The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Bonds & Fixed Income Investments

URL:  http://boards.fool.com/folgore-no-one-would-be-interested-in-such-a-30359800.aspx

Subject:  Re: OT, buy/write, a preferred, book title, Date:  11/4/2012  10:38 AM
Author:  trader2012 Number:  34484 of 35367

folgore,

No one would be interested in such a book, because "Bonds Are Boring." Bonds just don't have the cachet that stocks do. When have you ever heard anyone brag at the water cooler, "You wouldn't believe the deal I got on XYZ's 7.25's of '23"? But mention the fact that you bought shares in some over-hyped, no-earnings, start-up, and you're immediately welcome to the club of smart, savvy investors.

Bonds are used by investors to make bets. Mostly, those bets are interest-rate bets that the investor doesn't expect to lose. But, on average, they do lose that bet as the Dalbar 20-year studies of investor-performance document. To survive in the bond-game, much less prosper, the would-be bond investor has to engage the asset-class far differently than they are accustomed to doing. But figuring that out is their problem. I like the fact that bonds --presently -- are a still, mostly-misunderstood asset-class that nearly everyone has given up on, all the while they continue to pour money into it, driving prices to even more ridiculous levels. When the bubble bursts --and it will-- then the game will become fun again as the pendulum swings in the other direction. Right now, it's just hard work.

Yeah, the coming stock-market crash. Or, maybe not. The head man at Everbank writes:

Looking ahead,[post-election] the stock market should muddle through. I don't expect to see a major crash, as some of our gloom-and-doom friends have been predicting (some of them for several decades). Nor do I expect to see the market roar ahead anytime soon. If the Federal Reserve keeps adding to the monetary base, the stock market may continue to rise in response – but until genuine earnings begin to add up there isn't a compelling case for a boom.

Interest rates are being kept artificially low. This has been true for several years and I expect it to continue. Policy makers aren't doing this to punish savers, even though that is one of the effects. No, they have been very open that they are trying to encourage spending – even if it means borrowing more money to do so.
http://www.dailypfennig.com/2012/11/04/pfennig-and-pfriends-...

Charlie
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us