RL094 – How to reallocate your assets in response to market cycles

Today on the Retirement Lifestyle Show, Roshan Loungani, Erik Olson, and Adrian Nicholson talk about high-yield spreads as a macro indicator. They describe the high-yield spread environment, market turning points during the pandemic and reveal the best times to invest in bonds. Listen now to learn how to reallocate your assets in response to market cycles.

[02:28] The High-yield Spread and Why It’s Important

[09:10] Practical Examples of High-yield Spread Implementation

[10:40] Secondary Bond Market Activity

[16:10] How to Calculate Bond Spread

[20:00] Overheating Economy and Bonds

[26:55] The Best Times to Invest in Bonds

[32:35] Small-Cap Value and Missed Opportunities

[35:30] Market Turning Points During the Pandemic

[37:02] The Small-Cap Recovery

[44:30] The Loss Decade

[49:10] Decision Points, Investing, and Asset Management

[52:30] Parting Thoughts

To read the Full Show Notes scroll down or click here.

  • Roshan Loungani can be reached at roshan.loungani@aretewealth.com or at 202-536-4468.
  • Erik Olson can be reached at erik.olson@aretewealth.com or 815-940-4652.
  • Adrian Nicholson can be reached at adrian.nicholson@aretewealth.com or at 703-915-8905

Listen now to learn how to reallocate your assets in response to market cycles.

Select episodes, like this one, can be found on YouTube: https://www.youtube.com/channel/UC0ZZPM3xk6onXNpb1ceAkCg

Visit Anchor.fm for ALL the links to several podcast sites: Anchor.fm: https://anchor.fm/roshan-a-loungani
Spotify: https://open.spotify.com/show/354IACA2UGM1DMsX8pfKlQ?si=0bfKMPI9TS29JogpOLnG_Q
iTunes: https://podcasts.apple.com/us/podcast/retirement-lifestyle-show-roshan-loungani-erik-olson/id1470410459
Follow Us At:
https://www.retirementlifestyleshow.com
https://www.retirewithroshan.com
https://twitter.com/RoshanLoungani
https://www.linkedin.com/in/roshanloungani/ 
https://www.facebook.com/retirewithroshan/
https://www.linkedin.com/in/financialerik/ 
https://www.linkedin.com/in/adrian-nicholson-74b82b13b/

#retirementlifestyleshow #retirementlifestylepodcast #fire #podcast #FI #Retire #retirewithroshan

How to reallocate your assets in response to market cycles.

Full Show Notes:

High-Yield Spreads and How They Work

A yield spread is defined as the difference between yields on debt instruments of various maturities, credit ratings, or risk levels. They are typically calculated by subtracting the yield of one instrument from the other and presenting that difference in percentage points. On the other hand, a high-yield bond spread, also referred to as the credit spread, is the percentage difference in current yields of various classes of high-yield bonds compared against investment-grade corporate bonds or Treasury bonds. What happens is that these types of bonds offer high interest rates because of their high risk of default. The main characteristics that draw investors to these high-risk investment options are the high-interest rates. The greater the risk of default risk, the higher the interest rates.

Overheating Economy and Bonds

An overheating economy is one that’s experiencing an extended period of positive economic growth which often leads to high levels of inflation. Unfortunately, these periods eventually hinder the economy’s growth and often lead to a recession due to their unsustainability. So, what does it mean for bond investors maneuvering the overheated economy? First, rising inflation is never good news for bonds because it erodes their value, which is why most investors prefer stocks in such environments. However, investor concerns about the current bond environment are misplaced because the bond markets are at their most attractive in a long time. Inflation worries have led to a sharp rise in bond yields in recent weeks due to the accompanying fall in bond prices; prices move inversely to yields.

Links and Resources

Dan Rasmussen and Igor Vasilachi, The Best Macro Indicator, May 17, 2021: https://verdadcap.com/archive/the-best-macro-indicator

ICE BofA US High Yield Index Option-Adjusted Spread (BAMLH0A0HYM2): https://fred.stlouisfed.org/series/BAMLH0A0HYM2

Listen now to learn how to reallocate your assets in response to market cycles.

Disclaimer Welcome, you are now listening to the retirement lifestyle show with Roshan Loungani Erik Olson and Adrian Nicholson. This show is an exploration of ideas to help you work towards your ideal retirement. Roshan Loungani and Erik Olson serve clients across the US. They offer financial planning and investment advice through Arete Wealth Advisors, LLC, an SEC registered investment advisor and securities through Arete Wealth Management LLC, member FINRA, SIPC, and NFA. Get ready for the financial independence of your dreams. All opinions expressed by podcast hosts and guests are solely their own are based on information they believe is reliable. Neither Arete Wealth nor its affiliates, warrants its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only and should not be regarded as specific advice or recommendations for any individual. Before making any decisions consult a professional. Finally, our music is the chance by Jason Shaw and Audionautix. It’s part of the YouTube Audio Library and it’s licensed under a Creative Commons license.

Thank you for listening.

Recent Posts

2026 Mid-Year Market Outlook: What Investors Need to Know

In this episode, we dive into macroeconomic insights from a strategist at JP Morgan, covering key market trends, the impact of geopolitical events, and actionable investment strategies for navigating today’s complex economic landscape. Topics include the K-shaped economy, Federal Reserve rate outlooks, inflation, AI’s role in markets, and international investment opportunities. Listen now to learn about the 2026 Mid-Year Market Outlook: What Investors Need to Know

Read More »

$750 Billion Data Center Boom: Opportunities & Risks

This episode explores the rapid growth of data centers fueled by rising AI demand and the massive investments being made to support it. Adrian and Roshan Loungani discuss the opportunities and risks tied to this infrastructure boom, including energy challenges, geopolitical concerns, and the potential impact on investors and the technology industry. They also examine whether the trend is sustainable, how global competition is shaping AI development, and why future technologies like quantum computing could eventually change the data center landscape. Listen now to hear all about the $750 Billion Data Center Boom: Opportunities & Risks.

Read More »

Global Stagflation: Protect Your Retirement Now

This episode explores the complex and dangerous phenomenon of stagflation — the toxic combination of rising inflation, slowing economic growth, and a tough labor market. The hosts break down the historical context of the 1970s stagflation crisis, examine current economic indicators and risks, and explain how stagflation impacts households, businesses, and retirement planning. From Federal Reserve policy responses to hands-on investment strategies across energy, precious metals, consumer staples, healthcare, real estate, and inflation-protected securities, this episode gives investors and retirees the tools they need to protect their financial future and navigate one of the most challenging economic environments of our time. Listen now to how you can navigate Global Stagflation: Protect Your Retirement Now.

Read More »