What’s Your Plan Z?: What to Do When Things Go Bad
When things get really bad, escaping to the Grand Canyon is not enough. You need cash, passports, food, and all the right investments. Kim Iskyan explores Plan Z.
bankruptcy
Bonds and Liar’s Poker at Salomon Brothers
Just a few years before Michael Lewis was at Salomon Brothers, eventually writing his best-seller Liar’s Poker, Porter & Co. Distressed Investing analyst Marty Fridson was in another part of the building at One New York Plaza, identifying profitable trade opportunities in the debt market. He shares details in today’s Journal.
Meet Bank of America’s CEO – The Worst Investor in History
One-third of the reserves of our biggest banks are deeply underwater today. As Porter writes, Bank of America is in a deeper hole than all of them. And even if you don’t keep your money there, you might end up paying for it.
It’s Wall Street’s Secret
It’s no secret that Warren Buffett has been selling shares of Bank of America. These details are public. What nobody has figured out is why Berkshire has sold almost all of its bank stocks since early 2020.
“Fake” Bankruptcies, Real Bond Gains
When the economic cycle reaches the point where corporate earnings are plunging, hundreds of companies will come under closer scrutiny and often become distressed. Investors who get in around the low point will realize huge gains. The trick, of course, is figuring out which pose the risk of bankruptcy and which do not.
Bond Market Stress Declines… For Now
Bank loans are becoming harder to obtain. Meanwhile, credit ratings on corporate bond issuers are improving. The freight train represented by credit tightening is hurtling down the track, but it hasn’t arrived at the station yet.
Moody’s Shows “Hidden” Defaults on the Rise
As escalating default and bankruptcy rates make bond investors increasingly risk-averse, we can expect to see a growing number of basically sound companies’ bonds trading at depressed prices. And that means opportunities for distressed debt investors will increase materially over the next year.
Defaults Triple – But Market Thinks They Won’t Stay This High.
Most investors believe the Fed is done or nearly done with its inflation-fighting interest rate hikes – and so far, no recession is in sight. That means perceived risk will remain subdued in the high yield bond sector… for now.
Portfolio Update: Corporate Bankruptcies Reach Financial-Crisis Levels
Corporate bankruptcies are running at their highest rate since 2010, the year after the Great Recession. As defaults rise, investors will likely become more cautious about taking credit risk and it should become easier to find attractive values in lower-quality bonds.
Portfolio Update: Four Deeply Distressed Industries to Watch
In our view, the distress ratio is likely to double or triple from its current level by late 2023 or early 2024. And that means a crop of new distressed opportunities will soon arise.