Notes on Economy: Egypt and the Risk Premiums on Debt Instruments
Egypt and the Risk Premiums on Debt Instruments
Developments in the US mortgage market, in Europe, in Egypt and in the US municipal bond market are only four data points in a long string of events that should convince every observer that practically all debt instruments carry inadequate risk premiums. This has been true for years and in my opinion for decades. Portfolio managers should be cognizant of this fact and to the extent possible buy only when the premiums increase, such as at the recent bottom of the high yield bond market or the European sovereign debt markets. It is possible that the increase in the risk premiums by Fannie and Freddie now being contemplated as well as on FHA mortgages will provide an impetuous for other debt markets. Until then, however, taking risks in the stock market is still more reasonable even at present levels.
Thank you mike for your insight…
Looking forward for our meeting with Joav..,
Gilli
There are – or were some wonderful old “Ghost Towns” in Idaho – off the Yankee Fork and up off Anderson Lake. Up off the Yankee Fork was the old dredge they had used to dredge the gold out of the river – ruined the river – and when the gold ran out they left it where it stopped. Silver City was another old town up there. Some of the old towns are on “private” land now so you can’t go back to them. It was always interestin-g to see that the people left everything – just walked out in some cases – furniture – not much – but what they had – was still there – dust covered – waiting for someone to return – perhaps they do.buy Tera gold