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URL:  http://boards.fool.com/longreits-if-youre-willing-to-read-fabozzi-then-30557180.aspx

Subject:  Re: Inmet Date:  2/22/2013  4:47 PM
Author:  globalist2013 Number:  34801 of 35362

LONGREITS,

If you’re willing to read Fabozzi, then add this book to your list. http://www.amazon.com/High-Yield-Bonds-Structure-Strategies/... If you like Thorndike’s book, then try some of Jack Schwager’s. http://www.amazon.com/s/ref=nb_sb_ss_i_0_13?url=search-alias...

But if you really want to understand bond investing -- and I do mean investing-- you need to come at it as a good stock or futures trader would and focus on the trilogy of Money-Mind-Market. In other words, you need to dig into behavioral finance and gambling theory in an effort to understand why/how we humans all make such very bad decisions for ourselves about money and risk. But an easy shortcut to those topics is Justin Mamis’, The Nature of Risk., http://www.amazon.com/Nature-Publishing-Library-Contrary-Opi...

The key idea is this. There is a trade-off between ‘information-risk’ and ‘price-risk’ that we humans aren’t comfortable making, which is why the idiot academics (sorry for the tautology) like Markowitz, Merton, Scholes, Sharpe, Malkiel, Bogle, Bernstein (Wm, not Peter), etc. inevitably screw up the money entrusted to them to manage, as well as give out horribly bad advice. The obvious antidote to that group of truly stupid people is the books and technical papers of Mandelbrot and Taleb and their demonstrations of the limits of statistics when they are applied to non-physical domains. E.g., http://vantagepointtrading.com/wp-content/uploads/2010/05/Th... http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1142785

But if you want an even easier shortcut to all of the above, just go shopping at your local market for bell peppers and broccoli. Everything needed to make money in bonds is there if you just pay attention. That’s all bond-investing is. It’s just shopping. “How much am I paying, and what am I getting in return?” One can get fancy about the process. But that’s the basic question.

Charlie
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