1. Financial Shock by Mark Zandi in 2009(found very useful for understanding the origins of the housing crisis)
2. When Markets Collide by M El Erian in 2009
3. The Course of my Life by C D Deshmukh (RBI's first Indian Governor)
4. Do they Walk on Water by Leo Santow (Really incisive critique of the last 4 including Bernanke, Fed Governors and Fed moves)
5. Lords of Finance by Liaquat Ahamed (I wish I had written something like this)
6. Madame Bovaury by Gustave Flaubert (this is just to keep my sanity intact)
Well what is the idea behind listing all the names here. First, to brag about my reading habit.
Two, really to document what I have read as (this is the dawn of middle age) often I find something that I might have read sometime but am not sure; and
Three, I have started taking audio notes of stuff I read by dictating to my cellphone. I intend to put the notes here sometime. I attempted this sometime back with a Soros book but I dont think I updated the notes when I finished the book. So hoping to revisit the idea here.
Wednesday, February 24, 2010
Sunday, February 21, 2010
This is really about BONDS
* FEBRUARY 21, 2010
Bond Bubble? What You Can Do About It.
By BRETT ARENDS
Are bonds in a bubble? And, if so, what can you do to protect yourself?
This is a key question for millions of investors -- especially after the Federal Reserve's surprise move last week to raise one of its interest rates. That's often considered a signal the Fed is about to raise rates more broadly, a move that would be ominous for bonds.
[Lede] Chris Gash
Bonds are IOUs issued by governments and corporations. They are generally deemed more stable than stocks. Today the public has more than $2.2 trillion invested in bonds through mutual funds.
Bond sales have boomed in the past year, as investors have sought more stability in the wake of the stock-market crash.
According to the Investment Company Institute, a trade body for the mutual-fund industry, investors have poured nearly $400 billion into bond funds since the start of 2009.
But booming sales have driven up prices. Corporate bonds have become more and more expensive. And U.S. Treasury bonds look even more so.
These days a seven-to-10 year bond from a top-rated company will pay you only about 4.3%. Even a year ago that was above 6%, and not long ago it was higher still. Meanwhile, a 10-year Treasury bond will pay a paltry 3.8%. During the financial crisis it briefly went lower, but by the standards of recent decades it is near the floor.
Why does this matter? Bondholders may not know it, but they are taking risks. The biggest is from inflation. When consumer prices rise, the fixed interest you get from your bonds is worth less and less in real, purchasing-power terms.
If the bonds' yields are high enough to compensate, this may not matter. But if yields are low, like now, and inflation takes off you can get into trouble. Those who invested in long-term Treasury bonds in the mid-1960s, just before inflation surged, actually lost money in real terms over the following 20 years. (Those who bought bonds in the early 1980s, when yields went as high as 15%, made out like bandits as inflation collapsed.)
When inflation rises the government usually raises short-term interest rates. And that's an additional problem for bondholders. When short-term savings accounts are paying about 1% a year, a piece of paper from a company promising 3.8% a year for 10 years can look quite valuable. But it'll be worth a lot less if short-term rates were to rise to, say, 5%, or even more.
Are we definitely in a bond bubble? Even though prices seem high, it's not certain. Some people argue that they are a reasonable value, and inflation will stay subdued. Indeed one or two bearish strategists argue bonds could go even higher, and yields lower. Only time will tell.
There are very few certainties in the financial markets. For private investors, the key is to make sure you're getting paid for the risks you're taking. In the case of anyone holding long-term bonds, you're probably not.
What can you do about it? Here are three practical steps to take if you are worried:
1 Limit your exposure to very long-term bonds. These are the ones most at risk from rising inflation and interest rates. Most people invest in bonds through mutual funds that have a mix of short-, medium- and long-term bonds.
How does your fund stack up? Just check the duration. That's a technical term that's the best measure of a bond's inflation and interest-rate risk. Longer-term bonds have longer durations. The fund company will post this number, usually on the monthly fact sheet on its Web site.
A short-term fund will usually have a duration of a few years. You will earn less money in short-term bonds, but you will face fewer risks. A fund with a duration beyond about six to seven years is taking on more risk.
2 Move some bond money into TIPS. Treasury Inflation-Protected Securities are bonds with built-in inflation protection. Right now, the 20-year TIPS bond promises to pay about 2% a year on top of inflation. By historic standards it's not steal -- but it's OK.
It offers a much better tradeoff between risk and reward than the regular long-term bonds. And it lets you sleep easy at night. With TIPS, you no longer have to worry about inflation. Bond prices can still move, but rarely by much -- and if you hold the bond for 20 years, it doesn't matter at all.
3 Consider some dividend stocks as well. Too many investors think in simplistic silos -- stocks are risky, bonds are safe, and so on. Yet stocks of many solid, blue-chip companies may prove very safe investments, especially if you buy a basket of them, and you buy them when they are cheap. (Meanwhile, bonds may prove very risky, especially if you buy them when they are expensive.)
Over time, stocks also have typically offered better protection against inflation than bonds.
You can find plenty of decent yields without going near the high-risk financials. Take these exchange-traded funds: The Vanguard Consumer Staples ETF, which invests in such companies as Procter & Gamble, Wal-Mart Stores, Philip Morris International and Kraft, has a dividend yield of 2.6%. The Vanguard Telecommunications Services ETF is yielding 3.8%, and the Vanguard Utilities ETF, 4%.
Do your homework and understand what you're owning, but many blue-chip stocks with good yields can be a good addition to an income portfolio.
Bond Bubble? What You Can Do About It.
By BRETT ARENDS
Are bonds in a bubble? And, if so, what can you do to protect yourself?
This is a key question for millions of investors -- especially after the Federal Reserve's surprise move last week to raise one of its interest rates. That's often considered a signal the Fed is about to raise rates more broadly, a move that would be ominous for bonds.
[Lede] Chris Gash
Bonds are IOUs issued by governments and corporations. They are generally deemed more stable than stocks. Today the public has more than $2.2 trillion invested in bonds through mutual funds.
Bond sales have boomed in the past year, as investors have sought more stability in the wake of the stock-market crash.
According to the Investment Company Institute, a trade body for the mutual-fund industry, investors have poured nearly $400 billion into bond funds since the start of 2009.
But booming sales have driven up prices. Corporate bonds have become more and more expensive. And U.S. Treasury bonds look even more so.
These days a seven-to-10 year bond from a top-rated company will pay you only about 4.3%. Even a year ago that was above 6%, and not long ago it was higher still. Meanwhile, a 10-year Treasury bond will pay a paltry 3.8%. During the financial crisis it briefly went lower, but by the standards of recent decades it is near the floor.
Why does this matter? Bondholders may not know it, but they are taking risks. The biggest is from inflation. When consumer prices rise, the fixed interest you get from your bonds is worth less and less in real, purchasing-power terms.
If the bonds' yields are high enough to compensate, this may not matter. But if yields are low, like now, and inflation takes off you can get into trouble. Those who invested in long-term Treasury bonds in the mid-1960s, just before inflation surged, actually lost money in real terms over the following 20 years. (Those who bought bonds in the early 1980s, when yields went as high as 15%, made out like bandits as inflation collapsed.)
When inflation rises the government usually raises short-term interest rates. And that's an additional problem for bondholders. When short-term savings accounts are paying about 1% a year, a piece of paper from a company promising 3.8% a year for 10 years can look quite valuable. But it'll be worth a lot less if short-term rates were to rise to, say, 5%, or even more.
Are we definitely in a bond bubble? Even though prices seem high, it's not certain. Some people argue that they are a reasonable value, and inflation will stay subdued. Indeed one or two bearish strategists argue bonds could go even higher, and yields lower. Only time will tell.
There are very few certainties in the financial markets. For private investors, the key is to make sure you're getting paid for the risks you're taking. In the case of anyone holding long-term bonds, you're probably not.
What can you do about it? Here are three practical steps to take if you are worried:
1 Limit your exposure to very long-term bonds. These are the ones most at risk from rising inflation and interest rates. Most people invest in bonds through mutual funds that have a mix of short-, medium- and long-term bonds.
How does your fund stack up? Just check the duration. That's a technical term that's the best measure of a bond's inflation and interest-rate risk. Longer-term bonds have longer durations. The fund company will post this number, usually on the monthly fact sheet on its Web site.
A short-term fund will usually have a duration of a few years. You will earn less money in short-term bonds, but you will face fewer risks. A fund with a duration beyond about six to seven years is taking on more risk.
2 Move some bond money into TIPS. Treasury Inflation-Protected Securities are bonds with built-in inflation protection. Right now, the 20-year TIPS bond promises to pay about 2% a year on top of inflation. By historic standards it's not steal -- but it's OK.
It offers a much better tradeoff between risk and reward than the regular long-term bonds. And it lets you sleep easy at night. With TIPS, you no longer have to worry about inflation. Bond prices can still move, but rarely by much -- and if you hold the bond for 20 years, it doesn't matter at all.
3 Consider some dividend stocks as well. Too many investors think in simplistic silos -- stocks are risky, bonds are safe, and so on. Yet stocks of many solid, blue-chip companies may prove very safe investments, especially if you buy a basket of them, and you buy them when they are cheap. (Meanwhile, bonds may prove very risky, especially if you buy them when they are expensive.)
Over time, stocks also have typically offered better protection against inflation than bonds.
You can find plenty of decent yields without going near the high-risk financials. Take these exchange-traded funds: The Vanguard Consumer Staples ETF, which invests in such companies as Procter & Gamble, Wal-Mart Stores, Philip Morris International and Kraft, has a dividend yield of 2.6%. The Vanguard Telecommunications Services ETF is yielding 3.8%, and the Vanguard Utilities ETF, 4%.
Do your homework and understand what you're owning, but many blue-chip stocks with good yields can be a good addition to an income portfolio.
Wednesday, February 10, 2010
Secret of Successful Marriage
I found this story under the BONDS section of the WSJ!! (while I was looking for Treasury Bonds)
* FEBRUARY 8, 2010
Happy Couples Kiss and Tell
For Ozzy and Sharon Osbourne, it's perseverance. For Jimmy and Rosalynn Carter, it's maintaining separate work lives. For Doyle and Louise Brunson, having separate bank accounts helps.
A former first lady, a rock star who's been in and out of rehab, and a professional poker player can all offer considerable insight into the mysterious workings of marriage. After all, their wisdom is gleaned from decades of conjugal bliss.
OK, maybe it wasn't always bliss. But each of them has stayed married—to the same person—for a very long time. And each considers his or her marriage to be happy, strong and mutually supportive.
In other words, they beat the odds.
It is often possible to understand why a marriage fails, as so many do. It is much more difficult, though, to elucidate why one succeeds. Why do some couples thrive, while others fizzle or flame out, despite their best intentions?
When I recently met former first lady Rosalynn Carter, who has been married to former president Jimmy Carter for 63 years, I couldn't resist asking how they made such a perfect union.
Mrs. Carter replied that she and her husband had gone through two periods in their marriage that were tough. "First, well, let me just say: Don't ever write a book with your husband," she said.
She went on to explain that the period after she and Mr. Carter left the White House and returned to their hometown of Plains, Ga., also put a strain on their relationship. Her husband felt adrift after failing to win re-election, she said. He would often interrupt her while she was at work in her home office, asking her to have a cup of coffee with him and chat.
"We learned that it was important to our marriage for each of us to always have our own work, our own projects," said Mrs. Carter, 82.
I asked my parents, who just celebrated their 46th wedding anniversary, why their marriage lasted so long. My dad said he had no idea. "Your mother did all the hard work," he admitted. Mom agreed, and divulged her marital secret: "forgiveness."
Happily married people believe they married their soul mates, and for good reason. Even marrying the right person gets you only part way. Ask the couples themselves, and they'll likely credit some combination of hard work and sheer blind luck.
Journal Community
Discuss: What are your secrets for an enduring marriage?
James Cordova, a psychologist at Clark University, advises couples not to leave it to chance. You should assess your marriage at least once a year, he says. "Imagine going to the dentist only if your tooth actually hurt. At that point something has gone terribly wrong, and the odds of saving it go way down," says Dr. Cordova, author of "The Marriage Checkup." "Marriage is the same."
Of course, no one ever said that every day, or even every year, was going to be rosy. And there are plenty of long marriages that are unhappy. But there are some strategies that happily married couples say work:
• Find the middle ground. "It's all give and take," says Marlene Critch, a retired hospital director in Tucson. She met her husband Bill on a blind date in 1959. He took her on a picnic with a thermos of gin and tonics; they married two months later.
Flash ahead 50 years. The Critches have raised two daughters in Seattle and weathered his severe heart condition. They swim together each morning, and he reads her children's books when she has trouble falling asleep at night.
Compromise, they say, got them through the good and bad times. Mr. Critch, 75, says he compromised by quitting the Air Force early in their marriage, because it bothered her that he was away from home so much. (Press him for more concessions, and he says, "Miso soup.")
Ms. Critch, 74, says she made her own compromise by agreeing to retire to Arizona, where her husband preferred the climate. (She wanted to stay in Seattle to be close to their daughters.)
"If each person can give 75 percent, you've got 150 percent," says Ms. Critch. Her husband agrees. "Many men would call that wussy," he says. "But I don't because I value her more than anything else in the world."
Similarly, Jan and Len Konkel, who have been married for 62 years, long ago made a pact to never argue over anything that wasn't very important, saving their battles for things like how to raise their three children. "Everything else is minor and can be settled in a discussion," says Ms. Konkel, 84.
Her husband agrees. "I say 'Yes ma'am' and 'No ma'am' a lot," says Mr. Konkel, 88.
• Be funny. On the night in 1967 that Jackie and Ken Egan met at a dance club in Boston, he asked her for a kiss. She declined: "I don't know you," she told him. "And my kisses are like Lay's potato chips—you wouldn't be happy with just one."
The Egans, who live in Marshfield, Mass., and have four children, just celebrated their 40th wedding anniversary on Monday. Ms. Egan says laughter helps them deal with issues that would otherwise drive them nuts—such as Mr. Egan's fussy eating habits and forgetfulness about putting the toilet seat down. Or Ms. Egan's inability to let her husband finish a story without interrupting him, or her many knickknacks.
"You need to learn to find the humor in each other's annoying habits. It helps you keep the affection," says Ms. Egan, 69.
• Keep (some) secrets. When poker legend Doyle Brunson met his wife Louise at a country-and-western club in Texas in 1961, he told her he gambled for a living. And she accepted him for who he is. "Love is the most important thing," says Louise Brunson, 78. "You have to love your spouse more than life itself."
The Brunsons, who live in Las Vegas, have stood by each other through some serious trials in their 47 years of marriage, including the death of a daughter and an armed robbery of their home, during which they were tied up at gunpoint.
"You have to go forward, you can't go back," says Mr. Brunson, 76. Even so, the Brunsons don't share everything. He doesn't discuss his business with her. "I have won and lost millions of dollars without her knowing," he says. Ms. Brunson says that's just fine with her. "I have my own bank account," she says.
• Never, ever give up. This tip is really important, so pay attention. Sharon Osbourne says it is how she stayed with husband Ozzy for 28 years and counting.
And she's married to the Prince of Darkness. He bit the head off of a live bat, for God's sake. (Ditto a dove.)
He also spent years strung out on drugs and alcohol. Never mind the groupies and the near-fatal overdoses. This man set fire to his house, passed out on a freeway median, and once tried to strangle his wife.
Ms. Osbourne, for her part, tried to run him over with a car, smashing his gold records with a hammer and taking out a restraining order. "We became like a soap opera," says Ms. Osbourne, 57, who is her husband's manager.
And yet she stuck by her man. Why? Because she felt he was a good person when sober and that he would kick his addictions one day. And she still believes he is her soul mate. ("Twice recently we've had the same dream on the same night," she says.)
"I went into marriage thinking it was forever. So I was stubborn," says Ms. Osbourne who has three children with her husband.
Mr. Osbourne, who was married once before, finally did sober up "six or seven years" ago, he says, and is very glad his wife stuck it out. "You don't throw in the towel at the first sign of trouble," he says.
And so Mr. Osbourne has made a point of telling his wife he loved her every single day—no matter where he was in the world, no matter how drunk or high. "She sometimes said 'Drop dead' or 'F— off,'" he says. "But at least if you are arguing, you are talking. If you stop talking, it's time to call it a day."
• Stay alive. My sister, a doctor, told me about one of her patients, a 92-year-old woman who showed up for her appointment with her husband, who is 94. They said they have been married for almost 70 years.
My sister, highly impressed, asked the couple the secret to their union's longevity. And they looked at each other for a long moment. Then the wife spoke: "Eh, neither of us died." (Wasn't this funny)
* FEBRUARY 8, 2010
Happy Couples Kiss and Tell
For Ozzy and Sharon Osbourne, it's perseverance. For Jimmy and Rosalynn Carter, it's maintaining separate work lives. For Doyle and Louise Brunson, having separate bank accounts helps.
A former first lady, a rock star who's been in and out of rehab, and a professional poker player can all offer considerable insight into the mysterious workings of marriage. After all, their wisdom is gleaned from decades of conjugal bliss.
OK, maybe it wasn't always bliss. But each of them has stayed married—to the same person—for a very long time. And each considers his or her marriage to be happy, strong and mutually supportive.
In other words, they beat the odds.
It is often possible to understand why a marriage fails, as so many do. It is much more difficult, though, to elucidate why one succeeds. Why do some couples thrive, while others fizzle or flame out, despite their best intentions?
When I recently met former first lady Rosalynn Carter, who has been married to former president Jimmy Carter for 63 years, I couldn't resist asking how they made such a perfect union.
Mrs. Carter replied that she and her husband had gone through two periods in their marriage that were tough. "First, well, let me just say: Don't ever write a book with your husband," she said.
She went on to explain that the period after she and Mr. Carter left the White House and returned to their hometown of Plains, Ga., also put a strain on their relationship. Her husband felt adrift after failing to win re-election, she said. He would often interrupt her while she was at work in her home office, asking her to have a cup of coffee with him and chat.
"We learned that it was important to our marriage for each of us to always have our own work, our own projects," said Mrs. Carter, 82.
I asked my parents, who just celebrated their 46th wedding anniversary, why their marriage lasted so long. My dad said he had no idea. "Your mother did all the hard work," he admitted. Mom agreed, and divulged her marital secret: "forgiveness."
Happily married people believe they married their soul mates, and for good reason. Even marrying the right person gets you only part way. Ask the couples themselves, and they'll likely credit some combination of hard work and sheer blind luck.
Journal Community
Discuss: What are your secrets for an enduring marriage?
James Cordova, a psychologist at Clark University, advises couples not to leave it to chance. You should assess your marriage at least once a year, he says. "Imagine going to the dentist only if your tooth actually hurt. At that point something has gone terribly wrong, and the odds of saving it go way down," says Dr. Cordova, author of "The Marriage Checkup." "Marriage is the same."
Of course, no one ever said that every day, or even every year, was going to be rosy. And there are plenty of long marriages that are unhappy. But there are some strategies that happily married couples say work:
• Find the middle ground. "It's all give and take," says Marlene Critch, a retired hospital director in Tucson. She met her husband Bill on a blind date in 1959. He took her on a picnic with a thermos of gin and tonics; they married two months later.
Flash ahead 50 years. The Critches have raised two daughters in Seattle and weathered his severe heart condition. They swim together each morning, and he reads her children's books when she has trouble falling asleep at night.
Compromise, they say, got them through the good and bad times. Mr. Critch, 75, says he compromised by quitting the Air Force early in their marriage, because it bothered her that he was away from home so much. (Press him for more concessions, and he says, "Miso soup.")
Ms. Critch, 74, says she made her own compromise by agreeing to retire to Arizona, where her husband preferred the climate. (She wanted to stay in Seattle to be close to their daughters.)
"If each person can give 75 percent, you've got 150 percent," says Ms. Critch. Her husband agrees. "Many men would call that wussy," he says. "But I don't because I value her more than anything else in the world."
Similarly, Jan and Len Konkel, who have been married for 62 years, long ago made a pact to never argue over anything that wasn't very important, saving their battles for things like how to raise their three children. "Everything else is minor and can be settled in a discussion," says Ms. Konkel, 84.
Her husband agrees. "I say 'Yes ma'am' and 'No ma'am' a lot," says Mr. Konkel, 88.
• Be funny. On the night in 1967 that Jackie and Ken Egan met at a dance club in Boston, he asked her for a kiss. She declined: "I don't know you," she told him. "And my kisses are like Lay's potato chips—you wouldn't be happy with just one."
The Egans, who live in Marshfield, Mass., and have four children, just celebrated their 40th wedding anniversary on Monday. Ms. Egan says laughter helps them deal with issues that would otherwise drive them nuts—such as Mr. Egan's fussy eating habits and forgetfulness about putting the toilet seat down. Or Ms. Egan's inability to let her husband finish a story without interrupting him, or her many knickknacks.
"You need to learn to find the humor in each other's annoying habits. It helps you keep the affection," says Ms. Egan, 69.
• Keep (some) secrets. When poker legend Doyle Brunson met his wife Louise at a country-and-western club in Texas in 1961, he told her he gambled for a living. And she accepted him for who he is. "Love is the most important thing," says Louise Brunson, 78. "You have to love your spouse more than life itself."
The Brunsons, who live in Las Vegas, have stood by each other through some serious trials in their 47 years of marriage, including the death of a daughter and an armed robbery of their home, during which they were tied up at gunpoint.
"You have to go forward, you can't go back," says Mr. Brunson, 76. Even so, the Brunsons don't share everything. He doesn't discuss his business with her. "I have won and lost millions of dollars without her knowing," he says. Ms. Brunson says that's just fine with her. "I have my own bank account," she says.
• Never, ever give up. This tip is really important, so pay attention. Sharon Osbourne says it is how she stayed with husband Ozzy for 28 years and counting.
And she's married to the Prince of Darkness. He bit the head off of a live bat, for God's sake. (Ditto a dove.)
He also spent years strung out on drugs and alcohol. Never mind the groupies and the near-fatal overdoses. This man set fire to his house, passed out on a freeway median, and once tried to strangle his wife.
Ms. Osbourne, for her part, tried to run him over with a car, smashing his gold records with a hammer and taking out a restraining order. "We became like a soap opera," says Ms. Osbourne, 57, who is her husband's manager.
And yet she stuck by her man. Why? Because she felt he was a good person when sober and that he would kick his addictions one day. And she still believes he is her soul mate. ("Twice recently we've had the same dream on the same night," she says.)
"I went into marriage thinking it was forever. So I was stubborn," says Ms. Osbourne who has three children with her husband.
Mr. Osbourne, who was married once before, finally did sober up "six or seven years" ago, he says, and is very glad his wife stuck it out. "You don't throw in the towel at the first sign of trouble," he says.
And so Mr. Osbourne has made a point of telling his wife he loved her every single day—no matter where he was in the world, no matter how drunk or high. "She sometimes said 'Drop dead' or 'F— off,'" he says. "But at least if you are arguing, you are talking. If you stop talking, it's time to call it a day."
• Stay alive. My sister, a doctor, told me about one of her patients, a 92-year-old woman who showed up for her appointment with her husband, who is 94. They said they have been married for almost 70 years.
My sister, highly impressed, asked the couple the secret to their union's longevity. And they looked at each other for a long moment. Then the wife spoke: "Eh, neither of us died." (Wasn't this funny)
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