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Subject:  ‘Bond Investing’ as ‘Value Inv Date:  2/24/2013  3:05 PM
Author:  globalist2013 Number:  34803 of 35593

As you know, because you’ve read the book and it’s on your shelves, Ben Graham distinguishes between ‘Defensive’, ‘Enterprising’, and ‘Speculative’. Those terms can be applied to investors, or to securities. It’s just doesn’t matter. He defines each term in his classic intro to value-investing. (1) But he doesn’t quantify them. So I got to wondering if such a thing could be done and how it might be applied to the situation where we bond-investors currently find ourselves, namely, trying to find in the current offering-lists something that might be worth buying.

What prompts that remark is that I just spent a couple hours going through the current bond-offering list, all the while trying to take a ‘beginner’s mind’ approach. (2) In other words, I tried to assume that I owned no bonds already, but that I wanted to put money to work in the asset-class if I could. Among the several hundred bonds I looked at, I did find things that could be bought. But I kept having to say to myself, A ‘defensive investor’ really wouldn’t be --and shouldn’t be-- looking at that bond. It just doesn’t meet Ben’s standards of what is a ‘defensive investment’. So, let’s begin there and then work backwards.

You can look up what he says, or if you’ve read the book, you can recall what he says. In either case, you probably won’t disagree with this paraphrase. A ‘defensive investment’ is one on which you can turn a modest profit with little effort and little worry. ‘Defensive investments' are the ‘low-hanging fruit’ of the investment world. Their profits won’t be fat. But they’ll be decent enough and entirely proportional to effort and risk.

Now, ask yourself this question. What threatens profits from bonds? The usual response from them that think they understand bond-investing is “rising interest-rates”. Well, “No”