August 2022
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August 8, 2022

Financials Matter

"It's Not Just About Finance"

Are We Approaching Another SSDD Moment?

SSDD is another Annoying Acronym used by Wall Street meaning Same S**t, Different Decade.  You can read more about it HERE.

If you’ve been reading this column for any length of time, you should (by now) know two things:

  • Human Nature Never Changes

  • History doesn’t repeat itselfbut it often rhymes” -Mark Twain-

The SSDD moment I’m referring to has to do with the recent rise of yield starved investors scurrying to buying “junk bonds.”

Today’s “junk bonds” are (just like in 2007-08) being packaged and sold as Mortgage Backed Securities (MBS).  And these packaged products are stuffed with mortgages from recent home owners with FICO scores (credit rating) as low as 500.

What could possibly go wrong here?

Thanks to interest rates being at the lowest level in 5,000 years (that’s not a misprint) these garbage bonds are selling like popcorn at a circus.  And this three-ring circus is doomed for failure like it did back in 2008.  Henceforth we have SSDD.

It’s incredible to imagine that many investors fall for the same lies over and over again.  However, the Wall Street “Club” is the master of disguise and disinformation and they know investors have short memories.

The major difference this time is that fools that buy these supposedly “safe” bonds will end up getting spanked twice because:

  • Interest rates are rising = driving down bond prices

  • Defaults from deadbeats are rising = driving down bond prices

But here’s the dagger to your heart:  The majority of buyers are US government and large corporate pension plans.

Ouch!

Will your retirement (pension) account be affected by this oncoming SSDD moment?

Read about it HERE.

 

 

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