The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Bonds & Fixed Income Investments


Subject:  Re: Inmet Date:  2/22/2013  3:28 PM
Author:  globalist2013 Number:  34799 of 35838


The bond game --and it is just a game, as is stock investing or Black Jack-- can be done in one of two ways. Either you’re making bets on the level/direction of interest-rates, or you’re making bets on the level /direction of an issuer’s credit-worthiness. For all practical purposes, gambling on interest-rates is tough game to play well for being no less demanding than currency trading. But gambling on credit-worthiness can be an investing game. In fact, it can be a very clear instance of classic, Ben Graham-style, value investing in which you are attempting to buy assets at a sufficient discount to their estimated intrinsic-value as to create a margin of safety for yourself.

By and large, fixed-income value-investing is easy to do, and it requires no more skill than basic familiarity with financial statements and a bit of probability theory, like, “if I buy this piece of trash, what’s the likelihood and magnitude of my downsides (always to be considered f