Likely due to the Greece situation in Europe and anticipation of financial disruption, the markets are raising cash like no tomorrow by liquidating everything that can be liquified.

Naturally, this has gotten me somewhat interested in the markets again from a broad perspective.

Something fascinating is that anything relating to crude has been hammered for the past month. For example, Canadian Oil Sands (TSX: COS) has a relatively boring business that has been disproportionately traded down in relation to crude prices. An example is that a year ago you could have bought a share of COS for about 0.29 barrels of spot crude and today that ratio is 0.22.

This is generally the same effect that is seen with investors in gold – the underlying commodity is the volatile component while the stocks that produce the commodity are underperforming (Barrick, Kinross, etc.).

I don’t have much comment on COS other than that while it does seem like it is trading relatively cheap, my gut feel suggests that it can get even cheaper – especially if the unthinkable occurs. The unthinkable event in everybody’s mindset today is that the price of crude oil will make a significant fall. It’s similar to how nobody anticipated how low natural gas prices could go (and indeed, even lower than the economic crisis point), and how Canadian 10-year bond yields could not get lower than a very low 3% (they are now at 1.93%).

The other comment is that a good investor makes money by deploying it at the relative trough of a period of panic and crisis, and holding on for dear life until things feel rosy again, and then selling and going away until they see the panic and crisis again.

The problem is that it is very difficult to identify moments of panic and crisis, and even when you know you are in the middle of it, you still don’t know whether it can get worse than what you are seeing. It is expensive to be early to the party. One particular barometer that I use as a guideline (and many others do as well, so the information content of this proxy is somewhat diluted) is the VIX:

This would suggest we’ve got some way to go before deploying capital would be wise. I also still don’t see hints of any panic simply by looking at corporate bond yields – nothing is breaking in that department yet.

But assembling that watchlist would be a good idea. And this time, my instinct would be to go for non-commodity, non-yielding securities. And certainly not Facebook equity.

My writings have been relatively less frequent over the past month, but this is because I’m waiting for some opportunities to reveal themselves in the marketplace. There has been some renewed volatility over the past couple of weeks and some momentum-reversing trends (e.g. spot natural gas is finally showing an uptick), but other trends are back to their usual self (e.g. US 30-year treasury bonds at a very low 3% yield).

All I know is that reaching for yield becomes more and more risky. Avoid the yield since it is most likely an illusion that will give you a few pennies of income in exchange for a few dollars of capital.

Does anybody know of any services out there that enable you to pull up stock charts of companies that have been delisted (e.g. Nortel, MCI Worldcom, etc.)?

The five year rates currently advertised is a record low 2.98%; 10-year rates are around 3.84%.

With the best floating rate mortgages currently at prime minus 0.25% (prime currently being 3%), it seems fairly obvious that a 5-year fixed rate is an optimal solution compared to floating rate mortgages.

However, the 10-year rate, while historically at record lows, assumes that your next 5-year renewal will be at 4.7%, which still is relatively low historically. That said, there is no optimal answer – it depends on one’s risk tolerance and other factors, such as the leverage ratio of the debt. The spread between 5 and 10 year money on the bond market is currently 0.53%, so a consumer locking into the 10-year rate of 3.84% is overpaying slightly when comparing the true cost to the bank – which is why the banks are probably trying to muddy the waters by getting people on 10-year mortgages.

There is also an implicit bet on inflation with the selection of term – if you expect inflation to rise significantly in the next five years, go with the 10-year rate. If you expect inflation to be roughly the same or, heaven forbid, deflation were to strike the economy, then go with the 5-year rate and you will probably receive just as good a renewal rate.

At 2.98%, the banks are not going to be making much money on 5-year mortgages. It may be tempting to look for a little more levered spice in your portfolio and spread it in bonds of companies that will have a very high chance of paying back their investors with roughly the same duration structure – e.g. Rogers Sugar convertible debentures (TSX: RSI.DB.C) maturing on April 30, 2017 has a yield to maturity of 4.75% (just make sure to note there is call risk as the debt is trading above par). Of course, every institutional investor on the planet is trying to do this on margin as well, so your compensation accordingly is less than 200 basis points and is certainly not “risk-free”.

Whenever I see a headline like this:

Goldman Sachs: Best Time in a Generation to Buy Stocks, Sell Bonds

… I’m guessing the bond market hasn’t reached a high yet. Every trader on the planet is looking at the 40bps rise in 30-year bond yields over the past month and is wondering whether they should pile in short or wait, and I guess Goldman just answered that question.

As anticipated, the S&P 500 made its break to the upside, and notably, volatility is at a significant low:

I haven’t had much time to devote brainpower to the markets over the past month, so I will have to leave it at that. It does appear, however, that treasury yields are slowly rising and the uptrend in the market is continuing. For how long?

Notably, an index investor in the S&P 500 will be up about 10-11% year to date.

So the Greek debt crisis gets averted for another year or two until they have more problems, and the markets are back to their local highs, per the chart:

Do we go higher? My guess is yes, but not for long. Just have to be patient.

The S&P 500 continues to make a local high, and commodities except for natural gas appear to be on the rise again.

My examinations continue to be on zero or low-dividend, non-resource, non-financial companies. I don’t have much to report at present.