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If you buy a deeply discounted agency bond in the secondary market (no OID) and you hold it to maturity (more than a year away), since it matures at par value, are you taxed for the difference between your purchase price and par as a long term capital gain, or is it taxed as ordinary income? I read something about a De Minimis tax for deeply discounted municipal bonds, but I don’t know if it also applies to other bonds such as agency, treasuries, corporate, etc. Thanks in advance!

Great point on buying above par. A similar issue happened to me on an agency bond I bought in April at Par. The YTM and YTW was 6.25% but I did not pay attention to the settlement date that was not until mid May. Now it is called and they had my funds for 6 weeks but I am only getting 3 weeks interest so 3% not 6,25%.

Good video as always. I am 85% in fixed income with a combined rate of 5.7%. It is mostly short term with about half in T bills coming due each month with the other half divided equally between 1 or 2 year CDs, agency bonds which are starting to be called and TIPS and a 20 year nominal bond. I bought the 20 year bond in April and the coupon is 4.75% with a YTM of 4.88%. I bought it at a discount of .98 and it’s now at 1.02 so there is a nice gain.

I have Preferred shares that I have held for years (all have paid like clock work). My issue is that given the high bid-ask spread due to low volumes, and given that they are perpetual, I have no clear exit strategy. I won't be buying any more...

Happy M Day!

I like UTHR however it doesnt pay a dividend and it has run up 30% this year. I'll look for a pullback to 200 sma 232 range to add

Good video Badri, Fixed income is your play and with higher rates it is a good place to be.

What...?? You don't have magical powers..??? Shocking.

Good video Badri, I look forward to our conversation tomorrow

If the small tanker company is a better value, why did you invest in the larger tanker company?

Why short-term treasuries, why not lock in the treasuries in 10 years?

good video... could you please reduce the volume of the background music? It is irritating... good music, but very loud and disturbing

Hey young man, I'm really glad I stumbled across your channel... I like your style. Hope this isn't too terribly long winded, but I've got a 2 part question for ya if you'd be willing to entertain me... I also see alot of dark clouds on the horizon, and am filled with the feeling that a monumental crash is coming,like an asteroid hurling thru outer space on a collision course with us. I'd very much like to take some steps to financially brace for the impact, but I'm a village idiot when it comes to fixed income anything... So, my question is, in my John Hancock 401k I have some conservative options to switch into to ride out the storm: AF US Government securities Blackrock high yield bond fund DFA Inflation protected Sec Lord Abbett Short Duration Inc Or Money market fund... I just don't know if they're worth a damn. Any thoughts would truly be welcome?.. Also, in my private portfolio I have some rather large positions in Chinese companies (Alibaba & JD)... Do you think they will survive or even thrive in an American recession/ market crash?

Love your content. Question: as coffee bean price increases, I would expect that to be a drag on Starbucks and similar because it is an input cost. I would instead look at coffee bean producers. Thanks!

I am buying 20 year treasury bonds at 6.5% instead of 1 year T bills at 5%, knowing they will be getting called as yields drop. My 5 year also got called at 6.15% that I only held one month but the longer term ones are staying active between 6.0% and 6.5% for now.

Good video, there are not enough videos on fixed income. I have a channel as well and I would be interested in having a livestream with you. I would interview you to get your comments on your investment strategy and process. Let me know if you would like to do that are a convenient time.

Curious what you think of Chinese stocks in this environment? Less sensitive to US rates, exporter benefits from US inflation, and are also value juggernauts.

Thanks! Took a small position of TNK a few weeks ago based on my research after you alerted me to it. Nice to see it won your Superbowl. Keep up the excellent content!

Thanks for the elaborations and analysis. You are a great teacher.

Hi! Yield Nerd, Thank you for the insightful analysis. I have been closely following your work and conducting thorough research on your value stock recommendations. I would like to discuss two issues that have come to my attention. Firstly, I have examined UAA, which initially appears to be in good shape. However, upon further investigation, I discovered that they have a significantly high amount of total liabilities as of 3/31/2023 (2,859 million) in comparison to their total debt (674 million) and total equity (1,998 million). Consequently, their total liabilities to equity ratio stands at an alarmingly high level of 143%, which does not reflect in their debt to equity ratio. I am curious whether it would be more informative to consider the total liabilities to equity ratio instead of solely relying on the long-term debt to equity ratio, which can be manipulated by the company. Secondly, I have analyzed TNK's balance sheet over the past five years (2019-2023). One thing that stands out is the significant reduction in their total debt, which decreased from 1,240 million to 140 million. I'm perplexed as to how the company managed to generate the necessary funds to substantially reduce such a large debt burden. While it appears that the company disposed of some assets, the numbers don't seem to align. I believe you may have a more comprehensive understanding of their balance sheet and can provide insights to address this anomaly. Thank you for your attention and I look forward to your insights on these matters. Best regards, Wing

Adding chapter sections to your video would be really nice. It was surprising to wait till 12:47 to see the first time the nvidia of eggs actually has the name dropped. New visitors might not have twelve minutes to wait for the secret.

I appreciate your analysis deeply. ADM does appear to be a promising investment. If it’s not too much trouble, could you possibly share your insights regarding the preferred stocks (HTIBP)? I realize it might be difficult to revisit past experiences, but your wisdom could serve as a guiding light for other investors. You also seem to hold another preferred stock, PCG-B, which appears to be an attractive investment once more. Could you shed some light on any potential risks? Thank you in advance.

Thanks for sharing your investment experience. Is it possible to share what the differences are between the new and old filters? Why is it related to being greedy? Cheers!

What a great analysis! 👏

All investments show that same drop on ex-date. It is the market that discounts the investment by the amount of the dividend (which will be paid to the owner as of the ex-date regardless of who owns that stock on the dividend pay date). It is NOT the fund manager crashing the stock. I continue to learn alongside you so wanted to share that tidbit.

Excellent common sense! No Chinese junior mining companies here.

Thanks for the uncommon knowledge concerning these lesser-known entities. 😉

Hi Yield Nerd, thank you for providing great content and discussing the concept of arbitrage using the example of BDX preferred stock. I appreciate the effort, but there are some errors in the calculation that arises from the conceptualization of preferred stocks. Upon rechecking the preferred stock information on Quantumonline, the conversion price range should be $240-$288. I will use this range for the following example although this information doesn't significantly impact the discussion. I'd like to suggest an easier way to conceptualize preferred stock before diving into the yield calculation. Consider thinking of it as a call option with variable strike prices that must be exercised. There are three scenarios when the option expires, based on the market stock price: 1) above $288, 2) between $240-$288, and 3) below $240. Assuming a par value of $50 at expiration (we'll address discounts and premiums later). 1. If the stock price is trading above $288 (the strike price), a profit is always made. Hence, your Scenario B cannot be correct. 2. If the stock price is between $240-$288 (with a pro-rata strike price), we essentially buy at the market price, resulting in no gain or loss. 3. If the stock price is below $240, we will lose money because the market price is lower than the strike price ($240). Since the conversion ratio is at its highest limit, the number of shares you can get, the loss occurs. If you agree with the above scenarios, we can discuss the cases of premium and discount. For simplicity, let's ignore coupon payments for now. When the preferred stock is trading at a premium or a discount: When the stock price is between $240-$288, the preferred stock (BDXB) has a par value of $50. Therefore, any price below $50 is at a discount, while anything above $50 is a premium. When the stock price is above $288, you are guaranteed to make a profit when trading at the par value of $50. The actual profit is calculated as (stock price (let's say $291) - $288) * 0.1736 = $0.5208. Therefore, the preferred stock price should be valued at $50 + $0.5208 = $50.5208. Anything above this price is a premium, and anything below is a discount. When the stock price is below $240, you are guaranteed to experience a loss when trading at the par value of $50. The actual loss is calculated as (stock price (let's say $237) - $240) * 0.2083 = -$0.6249. Therefore, the preferred stock price should be valued at $50 - $0.6249 = $49.3751. Anything above this price is a premium, and anything below is a discount. I hope this clarifies the conceptualization of preferred stocks and the discussion regarding premiums and discounts. Cheers.

Thx so much for the explanation.

Thanks for the great content. However, there is a minor correction needed. Since the conversion ratio is pro rata between $226 and $185, the par value of the preferred stock (1/stock price * stock price) is always $100. The Implied RBCP column needs to be revised (values corresponding to RBC stock price >$226 are corrected). The premium calculation needed to be revised accordingly. Keep up the good work!👍

Hi! Yield Nerd, Thanks for putting out all the great content 👍. I learn a great deal from you. Just a friendly reminder since you said that the conversion is based on a pro rata based, I checked quantum online and the prospectus states that “ For market prices between those values the settlement rate will be $100.00 divided by the market value.” The conversion ratio should be 100/217.72 = 0.4593. 0.4593*current price ($217.72) =$99.998 (not $96.08) (round up to $100 par value for the YTM calculator) 2.27% YIELD TO MATURITY (YTM) Cheers.

Great analysis. Election years always make for some turbulence, it’ll be interesting to see where we go!

Your analysis of upstream costs of eggs was outstanding. Appreciate you.

Very interesting, thank you.

Financially, I missed out on the recent S&P bull market, but I enjoyed 5% plus T Bill returns and didn't worry about a stock market drop. It's been a good ride so far, and thanks for the video!

Good evening my friend. Thanks again.

Thanks for the shout out! Great video, learned something.

Good evening Badri, Very informative. Love the little snippets of humor. Thank you.

Excellent education without hype! I love that you presented a very comprehensible economic context for how and why rates fluctuate. Thank you.

Thank you for the video, good stuff. I continue to T-Bill and chill, but I definitely have FOMA over Nividia. Amazing to watch. If T Bills did not pay so well, I would probably jump into the market.

Good evening my friend. Great information as usual.

Thanks for the video. Very helpful to point out the 6% FHLB.

Great advice.

You have company on the sideline....

Could you please share your portfolio allocation w the positions? Do you have a blog/site?

Good evening my friend.

Love starting the day with your video. Hope you have a great New Year!

Good evening, My friend. Happy New Year.

You absolutely cannot make the call that a soft landing has arrived until after LEI index and manufacturing PMI turn around and go expansionary for 2-3 straight months. The aggregate economy never contracted yet, but the leading economy definitely has, and is. Look at freight volume. Look at yellow trucking. Look at the NY Fed manufacturing figures. I hope we get through 2024 without a massive spike in unemployment and a crash in corporate earnings. But if soft landing is your base case, you're already expecting the mother of all "this time it's different" with regards to leading indicators.

Good evening my friend. Thanks again.