February 15, 2021 BARRON’S 35
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reading this piece was thalidomide.
Keith Hawkins
Colts Neck, N.J.
Mental Faculties
To the Editor:
Regarding “From the Front Lines: Dr. Jason
Karlawish Talks About the Fight Against
Alzheimer’s” (Feb. 5): Karlawish offers opti-
mism for Alzheimer’s disease, or AD. I am
- My friends would not say I have AD.
However, were I do die tonight, my brain
at autopsy would show Alzheimer’s plaques,
ischemic spots from arteriosclerosis, some
Lewy bodies, and probably evidence of prior
tiny hemorrhages, brain atrophy, etc. Would
a pathologist diagnose early AD or a mixture
of pathologies? This is a major problem in
finding treatment specific for AD.
In its earlier stages, dementia waxes and
wanes; these changes are often related to
fatigue and the environment. Animal experi-
ments show that the brain can, at the cellular
level, make new connections, and demented
patients often show spontaneous improve-
ment. It is likely that drugs will be found
that satisfy FDA requirements for effective-
ness. However, such statistical improvement
can be minimal and does not mean cure.
Elderly dementia is highly variable, sponta-
neously changing, slowly progressive, and
has multiple causes. I am skeptical that if I
live many more years, my current mental
faculties will stay with me.
Dr. Arnold Flick
San Diego
W
ith bond yields ticking up
recently, dividend stocks
could see more competition
for investors’ capital. But
that doesn’t mean all payers face the same
obstacles.
Keith Lerner, chief market strategist at
Truist Advisory Services, said in an email
toBarron’son Wednesday that he doesn’t
see higher bond yields “as a major impedi-
ment for stocks, or dividend stocks per se,
as long as yields are moving up because of
increased investor confidence in an eco-
nomic recovery.”
Still, while stocks can often weather a
rising rate cycle with positive returns, eq-
uity income investors need to be selective.
“There are pockets of the market that
underperform during rising-rate environ-
ments, and those are generally the stocks
that are most like bonds,” Savita Subrama-
nian, head of U.S. equity and quantitative
strategy at BofA Securities, tellsBarron’s.
As for stocks to be wary of, she points
to “the high-payout-ratio, high-dividend-
yielding stocks that don’t necessarily bene-
fit from that growth angle because they are
cash-cow-types of investments.”
That includes regulated utilities, she
says, and some consumer-staples stocks,
including tobacco companies—“really, com-
panies that don’t benefit from a cyclical re-
covery [and] more of your defensive, high-
dividend-yielding areas of the market.”
Subramanian observes that dividend-
growth stocks with lower payout ratios are
better suited to absorb rising rates.
Broadly speaking, that includes industri-
als, financials, as well as certain technol-
ogy and consumer-discretionary compa-
nies. Those sectors, she says, “tend to be
more cyclical.”
Subramanian’s research on this subject
includes a Feb. 4 note that analyzed how
the S&P 500 index has fared during ris-
ing-rate cycles since the 1950s. During
those 15 cycles, stocks had a positive total
By Lawrence C. Strauss
Treating the Causes, Not
Symptoms, of Alzheimer’s
INCOME INVESTING MAILBAG
DividendStocksThat
Can Weather Rising Rates
return—which includes price appreciation
and dividends—13 times, most recently
from July 2016 through October 2018. The
10-year U.S. Treasury note climbed to 3.2%
from 1.5% over that stretch.
Still, utilities, a bond-proxy sector, re-
turned 11.1% during those two-plus years,
lagging behind the 30% for the S&P 500,
as measured by theUtilities Select Sector
SPDRexchange-traded fund (ticker: XLU).
On average, stocks had a 13% return
during those rising-rate cycles, the first of
which began in April 1954. The S&P 500
returned 68% over that 3 ½-year period,
as the 10-year U.S. Treasury note’s yield
went from 2.3% to 4%, according to BofA
Global Research.
Lately, the 10-year Treasury’s yield has
been rising off of ultralow levels, but it
remains low by historical standards. It was
recently at 1.14%, up from around 0.5% in
August, as investors—many of whom are
encouraged about the economic outlook—
sell those bonds. Bond prices and yields
move in opposite directions.
The S&P 500 had a minus 6% return
from March 1967 through May 1970. The
10-year Treasury’s yield, however, went
from 4.5% to 7.9% during that time—con-
siderably higher than where rates are to-
day, and much more of a threat to divi-
dend-paying stocks at the time.
The other negative-return period for the
S&P during a rising-rate cycle occurred
during a 13-month stretch starting in April
1983, when stocks returned minus 4%.
Meanwhile, Lerner points out that
many dividend stocks didn’t hold up as
well as expected during the early part of
the pandemic nearly a year ago, “while
rates were falling because of heightened
fears of dividend cuts.”
He sees payouts gradually rising as the
economy improves. One sector Lerner fa-
vors is financials, where “there is upside to
dividend payouts, but [it’s] also a sector
that tends to do better as interest rates
move higher and the yield curve steepens,”
he says.B
To the Editor:
I am convinced that the reason therapies
for Alzheimer’s have been failures is that
they are targeting the wrong things (“The
Other Pandemic,” Cover Story, Feb. 5). I’m
willing to bet that when we really under-
stand this disease someday, we will recog-
nize that the amyloid plaques we have
been focused on for decades now are
symptoms or consequences of the disease,
not its cause. It’s time to go back to the lab
for more basic research. Cassava Sciences
seems to be doing that and recognizes that
clearing amyloid plaques doesn’t do a lot
more than clear amyloid plaques. Perhaps
it will turn out that its approach—restor-
ing “the normal shape and function of
altered filamin A, a scaffolding protein,
in the brain”—is the right one. Perhaps
not. But we need to focus on uncovering
Alzheimer’s secrets, not treating its
manifestations.
Bernard Thomas
On Barrons.com
Biogen and the FDA
To the Editor:
I found quite disturbing the details of un-
usual drug-review collaboration between
Biogen and the Food and Drug Adminis-
tration, coupled with implications of the
FDA leadership feeling pressure to ap-
prove Biogen’s aducanumab treatment for
Alzheimer’s simply because there are no
recent treatments available for the disease
(“Biogen’s Alzheimer’s Drug Faces a Big
Test. What to Know,” Feb. 5).
The role of the FDA is only to ensure
efficacy and safety of proposed treat-
ments. It is not responsible for ensuring
the rate at which new drugs come to mar-
ket, regardless of the urgency for develop-
ing a treatment. Drugs either work safely,
or they don’t. Unwarranted pressure
upon, and lack of independence of, the
FDA is dangerous.
The word that came to mind while