Stock Jabber and Bond Blather

Have you grown tired of all the stock jabber and bond blather yet? It's relentless, isn't it? But of course it is if you check in with financial media, whether main stream of "alternative" - whatever that means.

Having reduced exposure to both, there's still enough "check in" time given to lend an eye and ear to all the experts out there. Sure, you can grab a nugget or two on occasion that helps think more clearly, maybe even assist in making a good decision or two. But the nuggets are few and far between. Like panning for gold, you've got to get through a lot of sludge - in this case stock jabber and bond blather - to find them.

Now what's with these two pestilent cousins? Let's start with stock jabber.

Stock jabber fills up the bulk of the time of the financial media we check in with. Always has. Was this always so? Yes and no.

Yes because stocks are the darling of the financial markets. If you're looking to get a leg up on your journey on the road to riches, they're your go-to. Bonds have never been. So if the media's going to grab your attention, stocks become the star of the show.

As for whether stocks really are the stuff you need to get rich, well, that's a whole other matter. Study history and, in the case of working in the business, simply observe, and you'll find that most folks don't make good decisions when it comes to either buying or selling stocks. In the end, they don't make out all that well - or at least as well as they might have thought. For the most part folks really to buy when the price is up and sell when it's down.

The way out of this dilemma in the last half century or so has been the great combo of "dollar cost averaging" and "buy and hold." Start early and hold on until retirement. That's the grand strategy. How has that worked out? For some, quite well. For others not so much. And for yet others, borderline disaster.

Why the distinctions? It's mostly got to do with bull and bear markets and age. If you were of the lucky breed that began investing in stocks from the early 1980s through, well, now, you rode on the wave of the greatest bull market run in history. The trick for you now is what's next? You're retired and you want to reap the benefits of your luck. The answer to what's next will depend on how much of your boodle you keep in stocks, and how much you diversify into bonds. At least that's the common belief.

Alas, there's not time to parse through all this in greater detail, so we'll move on to bonds. But maybe you get why there''s all that stock blather.

As for bond blather, it's been an unusual time for bonds. Stock jabber typically fills up most of the media's time. (Oh, right, we said that.) But lately bonds have moved in on the action. The immediate trigger for this have been yields on treasuries. They've risen. After being squashed for almost two decades by the actions of the Fed in response to that Great Financial Crisis of 2007--2009, they've finally cut away their chains. 

Now, to be clear, the current yields on the 10-year and 30-year aren't particularly high when compared to the bulk of history pre-GFC. They're basically approaching what was once considered normal. But relative to virtual zero, their rise has been dramatic. And drama grabs the media's attention because they use it to grab outs. Indeed, when drama is lacking they just make something up to create some drama. But let's cut them some slack here and admit that for many this rise in yields has indeed been dramatic.

Besides the relative thing - compared to the zero rates after the GFC - maybe the biggest item has been the interest to government will have to pay on their massive book of treasury securities outstanding, especially those coming due that have to be refinanced at higher rates. The interest the Treasury has to pay has been growing and growing rapidly. Why that's a big deal would easily take up another post or two, so we'll leave it at that.

The other item, less dramatic for sure, is the blather about how it's a good time to buy bonds, now that they pay some interest. The wisdom of this off the cuff advice is questionable (as it usually the case with general off the cuff advice). But it's out there and if it suits your fancy, you can revel in it in your spare time.

Frankly, there's a lot about what's going on with bonds that deserves attention. It's going to impact all of us in some way in the coming years. Again, a story for another time.

For now, ideally you get the reason for all the bond blather.

So there it is: a quick and dirty explanation of all the stock jabber and bond blather filling the time we spend with financial media. Now it's up to you to decide how much of it you want to indulge. 

For now, let's kick off the weekend with something that can capture the essence of jabber and blather. We could go to the various "Blah-Blah-Blah" tunes out there. But instead, here's something you likely haven't heard from the great Nicola Paone. This Italian-American guy wrote and performed a surprisingly robust opus of songs, many of which were meant to amuse. Our family had a couple of his records when I was a kid. Always have a soft spot for him. Hope it tickles your fancy.