Lessons Learned.

Shaken, Not Stirred.

A number of guest writers have thankfully provided their take on topics covering sports journalism, the economics of college athletics, the serious crisis in Lebanon, the meetings and events industry, and various other takes. Today’s guest writer provides insight into the world of bonds, a financial product that has always been a bit of a mystery. As a baseline:

  • The bond market broadly describes a marketplace where investors buy debt securities that are brought to the market by either governmental entities or publicly-traded corporations.
  • National governments generally use the proceeds from bonds to finance infrastructural improvements and pay down debts.
  • Companies issue bonds to raise the capital needed to maintain operations, grow their product lines, or open new locations.

Thanks to JP for his info and take:

Why should you own bonds? What are bonds? I have worked in the bond market for the past 35 years and I always get asked by friends “what are bonds?” are so I figured I may as well share some knowledge here. Thank you, Gary, for the opportunity.

Bonds Defined: As a simple definition, a bond is an IOU issued by a corporation, government, or government- sponsored entity, or municipality. It has a defined maturity and pays an annual rate of interest, typically on a semiannual basis.

What don’t I know about bonds? One clear benefit. Because bonds are IOU’s, they are from a capital perspective above equity (stockholders) in case of a bankruptcy. Huh? Well, if you own Apple stock and Apple bonds….and Apple were to go into bankruptcy and then into a company liquidation…. the first to get paid are the bond holders! That is right! All bank loans and bond holders get paid before the stockholders. So, in a worst-case scenario (bankruptcies/liquidations) …. the stockholders can get wiped out completely, while the bond owners would still get some of or possibly all of the principal they paid returned to them. Do you remember the financial collapse of 2008? If you owned Lehman Brothers stock, it went to zero. If you owned Lehman Brothers bonds, during liquidation they would have still paid out 40 to 50 cents on the dollar…. better than losing it all in the stock!

What is the size of the bond market versus the stock market? Thru 2019, the size of the U.S. stock market was $37.5 trillion, and the bond market $41.2 trillion. Globally, all of the stock markets combined total $95 trillion, and the bond markets $128 trillion.

How do bond prices and yields work? Yields and prices work in opposite directions on bonds. So, when interest rates increase…. bond prices decrease…. but if you hold a bond to maturity…..no matter what interest rates do…..you will be paid back at par (100) absent a default or bankruptcy. This is different than owning a bond fund. In a bond fund, interest rates and what other investors in the fund do can affect a gain or loss for you. Bond funds do not have a final maturity but rather a targeted duration.

Where are current US Treasury Bond Yields?

Why do yields go up? Yields on bonds are the market’s perception of inflation going forward. Rates will rise when the economy strengthens, signaling the federal reserve to begin raising short term rates to curb the unwanted additional inflation.

How do you measure your risk in bonds…? What is my downside? Let us say you bought a 5-year bond…. a AAA rated U.S. Treasury. You buy $10,000 of the U.S. Treasury 0.75% coupon maturing 3/31/26 at par. So, your yield is 0.75%. These will pay you that interest rate semiannually. So, each year that is $75, paid semiannually so $37.50 every 6 months.

Now let us say that interest rates on these bonds go from 0.75% to 1.50%. The market price of the bond goes from par ($100) to $96.40 or a paper loss of 3.6 points. That would be if you wanted to sell the bonds. If rates stay at 1.50% …. you still get paid $100 at maturity or $10,000….so only a loss if you sell them prior to the maturity date.

The longer the maturity (or duration) of a bond, the more the price changes for the same change in rates. So, on a 10-year U.S. Treasury at par ($100) with a 1.625% coupon with the same rate move of .75% to 2.375% in interest rates, the price moves to approximately $94.40 or a paper loss of approximately 5.60 points. Again, you still get paid your $10,000 at maturity if you do not sell them prior to maturity.

What if I want more yield? You can increase the yield you get by either lengthening the maturity of the bond you purchase or go down in credit quality. Since U.S. Treasury bonds are rated AAA, other bonds such as corporate bonds trade at a “spread” or yield on top of what U.S. Treasury’s yield. For example, in the above where 5-year Treasury’s yield 0.75%, a 5-year corporate bond such as Apple which are AA rated trade at a +.35 spread to the 5-year or 1.25% yield 1.10% (U.S. Treasury 0.75% +.35 spread = 1.10%). Or an Apple 10-year bond which trades at a +.40% spread to the 10-year treasury would yield 2.025% (U.S. Treasury 1.625% +.40 spread = 2.025%)
The lower the credit rating, the higher the spread and the higher the yield. The more risk you take, the bigger the reward.

What is duration? Duration is the weighted average maturity of the bond’s cash flows. This takes into consideration the interest rate the bond pays you as well as the final maturity. So, a five-year bond with a 3% coupon has a shorter duration than a five-year bond with a 2% coupon.

Why are interest rates and bond yields so low? The short answer is “QE” Quantitative Easing. QE is a form of unconventional monetary policy in which a central bank (like the Federal Reserve) purchases securities (bonds or some countries’ stocks) in the open market in order to increase money supply and encourage lending. This policy expands the central bank’s balance sheet and lowers interest rates. QE is typically used when a central bank has already lowered short rates as far as they can but still wants to drive down interest rates for longer maturities. Currently the Fed’s balance sheet is at $7.7 trillion and is growing at the pace of $120 Billion every month.

How do I invest in bonds? Most online brokerage firms have inventories of bonds to review. These can be U.S. Treasury bonds, Corporate bonds, Government Agency Bonds, or Municipal bonds. You can also purchase U.S. Treasury Bonds directly from the U.S. Government at this website:


SpaceX’s Used Vehicle Does It Again.

I have enough issues navigating Orlando’s Colonial Drive when heading to my local Publix Supermarket. Then, for the second time, I try to understand how SpaceX’s reused Crew Dragon links up with the International Space Station (ISS) 264 miles above the Indian Ocean. Let’s be very clear, I don’t understand how the Crew-2 and the ISS even come close to each other twenty-three hours after liftoff, nonetheless dock while on the same orbital path. Based on JP’s analysis of the bond market, I would expect he could tell us how this is possible? 🙂

No Winner Here.

  • Guilty on all three counts. The reading of the verdict by the judge was even-keeled and decisive. There really is no winner in the George Floyd/Derek Chauvin case – other than the process of a jury trial. What actually came out of this trial was a 12-person jury, whittled down from a pool of more than 300 potential candidates, made up of one Black woman, two multiracial women, two White men, three Black men, and four White women. Most under 40. This mix of people were charged with deciding one of the highest profile cases in recent memory, and without editorializing, provided the Court with a verdict that reverberated across the country.

As I posted two weeks ago, Derek Chauvin did not have the intention of ending George Floyd’s life. As the unfortunate circumstances unfolded, including Floyd resisting the police officers’ effort to place him in their car, Chauvin’s emotion and machismo led to a terrible act of judgment, one that will put him in prison for many years. The justice system was the only ‘winner’ here – a jury trial that provided the proper due diligence with a very difficult case. Difficult in many ways, including the Judge’s decision not to sequester the jury and two alternates.

Caitlyn On The Run.

California – one of my favorite states to visit, from Carlsbad to the Central Coast, and of course the Pacific Coast Highway leading you through the twists and turns leading up to the amazing town of Carmel. I had to yield way to my visits to the west coast due to the pandemic, but it is now probably time to visit California, that if a sovereign nation, would rank as the world’s fifth largest economy. It is also a state whose front-runner for governor is Caitlyn Jenner. The last time I saw Jenner as a front-runner was when he was in the throws of winning the 1976 Olympic decathlon gold medal. California: an amazing state to say the least. Run Caitlyn, Run!

Bruce Jenner, now Caitlyn Jenner, won the 1976 Olympic Decathlon Gold Medal.

Paying It Forward.

  • Now for some news that makes you smile. Speaking of paying it forward, an LSU fraternity did a great thing for their former fraternity house cook. A kind gesture to say the least that sheds a bit of light on a week of news to forget.
Paying it forward.

Adios, pay it forward, stay safe, and have a Funday Sunday!

It Is Already Mid-April.

UFO. The World Of Golf. Rocket Man. Challenge Me. Random Thoughts.

  • I am not a conspiracy theorist. I am reasonable and of sound mind (many might disagree). Then I read these statements, released last Monday, from the Pentagon: “As we have said before, to maintain operations security and to avoid disclosing information that may be useful to potential adversaries, DOD does not discuss publicly the details of either the observations or the examinations of reported incursions into our training ranges or designated airspace, including those incursions initially designated as UAP.” UAP is the acronym for Unidentified Aerial Phenomena. Am I the only one wondering what the hell the Pentagon is trying to explain?
Call me crazy but what are these pilots tracking?
  • Golf at one time was a sport of dignity, rules and attire. Years ago, many golf courses around the world demanded long pants, collared shirts and a level of respect for fellow players and the golf course. Over time, for many reasons, the number of golfers in the United States declined leading to as many as 200 golf courses failing each year. At many golf courses and clubs there a different revenue streams, but no matter, the key metric is the number of rounds played each day, month, and year. The number of golfers on a course lead to different levels of spend at the course including the green fees, pro shop purchases, and restaurant/bar tabs.

Just when the golf business seemed to be a thought from the past, the Covid-19 pandemic has yielded an increased interest in golf, mostly due to the ability to get outside and enjoy camaraderie in a relatively safe way. This circumstance has been great for the golf business with many people venturing out to play who have never before been on a golf course. The “dumbing down” of the sport has only been a good thing to a point, and without editorializing, here is a case in point:

Golf, the next WWF event!!

It looks like NASA has given Space X yet another “GO” for a manned launch of their Crew Dragon spacecraft this Thursday morning. The three-man, one woman crew will rendezvous with the International Space Station (ISS). This crew of four will replace the crew of the first operational Crew Dragon spacecraft who will return to Earth on April 28. Unbelievably, this has become an every month occurrence – out of the realm of thinking even ten years ago. The privatization of space has been a tremendous boost to the world’s space programs and many people’s wallets. It was reported last week that Space X is now at a valuation of about $74 billion.

SpaceX’s Crew Dragon Endeavour spacecraft is rotated for attachment to its Falcon 9 rocket.
  • I really like to challenge myself to learn or experience something new every year. I should have taken 2020, and the fallout of the pandemic, to learn something new, and since I really do like music, my challenge should have been to take a stab at learning how to play the guitar. I did not take the time to do so, and so far, almost five months into 2021, I have not yet set a new challenge. This video has nothing to do with pretty blondes, Sharon Stone in the movie Basic Instinct, or my passion for the band Deep Purple. I am just very envious at how effortlessly Emily Hastings cranks out Smoke On The Water – an inspiration for me to get off my ass and set a personal challenge for the balance of 2021.

Random Things I Think I Think:

  • Closing arguments start tomorrow with the George Floyd/Derek Chauvin case. It is going to be interesting how the defense attorney establishes reasonable doubt, etc.
  • Matt Gaetz – Even cutting the allegations in half, and in half again. A bit sickening.
  • JLo & ARod – thanks for setting the record straight as all of us had to know that you officially broke up. Get over yourself.
  • I respect that it is an individual decision not to be vaccinated. Just be respectful that private entities and businesses will make their individual decisions as well.
  • I am a firm believer of the U.S. Constitution including the 2nd Amendment. With that said, more tragedy, in San Antonio and Indianapolis, dictates some type of action must place. Forty-five mass shootings in the last 30 days – is it time for the 2nd Amendment to be amended just a bit?
  • The game, played between Orlando City and Atlanta United at Orlando’s Exploria Stadium, ended in a no-goal draw. The real win was Orlando City’s management and staff, who I am sure worked very hard to pull of this 50% capacity match on a hot and humid day. It really did feel good to be back in a stadium with approximately 12,000 very supportive fans. Kudos to Orlando City as attending a live sporting event felt very good.
  • To all vaccine manufactures: please figure out how vaccine booster shots can be paired with the annual flu shot. Thank you.
  • The Atlanta Hawks are very good…and when they get everyone healthy they will make a great run into the playoffs.
  • The Castro’s have been ruling Cuba since 1959. Raul Castro, who replaced his brother, Fidel, is “stepping down”. Raul, maybe you should just follow your brother to Hell? Sorry, that was political but what these brothers did to this awesome island country is criminal.
  • Speaking of my fav, Godzilla: If a few Tyrannosaurus rex (T.rex), the school bus-sized meat-eating dinosaurs that stalked our landscape seems impressive, how about 2.5 billion of them? Say what?

Adios, pay it forward, be safe, and have a Funday Sunday!

A Broad Stroke Of Topics.

Driver Needed. Honor. 118 Years Later. Enjoy Rikers. Electrified. I Drew The Wrong Straw. The Lions and Five Stripes – A Battle of Epic Proportions.

  • Can anyone please explain how Tiger Woods’ agent and business support team allows him to drive himself to commitments, appointments, or anywhere, especially in locations he may not be familiar with? The L.A. sheriff’s office has kept his awful auto crash under the radar but they did disclose the vehicle reached speeds above 80 mph, in a 45 mph zone. Tiger: no mas. Use some of that wealth and hire a 24/7 driver.
  • Speaking of golf, we head into today’s final round of the 2021 Masters. The tournament always opens with golf’s greatest teeing off on the 1st hole. A tradition like none other as they say, and this year, Jack Nicklaus and Gary Player were joined by honorary chairman Lee Elder, the first black golfer to compete at The Masters. Yes, the 80 year-old Nicklaus and the 85 year-old Player hit their tee shots straight down the middle. Of course they did.
Lee Elder with the legendary Gary Player and Jack Nicklaus at Thursday’s first round.
  • NASA engineers will try and attempt the first flight on Mars today and it could change space exploration forever. As a recap, NASA’s Perseverance rover, which launched in July 2020 and arrived on Mars February 18, carried the Ingenuity helicopter folded up in its belly. After the rover landed, it dropped Ingenuity onto the ground so the helicopter/drone could ready itself for its first flight.

As a matter of perspective, Ingenuity will attempt the first powered, controlled flight on another planet. The first powered flight on Earth took place Dec. 17, 1903, on the dunes of Kill Devil Hills, near Kitty Hawk, North Carolina. Orville and Wilbur Wright covered 120 feet in 12 seconds during the first flight. Those two brothers would be mighty proud 118 years later.

NASA engineers test Ingenuity in preparation for today’s flight.
  • An undercover Asian officer from the New York Police Department (NYPD) has arrested a woman for hurling anti-Asian remarks at salon employees in Manhattan. The woman was caught harassing Asian employees at a Chinatown nail salon by threatening them and blaming them for the Covid-19 pandemic. I have read that Rikers Island’s infamous penitentiary is cozy this time of year. In fact, former Rikers Island inmates have called the facility “hell on earth,” cockroach-infested, and filthy. In 2019, there were 70 violent incidents for every 1,000 people in jail. I can’t think of a better place for this moron to spend the next five to ten years.
Yes, it goes both ways.
  • In previous posts I have mentioned my interest in autonomous and electric vehicles. While I immediately think about the recharging and range issues it seems that major automobile manufactures are way ahead of the curve on how to overcome said issues. In fact, General Motors (GM) will offer thirty types of electric vehicles by 2025 – with 40% of the company’s U.S. models battery-powered electric vehicles. GM has partnered with EVgo, who in the next five years will add 2,700 fast charging stations, all powered by renewable energy. There is no doubt GM as well as most of the world’s major automobile manufacturers are betting heavily on the electric vehicle market, with GM announcing that their new Hummer will be all electric.
2022 gmc hummer ev
The new Hummer from General Motors will be all-electric.

On the other side of the electric vehicle spectrum, there are numerous manufactures that are are unveiling tiny electric cars that will carry just one or two people and in many cases, go relatively short distances on a single charge. I assume their market research has provided for the potential demand, but there would definitely need to be a discernible rhyme and reason with negotiating the crazy traffic and highways associated with most major cities.

The Microlino is modeled on post-World War II European "bubble cars."
The Microlino is modeled on post-World War II European “bubble cars.”
  • K-9’s. These unsung heroes of law enforcement are invaluable with hunting down suspects as well as the search for drugs and weapons. The training these dogs go through has to be intense and never-ending, and must include training exercises reenacting actual tense situations. The real question: who draws the short straw to act as the perpetrator? Take a look.
Hoping that the protective clothing….is actual protective clothing!
  • I am very much looking forward to Saturday at 3pm. The start of the Major League Soccer season includes what should be a great game between Orlando City and Atlanta United. Exploria Stadium is the venue, a beautiful downtown Orlando stadium walking distance from many outdoor restaurants and bars. Though Orlando City’s new in-state rival is down in the Miami area, there is no love lost between the Lions and the Five Stripes. It started many years ago when Atlanta United’s front office, in order to help generate a rivalry, placed outdoor advertising easily seen from I-4 in Orlando, and the rivalry expanded with comments made by both teams and their supporters. Orlando City, coming off a great 2020 season, will be a force to be reckoned with as they have reloaded their player pool, while Atlanta United has brought in a new manager, a few new impact players, and is hoping Josef Martinez has recovered from knee surgery. Saturday afternoon at Exploria Stadium will be a fun game to watch.
Orlando City’s Exploria Stadium – a great stadium with a great fan experience.

Adios, pay it forward, stay safe and have a Funday Sunday!

Cork The Whine v.2. Radioactive. Accountability. Spring Has Sprung. A First Time Listen.

An Overachiever. Godzilla Cuts Kong Some Slack. Stepping Over The Line. Sports Central. Crazy For You.

  • I guess we have every right to bitch and complain with all the issues we have to deal with these days. Whether personal, financial or work-related, the pandemic has given us a level of frustration and unfortunately in too many cases, despair. Then you learn about the greatest athlete no one knows, who is featured on the latest Real Sports program from HBO. Born with severe birth defects after her birth mother was exposed to radioactive fallout from the nuclear disaster at Chernobyl, 31-year old Oksana Masters was missing a kidney and part of her stomach at birth, had extra toes, no thumbs, and her legs were extremely deformed. Placed in an orphanage in Ukraine, she tells her story of being passed over by prospective parents for years. Fast forward and Oksana’s fortunes changed overnight as she was finally adopted by a college professor who had seen her story of complete despair. Those deformed legs were eventually amputated and after being fitted with prosthetics, Oksana, at the request of her mom, took up rowing and the rest is history. Her achievements include Paralympic medals in both summer and winter competitions including the biathlon, cross-country skiing, rowing and cycling. She is both an amazing athlete and inspiration to all of us. Watch this two-minute video – a real life dose of reality.
  • A few people questioned my sanity (join the club) with my exuberance and angst concerning the new Kong v. Godzilla movie. If you remember, I questioned the audacity of Warner Bros. Pictures and the film’s writers for growing Kong to the size of the 393-foot tall Godzilla. A sham in my opinion but the movie in general came off well. Out of respect for those who have not watched, I will not divulge the details and outcome of the movie. What I will say is that no one ever needs to challenge me about the greatest antagonist that has ever roamed this planet. Just don’t – and if you are not on Team Godzilla you just need to check yourself. 🙂
Michael Dougherty on How, and Why, King Kong Will Fight Godzilla  [Interview] - Bloody Disgusting
  • Another mass shooting last week and another Capitol police officer dead. In some states, a surge in Covid-19 contractions. These type of events damper what has become one of our bright spots in the last 14 months – the vaccine. There seems to be some momentum and a bit of light at the end of the tunnel. Then we get another dose of reality with the trial of police officer Derek Chauvin, 45, who has pleaded not guilty to the charges of second-degree murder, third-degree murder and second-degree manslaughter in the arrest and subsequent death of George Floyd. My assessment: Chauvin was a tenured officer, experienced in apprehension and arrest procedures. I do not believe that Chauvin had the intention of killing George Floyd but I do believe that he should be held accountable for his actions that have led to the charges filed against him. Whether it be his ego, machoism, or insecurity, his action of placing his knee on Floyd’s neck for over nine minutes was not warranted, especially with the presence of his fellow officers. To me he was proving a point -unnecessary actions that unfortunately led to George Floyd’s death. I agree with the charges levied against Derek Chauvin – and this is just my take. I am interested in your take, but don’t bother interjecting any reference to race or politics. Unacceptable as part of my ethos with this blog.
Autopsy: George Floyd's death was homicide caused by neck compression

  • This weekend has always been the start of many good things. A few weeks into daylight savings time, the weather moving into springtime, and the sports world on fire. The start of Major League Baseball and Major League Soccer, the NHL and NBA in playoff positioning time, Europe’s top leagues jostling for Champions League qualification, and the NCAA Final Four for both men and women. Tuesday starts the CONCACAF Champions League competition for a few MLS teams with Atlanta United playing the first leg against LD Alajuelense down in Costa Rica. This will be a difficult match for the Five Stripes, still putting together their team under new manager Gabriel Heinze, and with a starting lineup that will average 24 years old. Speaking of young, it looks like Heinze will start four very young defenders – a big ask on the road in Central America.
  • It is so fun to watch these two YouTube sensations discover music from the past – whether it be Pavarotti or Metallica. I am sure Heart’s Crazy on You provided these two young men a dose of reality when it comes to Ann’s incredible vocals and Nancy’s rifts on her magical guitar. The twins, Tim and Fred from Gary, Indiana, have become YouTube sensations with their “First Time Hearing” videos which were originally focused on rap. They have obviously expanded their range of music listening with over 250,000 YouTube subscribers. Nice work gentlemen!

Adios, pay if forward, be safe and Happy Easter!