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There's too much weirdness and manipulation in the market not to own stocks right now. Apple, Amazon and Google have all started issuing bonds. For Apple it's t

There's too much weirdness and manipulation in the market not to own stocks right now. Apple, Amazon and Google have all started issuing bonds. For Apple it's the first time they've ever sold corporate bonds. They don't need the cash. It's just that you can sell corporate bonds right now for below inflation so you may as well. As the below article notes they'll use the proceeds for share buybacks. eg. https://www.marketwatch.com/story/apple-pulls-in-pricing-joins-record-corporate-debt-borrowing-spree-2020-05-04 https://www.marketwatch.com/story/apple-pulls-in-pricing-joi... If you're wondering who's buying 30year corporate bonds that have yields lower than pretty much any current inflation predictions, the US Federal Reserve has a new directive under the CARES act to buy into corporate bonds. https://www.marketplace.org/2020/06/16/the-fed-starts-buying-corporate-bonds/ https://www.marketplace.org/2020/06/16/the-fed-starts-buying... If you are in a position to sell corporate bonds right now you can set the rates to well below inflation predictions and they will still sell thanks to government intervention. The real kicker is that the more this is done the more inflation will kick in making it an even better deal. For the common person the only way to get advantage from this ridiculous situation is to own shares in these corporations that are issuing low rate bonds and buying back shares.

chollida1 6y ago
> For Apple it's the first time they've ever sold corporate bonds. This just isn't true, Apple has sold debt for as long as their Non US cash position has been material, so they could access their non US cash without having to repatriate(pay US taxes on it) their cash. A simple look on a Bloomberg terminal shows they have outstanding debt from 2014
- AnotherGoodName 6y ago
  Sorry i'll acknowledge that point. I misinterpreted one of the tech articles where it was stated as the first bond yield at such at low rate since 1980 as being the first bond issue full stop. I think the point still stands as a whole though. When you see things such as "Of the $10 billion on offer, the $1 billion five-year tranche was issued at a coupon of 0.45%, the lowest coupon seen on a U.S. corporate bond at that maturity, according to Refinitiv data, which goes back to 1980." It's worth highlighting the rarity of these circumstances. https://www.reuters.com/article/us-alphabet-bonds/google-owner-alphabet-issues-record-10-billion-bond-at-lowest-ever-price-idUSKCN24Z2PC https://www.reuters.com/article/us-alphabet-bonds/google-own...
ww520 6y ago
Bond yield dropped drastically back when the market crashed due to pandemic. It was caused by people panic-rushed money into bonds for safety. Classic case of more demand chasing fewer bond supply. The lower yield drew more companies to jump in to offer more bonds. The corporate bond yield has since recovered as the stock market doing better and money moved out of bond into stock.
mywittyname 6y ago
Issuing debt to buy yourself, what could go wrong?!?! Seriously thought, this is a landmine. If the company faces cashflow issues and they can't pay their bond payments, then the company can be sent into a negative feedback loop where their stock price continues to fall, making it harder to borrow, which eventually leads to bankruptcy. This is the situation that happens a lot with companies who are otherwise profitable. They just have too much debt as the result of a leveraged buyback. So they are operating on the edge, and one bad quarter throws them into a tailspin.

chollida1 6y ago

> For Apple it's the first time they've ever sold corporate bonds. This just isn't true, Apple has sold debt for as long as their Non US cash position has been material, so they could access their non US cash without having to repatriate(pay US taxes on it) their cash. A simple look on a Bloomberg terminal shows they have outstanding debt from 2014

AnotherGoodName 6y ago
Sorry i'll acknowledge that point. I misinterpreted one of the tech articles where it was stated as the first bond yield at such at low rate since 1980 as being the first bond issue full stop. I think the point still stands as a whole though. When you see things such as "Of the $10 billion on offer, the $1 billion five-year tranche was issued at a coupon of 0.45%, the lowest coupon seen on a U.S. corporate bond at that maturity, according to Refinitiv data, which goes back to 1980." It's worth highlighting the rarity of these circumstances. https://www.reuters.com/article/us-alphabet-bonds/google-owner-alphabet-issues-record-10-billion-bond-at-lowest-ever-price-idUSKCN24Z2PC https://www.reuters.com/article/us-alphabet-bonds/google-own...

ww520 6y ago

Bond yield dropped drastically back when the market crashed due to pandemic. It was caused by people panic-rushed money into bonds for safety. Classic case of more demand chasing fewer bond supply. The lower yield drew more companies to jump in to offer more bonds. The corporate bond yield has since recovered as the stock market doing better and money moved out of bond into stock.

mywittyname 6y ago

Issuing debt to buy yourself, what could go wrong?!?! Seriously thought, this is a landmine. If the company faces cashflow issues and they can't pay their bond payments, then the company can be sent into a negative feedback loop where their stock price continues to fall, making it harder to borrow, which eventually leads to bankruptcy. This is the situation that happens a lot with companies who are otherwise profitable. They just have too much debt as the result of a leveraged buyback. So they are operating on the edge, and one bad quarter throws them into a tailspin.