As the Wall Street Journal noted this morning (‘Investors, Fearing Defaults, Rush Out of Junk Bonds’), “the specter of widespread corporate defaults in the coming months has caused a massive selloff in junk bonds around the world, as many debt-laden companies face the prospect of going weeks or months with virtually no revenue.” In fact, […]
As the Wall Street Journal noted this morning (‘The Oil Crash is Hitting this Investment Hard’), “the plunge in crude-oil prices is sending shock waves through closed-end funds tracking the energy sector, highlighting how the market turmoil is hitting products popular with ordinary investors seeking to boost returns during the long bull market. Shares of […]
As volatile market conditions continue and seem to be accelerating on a daily basis, questions are being increasingly raised regarding the risks posed to investors and the relationship of margin to those risks. Investors who sign a margin agreement can borrow up to 50% of the purchase price of marginable investments (the exact amount varies […]
With historically low interest rates before the recent market crash, corporate debt has skyrocketed. According to the Federal Reserve Bank of St. Louis, Nonfinancial Corporate Business Debt has eclipsed $6.5 Trillion. Low interest rates have given rise to “zombie corporations.” A “zombie corporation” only generates enough revenue to service its own debt, and as a result, […]
US companies will soon lose their coveted top-quality credit ratings, sending their debt tumbling into the rating category known as “junk.” A cut in rating below investment-grade — marked by the threshold between triple B and double B — indicates a stern warning from the likes of Moody’s and S&P Global for companies to improve […]