The Motley Fool Discussion Boards
Investing/Strategies / Bonds & Fixed Income Investments
|Subject: Re: Advice to SIL||Date: 11/5/2006 10:07 AM|
|Author: Lokicious||Number: 18743 of 35623|
I usually don't read this board, but have been going through it today to get some insight on what to do with a 30 yr GNMA bond I inherited. I get the feeling on this board that everyone is down on the stock market (I know I am on a "bond" board). Words like "speculating" or "dangerous". Going to work in the more is dangerous (esp if you live where I do).
Also, the comment above, "...why most attempts to beat the stock market lose..." (sorry I can't figure how to italize.)
I thought the Motley Fool was built on beating the stock market? I have a stock advisor subscription and am very happy with what I have been able to do with their help. And if their figures are correct all of their services e.g. Stock Advisor, Hidden Gens are stock based and beat the market. So why so down on the market? Is it really such a horrible beast?
That said - I deeply respect most of what I have read on this board. You guys are a lot smarter than me - that is one of the reasons I am here and also why I am puzzled.
Back to my original reason for being here - I am reading through this board is to figure what to do with a 30 yr $40,000 GNMA bond at 5.25% I have inherited. With the market historically getting a 10 to 11 % return why do I settle for a 5.25% return on a bond?
I don't think most of us on the bond board view prudent investing in the stock market as speculative. The view Wendy posted is the standard doom and gloom scenario we hear from "perma bears," whether the stock market has been hot or cold, backed up by questionable statistics. I would say on the whole, those of us interested in bonds and fixed-income are on the whole more conservative about investing, which makes us less prone to either the doom and gloom scenarios or to the gung-ho stock market scenarios. I would also say that most of us follow broad economics, not to be confused with financial markets economics, and that means we are aware of issues about debt and falling real wages and aging demographics, which make us concerned about long term economic conditions, which is very different from predicting imminent crashes on the stock market.
Most of us would advocate a portfolio that fits your age and goals. You will find that this board has an older demographic than most boards (other than those specifically oriented to retirees and seniors), because those of us approaching or in retirement need more conservative allocations, in case the stock market does fall when we need to live off our investments.
My comment that most attempts to beat the stock market lose is absolutely true, based on substantial statistical research. All this is saying is that, if we take the returns (for the US) on the Total Stock Market Index as an abstract average,