Tag Archives: Bonds

Why almost EVERYONE needs Bonds in their Portfolios

In true Tortoise and the Hare like fashion from the old school fable …..rabbit-2414356__480

There’s a tug-of-war that goes on between the turtle and the hare…..

We all know the ending, although some endings have changed over the years, but stay with us for just a second, as we bring a financial parallel to our fable.

In our interesting story, bonds are the Tortoise and the Hare are Equities/stocks.

Why most need Tortoise/Bonds in their portfoliosturtle-863336__480

Bonds are truly like the Tortoise as they’re more slow running, BUT also importantly, slow to lose value. 

Equities/stocks carry Hare like returns that generally, over the longer term are faster,  but in true Hare like fashion, can get really sidetracked at times (think October – December of 2018 Amateur hour time.)

Here is the Great News in our Story – You can do both!

The good news about investing, unlike the fable is that you don’t just have to be one or the other, but you can mix.

We would argue that mature (larger or for more mature folks) portfolios need a Tortoise for stability during bad times as well as the yummy income that bonds produce!

As the portfolio grows or the income needs rise, more Tortoise may be needed.

Early portfolios that have heavy contributions can frequently be all Hare/Equities/Stocks as the contributions making up a great percentage of the portfolio act like a stabilizing Tortoise.

Normal progressions may be 75% Hare, then 50% then 40% and 25% or less Hare are frequently ok …. with the remaining portions being Tortoise of course….

One of our favorites are 50/50 Hare to Tortoise ….

Another great part of having both in a portfolio is they tend to offset themselves naturally during bad times – when Hare/Equity/Stocks get smacked, almost inevitably Tortoise/Bonds have a field day – multiple reasons such as interest rates dropping when Equities rise and visa versa, as well as a Tortoise safe haven…

There are always unique situations such as all Tortoise due to immediate need or just dislike of volatility and all Hare when there are no needs for the future.

Look for a greater depth information in our coming Newsletter with possible follow up items and details here.

Needless to say we are fond of both the Hare and Tortoise.

Thanks for accommodating our juvenile humor!

Have a Great “Tortoise and the Hare” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.


Q 4 2018 Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 4 2018 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

Click Here for direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

BREAK IN – Save the date for the Holiday Party

November 17th – Saturday before Thanksgiving – Dallas Athletic Club from 3-5 pm


Let’s get going!

Q 4 2018 Newsletter

And here is your review!

Capital Market Talk

Earnings and Markets Eventually Converge

In this hugely in depth article, first we discuss the effect of earnings eventually driving capital markets, but disconnects can occur. It can even be a good thing for Capital Markets to WAY underperform earnings, as they are this year because in brings valuations back in line.

Here is the key graph

7-13-18 EPS Growth and Mkt Growth 10 year avg

Higher Rates, a Short Term Headwind, Eventually a Tailwind

With sustained lower rates over the last decade, memories have faded on the tugging headwinds that higher rates have – IN THE SHORT TERM – on the mandatory safety asset class of bonds.

Higher rates are a great thing as Bonds/Fixed Income Assets have a place for almost all investors due to their safety and liquidity.

Once the headwinds subside our fixed income investments will have ridden the yield curve higher and begin paying more income in the form of yield – into our pockets – Finally!
bond index V Interest Rates

Too High of Rates Can Create Trouble

Too high of rates or an overshoot CAN create trouble … or a recession…

Our friends at JPMorgan – historically show that rate is about 5% – yea FIVE percent –

We disagree and think a lower level may now be this tipping point, due to the decade low interest rate level we have just experienced-

Current at two percent, we have a long way to go before getting too antsy
JPMorgan Rate Level for Slowdown

Inverted Yield Curve Update

So far to good- no inversion yet!
9-28-18 90 day to 10 year Inverted Curve status

Financial Planning

This series of articles came out of no where and in like domino fashion, once one was done the next took form and fell into place-

PLUP graph

App of the Quarter – Hardware

Our editor took the fancy picture out due to copyright fears, but our experience with the Firestick has been exceptional – Here are the highlights of our findings

  • Great Savings compared to just full service in many cases
  • Does not take as much internet speed as we thought
  • Bring your home on the road
  • Multiple devices used at once
  • Cuts back on duplicated services
  • Allows cherry picking services

Enjoy the fall –

See Ya next Year – Wow 2019 here we come!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

The Short Term Inverse Relationship Between Rates and Bonds

After over a decade of not only lowering of rates, but SUPER low, interest rates, it is no wonder we have forgotten the short term relationship of bonds and interest rates.

Inverse Buddies

Over the short term, when rates are going down bonds go up and just the opposite as rates are increased. Pair that with extremely low – zero – rates and the gradual increase in rates, which causes a natural headwind has caught many by surprise, especially after over a decade of lowered and low rates.

bond index V Interest Rates

Ok, so it is a little busy – but it directly shows our point – as rates go down, bonds go up and then as rates go up bonds down. This is a short term phenomenon as once rates stabilize, bonds do as well.

We are happily welcoming higher rates as we think they are much needed – even though they present headwinds for a much needed safe asset class, Bonds – in the SHORT term!

Have a Great “Rate Bond Buddy” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

March 2014 Financial Planning Money Saving Tip, Economic, Financial Review (Video) FINALLY

Welcome to our monthly review, which includes a video for further clarity and a lighter touch to the world of finance. At the beginning of this year we also added a special financial planning monthly tip to break up the monotony. Let’s get started.


 Click here if you cannot see the video

Here for Vimeo


Cell Phone Pricing Wars Means Money In Your Pocket

This months financial planning tip came by accident from our own personal experience. Earlier this year the big two cell phone carriers commenced in a pricing war. Our discovery, originally from an investor standpoint, soon turned consumer. After multiple confirmations other than just ourselves, we feel certain we are on to something.Price War

The trick of this discovery is  you must log into your carrier and review your current plan. So far by pointing this out we have helped with several thousand dollars of savings.  Next time you pay your bill, take 30 extra seconds and click on your current plan, you may find significant saving are available.

Taxes – The Toughest Season in A Decade

This years taxes are the perfect storm for the following reasons.

  1. Tax payer relief act has sunset, diminishing many relief items.
  2. Phase Outs (restrictions of tax write-offs) are making for higher taxes due.
  3. AMT (alternative minimum tax) is making it’s presence known.
  4. Basis reconciliation is still troubling.Income Tax

This year, do not feel bad if your taxes are greater than years past and it is taking longer. The entire financial community has been slowed by this year’s tax season.

Market and Economic update

As mentioned in our cover letter and Q 2 2014 Newsletter, both on the presses and cyber ramp currently, the capital markets have gone no where so far this year. Bonds, the lumbering giants of safety have been the real winner in March as well as through the first quarter of the year.

10 Year Treasury W Trendline 4-8-14


Have a Great Day!

John Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225

Earnings Update … Bond V Stock Guys … Travels Ahead …

It’s about the bottom of the second inning of the 90 day treadmill we call earnings season, and so far it looks pretty good. Managers are executing well, given the continued slow growth economy that continues.

Earnings Update, Bonds not Listening

While earnings as mentioned above in our opening are doing ok, bonds are telling a more conservative story. Lower interest rates, higher bond prices infer a slowing. With a very weak recent non-farm payroll number (75k actual versus 175k expected) and a few weaker China economic numbers, the bond guys are … at least at this point (pretty short-term, so maybe just a glitch, but we are watching) leaning towards a slower future. The good news is time will let us know who is correct.

10 Year Treasury 1-23-14

Travels Ahead

Looking into the next several weeks, the weekend’s look rather full as the calendar shows travels ahead. This weekend in fact, is packed full of fun with sports, several meetings, and some rest time with the family before the travels ensue.

Have a Great Weekend and a Super Friday!

John Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225

Bonds Can Lose Money….Out for the rest of the week

Over the most recent weekend during several family, client, and friend gatherings, I had the opportunity to visit several times about investing….a recurring theme kept happening, such the article.

Bonds Can Lose Money

Multiple times over the weekend the subject of bonds not losing money arose. While there are few certainties in investing, if you hold a long-term bond AND interest rates rise, YOU WILL LOSE MONEY IF YOU SELL EARLY….Who really wants to lock in a 30 year bond at 3% today ?

These topics come up as everyone is beginning to search/stretch/reach for yield. DO NOT DO IT! It does not end well.stretch for money

We have no idea when exactly rates will rise or even if they will. If rates rise, and as an investor you are stretching for yield, you will very likely be hurt. When the music stops there may be a fight for the exits.

Safer Investing in Bonds Today

Here are a few keys to help keep losses to a minimum if rates rise. Even in this scenario, losses may occur, although they should be minimal.

  1. Stay in shorter terms (1-5 years, 7-10 MAX)
  2. Favor higher quality over lower
  3. Diversify (Corporate, Muni, Foreign)

On the Road Again

With a flight out tonight, I find myself out of the state and happily, lightly tethered via electronics. I will be back in the saddle in full force next Monday!

Have a great Day and rest of your week!

John Kvale



8222 Douglas Ave # 590
Dallas, TX 75225