16 August 2018 FT — Articles to Read

16 August 2018


Question: With 12 of the 13 tax liens redeemed for the investment within a partnership made in 2017 for Baltimore City Tax Liens, what is the currently Portfolio Return?


Spooked investors push emerging market stocks into bear territory – Pg. 1

–          Emerging markets fell by the most in six months yesterday, tumbling into a bear market as investors were spooked by a commodity price rout, currency turmoil and disappointing results from one of China’s technology giants

–          Emerging markets have faced mounting pressure over recent months, led by concerns over escalating trade disputes between Washington and Beijing.  Rising US interest rates and the dollar’s renaissance have also dented emerging markets, fueling crises in more vulnerable countries dependent on capital inflows, such as Argentina and Turkey


New Zealand property ban slams the door to wealthy foreign ‘survivalists’ – Pg. 1

–          New Zealand has banned foreigners from buying existing residential property in a blow to the global super-rich, who have snapped up scores of luxury estates in recent years to use as holiday homes and provide a “bolt-hole” in case of global catastrophe

–          Last year the New Yorker pinpointed New Zealand as a favoured destination for rich “survivalists” preparing for apocalypse

–          The law follows a 60% surge in house prices during the past decade that has driven local home ownership levels down to their lowest in almost 70 years. Immigration, a shortage of affordable homes and high rents have placed housing at the top of the political agenda


Convertible debt outperforms amid rally for US tech stocks and rising interest rates – Pg. 17

–          US corporate bonds that convert to stock at a given price have generated a return of 6% this year…

–          In contrast, investment grade rated corporate debt has lost 5.8% and high-yield bonds have dropped 2.4% in 2018

–          Higher interest rates also encourage issuance because convertibles can typically offer lower coupons than other bonds.  This has become increasingly advantageous given Changes to the US tax code, which limit the amount of interest payments companies can deduct from their adjusted income


Answer: 9.44% (Prof Note: I am learning about tax lien investing.  It is not as straight-forward as I once thought and the partnership, in which I invest, almost ended up owning a “Jerk Chicken” restaurant.  It is fascinating as there is not YtC but rather YtR, i.e. Yield-to-Redemption.  So far I would classify this as a high return given the risk, however, one must have the appetite for “Jerk Chicken” ownership!)