Credit Chaos and Fool’s Yield: Updating the Thesis

Published on
March 24th, 2020
Duration
43 minutes

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10

Credit Chaos and Fool’s Yield: Updating the Thesis

The Interview ·
Featuring Dan Rasmussen and Greg Obenshain

Published on: March 24th, 2020 • Duration: 43 minutes

Dan Rasmussen, the CIO and Founder of Verdad Capital Advisers, speaks with his colleague Greg Obenshain, Verdad’s director of credit, to examine the credit market sell-off over the past two months. They focus on the recent widening of spreads and other areas of financial markets hit hardest by the recent acceleration. Rasmussen asks Obenshain what the biggest factors for returns in corporate credit are, the turmoil in the credit markets has impacted the energy sector, and where they see the biggest opportunities for investors will be coming out of the crisis. They also update Verdad’s Fool’s Yield thesis that the company has been writing about since January 2020 and that Rasmussen has presented to Real Vision members in the past few months. Filmed on March 17, 2020 over Skype.

Comments

Transcript

  • AH
    Amir H.
    31 March 2020 @ 00:34
    0 0
    Superb discussion, evidence based, deep insights.
  • km
    kristopher m.
    27 March 2020 @ 01:29
    1 0
    excellent.
  • DS
    David S.
    26 March 2020 @ 22:51
    0 0
    Great insights to the bond market. A small comment on the length of the question. It is difficult to answer a compound complex question. If the preamble to a question is too long, it confuses the response. There is a golden mean between too little preamble and too much. Thanks. An excellent discussion. DLS
  • CW
    Claude W.
    24 March 2020 @ 21:46
    4 0
    Valid analysis if frame of reference is time period back to early 1990ies. Looking at a longer history and the possibility of a looming depression, the current opportunity in high yield - in the language of the presenters - may end up revealing itself as a fool's yield...
    • DS
      David S.
      26 March 2020 @ 22:23
      0 0
      We all need to remember that professionals watch the markets daily. They will change as they see the facts change. I was thinking in a similar line with MMT and possible inflation a 5% percent yield may not be enough. DLS
  • RM
    Russell M.
    25 March 2020 @ 13:23
    1 0
    Helpful, common sense insights. Be very careful about industry sectors you invest in. Check the business headlines to see where we can expect wholesale defaults.
  • PC
    Petros C.
    25 March 2020 @ 10:23
    4 0
    Can you please comment on HYG (iShares iBoxx $ High Yield Corporate Bond ETF) for both short & medium term outlook? Raoul has talked about HYG in recent videos.
  • ML
    Mehdi L.
    24 March 2020 @ 14:59
    1 0
    I cannot find any online broker that allows retail investors buying corporate bonds, even for US accredited investors. Any website you'd recommend?
    • ED
      Etienne D.
      24 March 2020 @ 17:03
      1 0
      if i wanted, i could place an order with interactive brokers. but well...
    • DR
      Derrick R.
      24 March 2020 @ 19:58
      1 0
      Not sure if this helps but in yesterday's daily update they talked about this. LQD was mentioned. iShares iBoxx $ Invmt Grade Corp Bd ETF
    • TW
      Tom W.
      25 March 2020 @ 02:33
      0 0
      Try TD Ameritrade
    • MP
      Máté P.
      25 March 2020 @ 06:00
      0 0
      these are mostly otc
  • TW
    Tom W.
    25 March 2020 @ 02:47
    1 0
    Excellent interview, you addressed many questions I’ve had of late. I’m currently holding BBBY 2034 bonds (Moody’s Ba2), which are down dramatically in the past few weeks. They have a solid balance sheet, however profitability is far from what it used to be. Active investors and new management are taking steps to turn it around, but success is not certain. My plan was to hold to maturity. I’ve been on the fence on whether this is a good opportunity to add more, or cut losses here. Would appreciate it if you would share your thoughts on such a scenario. Thank you!
  • AP
    Alex P.
    24 March 2020 @ 19:27
    0 0
    What are the best options for retail investors to get this type of exposure to corporate credit?
    • DR
      Derrick R.
      24 March 2020 @ 19:58
      2 0
      Not sure if this helps but in yesterday's daily update they talked about this. LQD was mentioned. iShares iBoxx $ Invmt Grade Corp Bd ETF
  • BC
    Bruce C.
    24 March 2020 @ 18:44
    1 0
    Great session. Congrats on the call you guys saved me a bundle. Raoul you though the down cycle could last 18 - 24 months and you made a comparison to 1930. I remember a former professor of mine who was a Rhodes Scholar said he thought that the down cycle of the 1930s was prolonged because taxes were raised to pay for all the new social programs. With all the fiscal stimulus, we'll have a lot of debt and I would expect higher taxes.
  • MF
    Max F.
    24 March 2020 @ 18:34
    3 0
    Great interview guys! Any thoughts on BBB downgrade wave which some people say is coming?
  • DD
    Darios D.
    24 March 2020 @ 10:16
    7 0
    Thank you for the informative interview. Would love to see more content from Dan and Verdad Capital Advisers.

Chapters

  1. 00:01:40
    The Fool's Reach for Yield
  2. 00:06:21
    What has the Credit Sell-Off Looked Like Over the Past Two Months?
  3. 00:13:23
    What Area of the Market is Hit Hardest by this Financial Acceleration?
  4. 00:18:33
    What is the Potential for Return after this Meltdown?
  5. 00:23:20
    What is Your Current View of Energy Credit?
  6. 00:26:24
    What is the Biggest Factor in Determining Corporate Credit Returns?
  7. 00:34:03
    How are You Viewing Investment Opportunities Now?
  8. 00:38:16
    The Intersection