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Investing/Strategies / Bonds & Fixed Income Investments
|Subject: Re: Building Bond Portfolios||Date: 11/24/2002 5:46 PM|
|Author: GREYFOX||Number: 5346 of 35345|
" I also wonder if you are sincere or are somewhat playing around regarding your discussions about bonds in the C +/-rated category.
Surely they are not for everyone but for those who have the knowledge and experience trading such stuff maybe there is real money to be made.I prefer the buy and hold strategy for bonds, not the least of which is due to the high costs of buying and selling individual bonds, whic is one reason I think such horse trading of low rated bonds is best done on a level where the trading costs are minimal, not where I
am at I admit."
IMO the Buy and Hold style is for the birds.I am old enough to have been one of the "lucky" ones who bought Treas. yielding double digits in the 70's.Unfortunately I held to maturity(mid 90's) and therefore missed some great entry points for equities.As well as I did in the Gov's I would have done much better taking my profit in the bonds(and paying the damm Tax) and investing more in equities.I also had friends who lost gobs of money by buying and holding bonds in the 50's and 60's-adjusted for inflation:adding insult to injury the govt. imposes taxes on the nominal interest and/or gain.
While I agree with your'e statements re the Tobacco Bonds I decided to pass because I could not feel comfortable as to the risks.It is one thing to manage risk by buying Junk where the outsized returns compensate
for risk and another when I am geting 6%.While I have Taken big losses in
Junk like Casual Male and Exodus I have more then made up for those losses by Hedging Steps and winners like Level 3 and World Com.While I agree such plays are not for everyone I would think people like Charlie who are willing to invest the TIME as well as the money will do quite well over time. My opion is that now is not the time to buy BBB or higher rated Bonds to hold untill maturity.The only way interest rates can stay at this low level for the next 5 years is if the U.S. economy is in the crapper-which means the default rate will be VERY BAD.Just my opinion.
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