Can Hurricanes Create Investment Opportunity?

Written by Rob Copeland | 11 October 2016

Natural disasters are always bad—the impact on human lives and property is something that nobody wants.

That's certainly the case with a storm like Hurricane Matthew, which hit Florida and the Southeast earlier this month. But the truth is that the storm, like other unfortunate events, has had an impact on the economy and on certain investments. And that may lead to investment opportunity.

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When That High Yield is a Trap

Written by Rob Copeland | 14 September 2016

<p>Yields are miserable out there: The S&P 500’s average dividend yield is just about 2%. The highest-rated 10-year corporate bonds, meanwhile, are paying just a bit more than that on average.</p><p>

So when income-hungry investors find a stock or bond with an exceptional yield, they understandably want to pounce. But reaching for yield can backfire if stock or a bond has underlying concerns. And unfortunately, companies that issue securities are adept at using accounting maneuvers to camouflage weaknesses.</p>

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Opportunities But Also Risks in High-Yield Bonds

Written by Rob Copeland | 12 August 2016

High-yield bonds are on a roll: The iShares U.S. High-Yield Bond Index ETF (ticker: XHY) is up more than 11% for the year.

But before jumping on the bandwagon, be aware that there's lots of risk in high-yield, particularly after prices of these bonds have run up so sharply. To invest in high-yield bonds right now, it's important to do company-by-company analysis, not just to buy a sector or the market as a whole.

A high-yield bond is debt issued by a corporation with a lower credit rating than "investment-grade" debt. They are rated below "BBB" by credit-rating agency S&P, and below "Baa" by its competitor, Moody's. Bonds with these sub-investment-grade ratings pay a higher yield to compensate for their greater risk of default.

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Record-High Stocks: Good News or Bad?

Written by Rob Copeland | 12 July 2016

The stock market is at record highs, and that’s great for investors—unless, as some commentators insist, it’s bad for investors.

The fact is that it isn’t easy to get a handle on what the stock market is telling us. On Monday, the S&P 500 index of U.S. blue-chip stocks reached an all-time high, as investors bet on our economy as an island of stability in an unsettled world.

Pessimists point to stocks’ new highs, seven years into a bull market, and warn that what has gone up will soon come down. But warnings of a recession and a bear market have been ringing out for several years now, without results. In my experience, it will take a major event to reverse the market’s upward trend.

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