McLean Asset Management

It’s become an article of faith lately that bond yields have to go up – just like they were supposed to last year. Well, the market continues to confound the market timers. Bond yields are actually down. This is a good reminder that the market doesn’t actually care what you think. It’s going to do…

The U.S. began issuing Treasury Inflation-Protected Securities (TIPS) in 1997. Backed by the full faith and credit of the U.S. government and assurances that inflation cannot eat away at their value, TIPS provide a risk-free asset for U.S.-based investors. The face value and coupon payments are both indexed to keep pace with inflation and preserve…

Understanding the relationship between bond risk and time to maturity and duration of a bond provides the basis for understanding the bond yield curve. The yield curve shows the yields to maturity for a series of bonds — typically U.S. Treasury bonds — with the same credit quality but different maturity dates, along with the…

We all know diversification is important. But it’s always nice to be reminded just how important it is – and even better when you have news articles linking directly to academic papers like this one does. Hendrik Bessembinder, a researcher at Arizona State ran a really interesting analysis. If you look at individual stocks in…

Investors can find signals anywhere, for better or worse. Apparently one of the better ones out there is the Super Bowl. Since 1967, when the AFC wins, the markets are down for the year. Unfortunately for me, I live in New England. I’m not sure what I’m supposed to do… At least this time it seems…

Bond prices are sensitive to interest rate changes, and bond duration is a measure of just how sensitive. For instance, if a increase in interest rates from 2% to 3% caused a bond’s price to fall by 8.5%, the bond would have a duration of 8.5, meaning that a 1% rise in interest rates leads to an…

As a bond provides a contractual right to a series of future payments received at specified points of time, the price for a bond is simply the present discounted value of the future cash flows. The face value of a bond will be repaid at maturity. A zero-coupon bond provides only a bond’s face value,…