned? – Byline Times [58]

Kindle book bargains

How Women Rise: Break the 12 Habits Holding You Back by Sally Helgesen – £0.99 on Kindle [59]

Narconomics: How To Run a Drug Cartel by Tom Wainwright – £1.99 on Kindle [60]

The Complete Guide to Property Investment by Rob Dix – £0.99 on Kindle [61]

Winners and How They Succeed by Alistair Campbell – £1.99 on Kindle [62]

Off our beat

‘Lewis Hamilton of pigeons’ sold for world record €1.25m – Guardian [63]

Instagram is the Internet’s new home for hate – The Atlantic [64]

And finally…

“Investors are simply throwing away wealth.”
– Tim Hale, Smarter Investing [65]

Like these links? Subscribe [66] to get them every Friday!

  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [ [69]]