Great Video Mark! - Could you please do a video on the effects of $2 Trillion money printing on the long term - Inflaton, US currency and it means for long term interest rates?
I passed all three exams in my first try in 2013. Yet i can still learn more things on youtube than all my weird CFA points stuffs in all the past years. I wish watching youtube counts towards these points.
I was looking for content like this for a long time. Apparently finance content is either too simplistic or too academic. This is practical. Something only a practitioner could teach you. Thanks a lot Mark.
Thanks for sharing. To be clear, here you are looking at the company's lowest rated issue, not at the company's overall credit rating, even though they would tend to be highly correlated. In other words, a company with an overall credit rating of AA, is unlikely to have subordinated debt rated below investment grade.
Dr.Mark, as per the video is it true that during tough times small cap companies will be hit the most ?( I know small caps are riskier in general) but going by the logic of the video, I presume that they have debt of lower quality and there is also high uncertainty of E(CFs) because of slowing economy .So , the numerator decreases and denominator increases and thus the valuation takes a hit. Also, in India I can name two companies DHFL and Indiabulls housing finance where I had invested money and they eventually became penny stocks :( because they issued junk bonds. I wish you had made this video 2 years back I could have saved my money.
Thank you Mark, this is getting better and better :> Is there a fast way via IB to find the credit rating of a certain company, hence without going into the financial statements and dig deep there ... . Thank you !
Hi Mark, Ackman turned 27 million into 2 billion by buying insurance against credit spreads when they were narrow; as the virus crisis came, the spreads widened and he profited. Is there a retail way to bet against credit spreads?
Hello Mark, curious if this 2018 fixed income level 2 playlist is still on youtube? Looking to dive in a little deeper on the lost CFA reading as you mentioned. Thanks in advance!
Great stuff. But since we are talking about growth in medium term I think it would be wise to take in account the inflationary impact of the massive amount liquidity being pumped in to the economy. And by the virtue of the survivor of the fittest if the company you are invested in can survive this storm chances are it would have fewer competitors. I guess the bottom line is we have an income statement crisis here so we can hunt for companies with strong balance sheet the income state would do fine coming out of this pandemic
Hi Mark, thanks for yet another informative material. But just to be clear prof. on the valuation of a company expected risky cashflow to equity, isn't the risk free rate already reflecting expected inflation? Because on this video you specify expected inflation after the risk free rate, both as the component of the discount rate.
Well, the company would have a higher credit rating since it would be based on senior unsecured. So the key point of the information for equity would be lost.
mark, thank you so much for the insight. wonderful content. Would you be able to also provide some guidance/opinion on how to go about analyzing the feds most recent moves to purchase a lot of these corporate bonds? Is there anyway to even figure out which bonds the Fed is buying since its through an SPV and treasuries exchange stabilization fund? I assume this would essentially create a ceiling on the credit spread (OAS) as its creating price floor for the bonds But any insight you could offer regarding this would be greatly appreciated. Thank you!
A suggestion. Why not have such analysis at the end of each reading so we get to see the stuff taught in reality. Although it takes time but it will even further increase your subscribers
Hi Mark, Can this concept be applied to describe the relationship between bond market and equity market? When the credit spread (difference between 10y gov bond yield and 10y AAA corporate bond yield, for example) widens, can I then assume that there will be an overall drop in the equity market? Thanks. Hope this isnt too off topic.
If spreads widen, the the discount rate must also increase. So unless expected cash flows are growing faster than spreads are widening, there would have to be a lower valuation overall.
Mark, is there any relationship between the cost of debt to the credit spread, for example, ABR has 8.75% prefered shares, are those also considered for credit rating as it do come before common shares.
Hi mark What is a good website to look up the credit spreads and ratings for various companies ? My brokerage account is with fidelity and it is asking for a cusip to look up bonds versus being able to look up by company
I don't think so. MFs that are equity MFs are all in equity anyways. Pension fund allocations - maybe some tactical reallocation here and there on new cash inflows - but I doubt such events are responsible for the "rally".
@@MarkMeldrum Got it. Given this mild recovery came around the end of Q1, I assumed a lot of multi-asset funds would reallocate into equities and sort of provide support to the equity markets.
is this why the saying goes something like the dumb money is in the stock market and the smart money is in the bond market ? ... something along that line I heard ;))
