The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Bonds & Fixed Income Investments

URL:  http://boards.fool.com/hey-charlie-bit-late-to-this-party-if-he-wants-30634040.aspx

Subject:  Re: Div Stocks vs. Bonds Date:  4/12/2013  10:58 PM
Author:  jackcrow Number:  34849 of 35576

Hey Charlie,

Bit late to this party.

If he wants to compare junk to equity this way then it is he that is being disingenuous because included in that JNK's"7%" is YTM not simply coupon payments and he is actually comparing a fund to a vague dividend paying stock.

So lets make a more total yield to total yield comparison and use earnings yield to take a sniff at equities. Since the author used JNK lets use SPY, broad asset fund to broad asset fund. SPY price = 158.67, earnings 31.03 = 19.56%.

Where the author is absolutely correct is that there is a different risk profile between bonds, even junk, and equities. Equities, just like JNK, have no maturity their risk is open ended. Both bonds and equities can go to zero. If an equity goes to zero there will be no workout.

Now some very smart people, long ago, decided that a p/e of 8 was/is a goo