Charlie, I was running through old posts and came across this one you did as a favor to Wendy. I think it does a good job of showing your way of analyzing bonds and would be a good link to add to the FAQ.http://boards.fool.com/Message.asp?mid=24340866dan
Dan,I'm really not sure where to throw in anything with bond analysis in the current set of 4 parts. I suppose it would be possible to add some links in conjunction with the discussion of corporate bonds, but my inclination is to wait until someone is willing to organize a part 5 dedicated to the rudiments of bond picking and trading.Maybe for now, you (or someone else) could just start from something like:If you want to buy corporate bonds with anything less than the higest ratings (AAA or AA), and in principle even those, you need to evaluate the default risk of the bond relative to its yield and value, and in comparison to other bonds. Bond analysis requires considerable knowledge. Here are some links to some such analyses.
I think waiting makes sense. I'd probably muck up the waters trying to do it myself as I'm not a bond picker/trader, but I could at least go trolling for past posts.dan
Dan,While I did appreciate Charlie's efforts, in writing the post you link to, I don't think that it is appropriate for linkage to a FAQ.The essence of FAQs is to introduce newbies to a subject. Like the FAQs that Lokicious and 2old4bs have written, they should be general and concise. They should explain all new terms. Above all, they should instruct, specifically, how the new information can be used, in a practical sense. I applaud Loki and 2old, for their excellence, in achieving these goals, with the bond FAQ.By contrast, Charlie's post is full of undefined terms and unexplained, intuitive judgments. For example, he talks about puts, without defining what a put is. He talks about how buying a bond as if it was a put, without explaining why that works. He talks about looking at a list of bonds, where one jumps out, without explaining how to find the list, how to put it in order, how to judge which jumps out, how to decide how much risk is involved.I was unable to use Charlie's advice, in any practical sense. Charlie appears to treat bond investing as an art form. He denigrates the FAQs, which are of real, practical use, while his own contributions are not usable.It might be OK to link to Charlie's post, under the rubric of "bonds as an art form," but, as a FAQ, it doesn't meet the objectives.Wendy
It might be OK to link to Charlie's post, under the rubric of "bonds as an art form," but, as a FAQ, it doesn't meet the objectives. What I had in mind was something like how the Retire Early Home Page FAQ once dealt with a very touchy subject over there - the "Great SWR Debate." An earlier version of the FAQ linked to several different posts made by people with different viewpoints. It was a good way to see the dynamics of various board participants.Now, I think they've simplified it to "look at some posts in a 40000-post range", which doesn't do as good a job - but perhaps it's better than something that's more confusing.In any event, I've done pretty much no work on the FAQ, so I should back off and let those who played a more active role consider what they want to do.dan
If someone (not me) wants to provide a handful of links on bond picking (not too many) under the general rubric I suggested earlier (i.e., don't try picking lower grade bonds without knowing what you are doing, but if you are interested, here's how some people do it), I can easily slip it in as a single question, probably right after the stuff on junk bonds. I don't think it would cause confusion.
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