‘Return-Free Risk’

In a world where some $18 trillion in debt "boasts" a negative yield, bonds no longer offer risk-free return, but rather "return-free risk." So says Leon Cooperman who, apropos of nothing, but I feel compelled to mention it anyway, literally cried on national television last year at the prospect of an Elizabeth Warren presidency. Cooperman's characterization of the bond market, delivered in a September interview with Bloomberg, is apt. The fixed income universe is, of course, distorted beyond

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5 thoughts on “‘Return-Free Risk’

    1. Several short-term muni funds get over 2% on a tax-adjusted basis. I have my grandson’s college fund in a nice Vanguard short-term corporate fund yielding ~2.4% (VCSH). Even have a small gain in that one.

  1. Come on H, there is an answer, I much rather be chased by Freddy Krueger, all you have to do survive is stay awake:
    One, Two, Freddy’s Coming For You
    Three, Four Better Lock Your Door
    Five, Six Grab A Crucifix
    Nine, Ten Never Sleep Again

    Happy holidays, merry xmas or whatever you celebrate, thanks for all the great content in 2020

  2. Seems like maybe bonds as an asset class are over. What are portfolio managers going to do? What about the auto-allocation for all the 401(k) money? Who are the bag holders going to be?

    How is my life insurance company who has my policy going to be able to stay solvent long enough to pay out when I’m dead?

  3. Negative yields logic lays in Government bonds as a service: their use as collateral. Market operators are willing to pay Governments for the purpose to have a pristine asset to be used as collateral for repos and other complex structures.

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