Peanut Convertible Debentures Index™ (November 2019 Review)

In the courtyards of the Mediterranean under the Maltese cross, dreaming of the World Cup. Vittoriosa, Malta.  Copyright © 2008 Felix Choo / dingobear photography.  Picture available for licensing at Alamy Images. Photo may not be reproduced without permission. 

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We're still playing catch-up over here at the Canadian Convertible Debentures Project.  Thank you for your continued patience.

As long time readers of this blog know, we introduced the Peanut Convertible Debentures Index™ back in January.  Hard to believe it's almost the end of the year already; let's see how the benchmark convertible debentures index in Canada performed in November. For more background on the index, please click here. 

Important disclaimers: Like everything else on this website, content here is provided as information and opinions only and not intended to be a provision of investment advice or a recommendation of any investment action in any form. There is no guarantee, warranty, representation, or other assurance whatsoever on any of the information provided.  Information and opinions reflect our views as of the date provided, but may change without notice.  Investments made in convertible debentures are exposed to the risk of financial losses, and as with all disseminated information concerning investments, it is highly recommended that an individual consult with a qualified investment professional before making any investment decisions.



Peanut Convertible Debentures Index™ (November 2019 Review)

In many ways, 2019 has been a remarkable investing year.  Despite all of the political, trade, economic, and environmental considerations, markets of most types have climbed the wall of worries and scaled ever higher.  Stocks, bonds, real estate, infrastructure and, yes, convertible debentures - all have been up and up big since the start of the year.  With respect to convertible debentures, in November, the Peanut Convertible Debentures Index™ went up 0.66%.  Year-to-date to November 30, 2019, the Peanut Index is up 11.85%, exceeding the return of the FTSE TMX Canada Convertible Bond Index™ by 277 basis points or 2.77%.

Bond yields have firmed a bit since the hitting lows earlier in the fall, and immediate fears of a coming global economic recession has dissipated somewhat thanks to central banks easing on interest rates and some progress on the trade front (NAFTA 2.1 signed, US and China coming to a Phase One trade deal on paper if not really on substance).  Developments in the US and China trade front bear watching as a misstep here could singlehandedly plummet the global economy.  However, as the US heads into an election year in 2020, the current incumbent has plenty of incentive to do whatever necessary (legal or not) to keep the US economy afloat, as this would seem key to his re-election prospects (never mind the apparent high crimes, misdemeanours, and impeachment); unnecessarily inflaming trade issues would seem to be a critical unforced error, but with this guy, you just never know.

Over in Mother Britain, Brexit seems a foregone conclusion after the recent elections in Britain handed the Boris Johnson-led Conservatives a decisive majority.  Damn the torpedoes as the saying goes, but the impending messy breakup with the Continent will have real economic implications (look no further than the high pricing of puts on broad-based European stock indices) which could light a powder keg of currently suppressed market worries.

In the bond market, one thing to watch for is credit.  Specifically, all of the years of easy money and low rates means leverage levels of companies have headed higher, and credit quality has deteriorated.  Every now and then, you see news reports that even so-called "investment grade" fixed income is becoming increasingly skewed toward the BBB-end of the spectrum as opposed to AAA, and yields on sub-investment grade debt have compressed.   Of course, convertible debentures as a whole in Canada are issued by smaller companies in general and are lower credit quality grade everything else being equal; the returns in 2019 have been great but it's probably best to keep close watch on how much credit risk you want to take so you can sleep at night.  As we've been saying all year, emphasize quality issues and stay diversified out there.  As unexpectedly great 2019 has been, 2020 could be conversely unexpectedly bad ... so keep your head on a swivel!

Please click on the table below to also see how performance for the Peanut Convertible Debentures Index™ compared with two exchange-listed Canadian convertible debenture ETFs, the iShares Convertible Bond Index (ticker: CVD) and the CI First Asset Convertible Bond Index (CXF), as well as the FTSE TMX Canada Universe Bond Index™ and the S&P/TSX Capped Composite Index.  Pro tip: if you still find the table below too small to read after clicking on it, please simply download the PNG file, which then can be zoomed to a size that you prefer.

If you're a regular reader of this blog, you are probably already aware that we update the Peanut Convertible Debentures Index™ levels and daily percentage changes on a frequent basis in the dedicated widget on the right sidebar for desktop users and the Peanut Convertible Debentures Index™ page for both desktop and mobile users.

We will try to do another performance update post in about a month's time. Until then, good luck with your convertible debenture (and other) investing.
 

Drop Us a Line, Drop Us a Dime

Thank you for reading The Canadian Convertible Debentures Project.  As always, if you have any comments, questions, or feedback about convertible debentures and/or this blog, please leave us a comment at the bottom of the page or email us at convertibledebs@gmail.com. Note it may take us a few days to get back to you depending on our schedules. 

In addition, for media, sponsoring, and/or financial institution inquiries, please email us at convertibledebs@gmail.com.  We appreciate your interest!

If you enjoy reading this blog and have found it useful and valuable in your own investing in convertible debentures, we'd be humbled if you'd like to make a contribution to support us in our mission of making quality, independent, Canadian convertible debentures content freely available to all investors out there, big or small.

If you're interested in contributing, please click on the "donate" button below and follow the instructions.  Donations to this blog may be made by credit card or PayPal, and are processed by PayPal as a third-party on a secure platform; we don't ever see or access your credit card number.  We thank you for your continued support - we really appreciate it!

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Peanut Convertible Debentures Power Rankings (as at December 6, 2019)

Follow your star. Jakriborg, Hjärup, Sweden.  Copyright © 2009. Felix Choo / dingobear photography.  Photo may not be reproduced without permission. 

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Hi.  It's been quite awhile since we've updated our Peanut Convertible Debentures Power Rankings.  Thanks for your patience.  If you're keeping score at home, this is the 46th update of the Peanut Power Rankings; this version takes into account available data current to December 6, 2019.  Thank you for continuing to read and support the Canadian Convertible Debentures Project.

Some of you have written in and asked why updates have become fewer and far between in recent months, and that's a fair question.  The excuse is pretty extreme pressures in the day job (I don't mean the photography day job), and those don't look like they're going to subside anytime soon given what we're dealing with here.  I really can't get into much detail beyond that, but when it comes to other people's hard-earned retirement savings, I think those of us who are entrusted to work in the best interests of beneficiaries certainly face plenty of uphill challenges in a day and age where power,  greed, and political expediency are allowed - or even encouraged - to run rampant.  It's not right.  And going forward, it needs to get better.  That's what I ask for this Christmas and holiday season.

Ok. I know I'm getting pretty abstract and far away from convertible debentures on this soapbox, so I'll stop now. But thanks for listening.  Now let's get back to our regularly scheduled programming.  

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To review and for those new around here, let's do a quick summary of what the Peanut Power Rankings are all about. In a nutshell, the rankings are based on two main considerations: (1) a proprietary quantitative model I developed to help myself determine the "fair value" of a particular convertible debenture issue and (2) a qualitative judgment (based solely on my own humble opinion) on the particular issue, issuer, economic environment, interest rates, and other factors.

For this version of the Peanut Power Rankings, please click on the table below to read it larger.  If you still find it too small to read, please download the PNG file, which then can be zoomed to a size that you prefer.  For those who are looking to obtain a PDF or Excel version, please email us for more information; they can be made available for a small fee (let's say $5 but I won't complain if you want to pay more :)

For more background information on the Peanut Power Rankings, please see our FAQs by clicking here.

Important!: Like everything else on this website, content here is provided as information and opinions only and not intended to be a provision of investment advice or a recommendation of any investment action in any form. There is no guarantee, warranty, representation, or other assurance whatsoever on any of the information provided.  Information and opinions reflect our views as of the date provided, but may (and do!) change without notice.  Investments made in convertible debentures are exposed to the risk of financial losses, and as with all disseminated information concerning investments, it is highly recommended that an individual consult with a qualified investment professional before making any investment decisions.



Market Commentary - Quick Points (December 6, 2019)

• Wow, what a year 2019 has been thus far for equity investors.  Convertible debentures haven't done too shabby either, with double-digit gains buoyed by low interest rates and a rising stock market. 
• However, if you've been reading us for awhile, you know that we've been cautious all along because of all of the uncertainty out there.  Right now, I think it's safe to say that the market expects that rates will remain low and that there will be a positive outcome from the US-China trade disputes.  I can agree with the former, but the latter is no slam dunk.  
• A so-called Phase One trade deal between the world's two powers is still not done, and I maintain that the downside risks from a trade hiccup is (potentially much) higher than the upside risk from a trade deal. 
• And of course, next year is a Presidential election year in the US, which means unpredictable policy directions and tweets as the incumbent tries to hang on to power.  
• Yields have bounced off their recent troughs but remain nevertheless low, and it's noteworthy that the previous yield curve inversion that we had in the US in late summer has now reversed itself.  Indeed, it seems immediate US recession clouds have thinned out for now, but one is still possible 12 to 18 months out especially if continued unforced errors in the form of trade and tariffs emanate from the current administration.
• Closer to home in Canada, we have a slowing economy, a retiring central bank chief, minority federal Parliament, and provincial leaders (you know which ones) that are fanning the flames of regional grievances for their own political gain.  This is potentially a troubling slate to work with, but because the Bank of Canada has been among the slowest of all the major central banks to cut rates, there is capacity here to implement some monetary policy if needed.  
• As always, stay diversified, focus on good credit quality issues and, where possible, keep focused on the long-term.

Drop Us a Line, Drop Us a Dime

Thank you for reading The Canadian Convertible Debentures Project.  As always, if you have any comments, questions, or feedback about convertible debentures and/or this blog, please leave us a comment at the bottom of the page or email us at convertibledebs@gmail.com. Note it may take us a few days to get back to you depending on our schedules. 

In addition, for media, sponsoring, and/or financial institution inquiries, please email us at convertibledebs@gmail.com.  We appreciate your interest!

If you enjoy reading this blog and find it useful and valuable in your own investing in convertible debentures, we'd be humbled if you'd like to make a contribution to support us in our mission of making quality, independent, Canadian convertible debentures content freely available to all investors, big or small, out there.  We thank you for your continued support!

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