04-25-2009, 02:54 AM
<!--quoteo(post=33038:date=Apr 25 2009, 12:47 AM:name=BT)-->QUOTE (BT @ Apr 25 2009, 12:47 AM) <{POST_SNAPBACK}><!--quotec--><!--quoteo(post=32896:date=Apr 24 2009, 04:42 PM:name=rok)--><div class='quotetop'>QUOTE (rok @ Apr 24 2009, 04:42 PM) <{POST_SNAPBACK}><!--quotec-->FYI, the AAA avg bond yield for the past 10 years:
1999, 7.05
2000, 7.62
2001, 7.08
2002, 6.49
2003, 5.66
2004, 5.63
2005, 5.23
2006, 5.59
2007, 5.56
2008, 5.63<!--QuoteEnd--><!--QuoteEEnd-->
And hasn't 2003 and onward been historically low as well? So aren't those years that are below 6 percent essentially the worst case scenario?
I thought I read somewhere that in normal times, people can expect 10 percent return on huge investments (which 25 million would qualify as).
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10%? Those would be ponzi scheme or junk bond type returns, and preferred stock is like higher grade fixed income. Normal returns on traditional equity are around 8-10%, while returns on high grade fixed income/debt are traditionally between 5-7%, before inflation. And that isn't just over the past 10 years, but using data for the past 100 or so.
But, yes 2003 and on have been very low in terms of yields on newly issued govt debt, but the above yields are on all corporate debt, both new and existing, which don't track the fluctuations in govt debt yields as closely as one might think, as other business cycle and company specific factors affect corporate rates moreso than govt rates.
1999, 7.05
2000, 7.62
2001, 7.08
2002, 6.49
2003, 5.66
2004, 5.63
2005, 5.23
2006, 5.59
2007, 5.56
2008, 5.63<!--QuoteEnd--><!--QuoteEEnd-->
And hasn't 2003 and onward been historically low as well? So aren't those years that are below 6 percent essentially the worst case scenario?
I thought I read somewhere that in normal times, people can expect 10 percent return on huge investments (which 25 million would qualify as).
<!--QuoteEnd--></div><!--QuoteEEnd-->
10%? Those would be ponzi scheme or junk bond type returns, and preferred stock is like higher grade fixed income. Normal returns on traditional equity are around 8-10%, while returns on high grade fixed income/debt are traditionally between 5-7%, before inflation. And that isn't just over the past 10 years, but using data for the past 100 or so.
But, yes 2003 and on have been very low in terms of yields on newly issued govt debt, but the above yields are on all corporate debt, both new and existing, which don't track the fluctuations in govt debt yields as closely as one might think, as other business cycle and company specific factors affect corporate rates moreso than govt rates.