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We live in a world in which you better know how to think for yourself. More importantly, you must be willing to act and make decisions.

Streaks End

November 30th, 2021 by Kurt L. Smith
  • Streaks don’t last forever. This past weekend in college football proved that. The college football playoffs this year will not include Clemson, Ohio State or Oklahoma. Despite all reason, the best talent, and the fact we all love winners, the playoff runs for these schools has ended. Only Alabama’s hope remains. 

    Time will tell whether this is but a minor setback for these perennial powerhouses or one of long-lasting stature. I know the differences. I am a (now) long suffering Texas Longhorn fan. 

    I also called the end of the bond bull market as March 6, 2000. An almost forty-year winning streak for the bond market is now over, yet many do not share my certitude, even after twenty-one ridiculously long months. 

    From a National Championship sixteen years ago and runner up twelve years ago, everyone now knows the Longhorn streak is over. No fan would ever admit that the 2006 Rose Bowl would be as good as it gets, but that’s always a possibility when you are on top. 

    Things happen, streaks end, even when no one wants them to or worse, admit it. Despite having the best talent, the best resources, the most money, things happen and streaks end. 

    Though the bond market bull is over one can argue the world hasn’t come to an end. One can also argue the stock market has never been better. One can also argue the unlimited resources of the Federal Reserve will forever ensure that the streak (whatever streak you are cheerleading) will never come to an end. Seems like a lot of never’s and forever’s, but let’s ride with it! 

    We have also decided to ride with our current Federal Reserve chairman, Jerome Powell. He may not (yet) be the greatest Fed chair ever, but he’s our Nick Saban and we will be counting on him to keep the streak (and all streaks) going. While that does not seem to include the bond market, in my opinion, many are not yet willing to concede that the bond streak is even over. Even the Longhorns came close four years after their 2006 climax; too bad second is the first loser. 

    We live in a world in which you better know how to think for yourself. More importantly, you must be willing to act and make decisions. There are few voices out there going against the flow and most of them continue to get run over. But when change is happening, and happening at unprecedented speed in unprecedented ways, you need to be ahead of the curve. 

    These are the lessons of the trader and most people do not have worthwhile trading skills. Bitcoin set numerous record prices only to fall twenty percent in about two weeks (November 10th to November 26th per Bloomberg). Top of market or merely gut check? We won’t know for a while perhaps, but you never know when a streak may be over. A nice ride so far, no doubt, but financial history is littered with boom-bust examples. 

    You have enjoyed one of the truly remarkable financial booms in human history. My job is not to pour cold water on it; my job is to help you preserve it. Having a plan is not enough. Mutual fund companies and money managers have a plan for you. Having the right plan and acting on it will be much better for your financial health. Now continues to be the time to act. Down forty percent is not the time — just ask U.S. Treasury bond investors. 

    Schertz – Cibolo – Universl City Texas Independent School Dsitrict 

    Refunding Bonds, Series 2021A 

    Aa3 Moody Underlying   Aaa Moody (PSF) 

    Due 2/1   Dated 12/1/21 Maturity 2/1/44 

    $7,220,000 Sold 

    Years   Maturity     Coupon      Yield* 

    2            2023              4.00%           0.31% 

    3     2024      4.00%           0.42% 

    4            2025              4.00%           0.52% 

    5    2026              4.00%           0.71% 

    6            2027              4.00%           0.86% 

    7            2028              4.00%           1.08% 

    8            2029              4.00%           1.20% 

    9     2030     4.00%           1.29% 

    10     2031       4.00%           1.34% 

    11     2032     4.00%           1.39% 

    13          2034**            3.00%           1.46% 

    15          2036**            3.00%           1.52% 

    17          2038**            3.00%           1.58% 

    19     2040**            3.00%            1.66% 

    23          2044**            3.00%            1.78% 

    *Yield to Worst (Call or Maturity) ** Call 2/1/32 

    Source: Bloomberg 

    This is an example of a new issue priced the week of 11/22/21 

    Prices, yields and availability subject to change 

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