No. of Recommendations: 2
… the analogy of fishing to stock/bond investing points to a character defect of mine... I like to fish only if the fish are biting and lack the patience of a dedicated angler. Similarly I love a bull market, but I want to crank up the outboard and head home when things go south (a bear market). I am finding out that holding some cash makes me feel easier in a decline because I find myself hoping to find bargains. If you don't have any cash all you can do is sit and watch things tank.


Rather than call your preferences a ‘character defect’, put a positive spin on the matter. If easy fishing and easy markets is what you prefer, then why waste your time on tough ones? Acknowledging and respecting that self-awareness is what puts fish into the creel (or money into one’s account) over the long haul. Don’t fight those preferences. Work with them. That’s exactly why I do bonds exclusively. The promise to pay interest and to repay principal isn’t guaranteed, and taxes and inflation will eat the whole nearly any gain made. But it’s easy for me to sleep at night when I’m buying what amounts to baskets of puts enough of which are going to work out, on average and over the long haul, for me to preserve purchasing-power.

I found today's post showing how the little guy can buy bonds at a fair price very interesting. Lesson: Stay away from the big houses.

I’m glad you found the post useful. But now come the necessary disclaimers. Bonds aren’t priced “fairly”. Bonds are an institutionally-dominated market in which the retail investor is a barely-tolerated nuisance and will quickly to be taken advantage of. E.g., just this morning, I was looking at a muni I would like to have bought. The offer was a lot of 5 at 88 something. But I could see from T&S that the most recent sale was a lot of 25 at 83 something. That’s a 5-point spread and, clearly, abusive. So the small investor has two choices. Pay the desk their price and put the bond into your account, or wait ‘em out and, possibly, miss out. I’d like to say that stock investors don’t encounter that kind of crap. But they do, especially if the stock is thinly-traded, which really does describe much of the bond market and, especially, the muni market, where bonds trade almost by appointment only.

A useful rule in buying bonds is this: If you can get in easily, then the desk is dumping and you don’t want to be getting in. There are exceptions, of course. But, in general, the good stuff is either unavailable in retail quantities or is a fleeting opportunity. So if you’re serious about building a portfolio, you shop daily, but you often end the day with nothing bought. You’ve looked at a lot of stuff, but you've chosen to back away or were forced to do so by your own metrics of what constitutes a reasonably-price risk.

PS If you want some truly easy fishing, try Lost Lake off the Santiam Pass. I watched a guy release a hundred fish in the roughly two hours it took for late afternoon become nightfall. He was to the northeast of where the brookies where concentrated in the lake, waded in a bit, and using an ant pattern. His two sons were opposite and west of him, to the right of me, waist deep, the wind at their back, using BWO’s. I was in my pram, anchored, and throwing humphies. Their catch counts were in the forties. Mine didn’t break two dozen. I was raising fish, but missing the hookup as often as not. So the fishing situation was this. The brookies (and an occasional rainbow) were surface-feeding, hitting any small, dark pattern, and a hookup depended on superb timing, which the guy throwing ants did have. As fast as he could release a fish and get his line back out, he was into another fish that he didn't miss.

During daylight hours the next morning, the action was sub-surface as it had been midday before, and a stripping a Prince Nymph worked as well as anything else. A typical fish was 8"-9” and very strong, but not as brightly colored as other bookies I’ve caught, with the exception of some larger males in their spawning colors. In the morning, one fish broke me off, and I know he was huge, because I had done a long cast across the pool into the shallows, and the sunlight was just right, so I saw him take the fly, make his run and then keep going, breaking off a 5x tippet.

I’d never fished in what amounts to hatchery before, with hundreds of fish schooling so close you can almost step on then. So I have mixed feelings about the experience. The setting is pretty (picture linked below), and the three pair of ospreys were fun to watch, some diving almost close enough to splash you, hauling their catch to their nests in the surrounding trees and then returning to lake, annoyed at me for being where they wanted to be but working the water and catching food for their nestlings. The fishing there for us humans really is too easy, the sort of thing one does once and then moves on to more satisfying challenges, where the creek has to be read, and trees and brush avoided, so the presentation can be done properly.
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