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Author: trader2012 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: Fed Report on Who Owns What Date: 6/19/2012 12:37 PM
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By now, you’ve probably read articles on the decline of family net-worth. (If not, here’s a link to a typical one. http://money.cnn.com/2012/06/11/news/economy/fed-family-net-...) You should be shocked by the numbers. But if you dig into the underlying Federal Reserve study that the articles are cribbing from and commenting on, you will be even more shocked. http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.p... In particular, look at Table 6, whose guts I’ve summarized below:
	
Who Owns What?

Income Savings
Percentile CDs Bonds Bonds Stocks Mutual Funds


<20 9.4 3.6 * 5.5 3.4
20-40 12.7 8.4 * 7.8 4.6
40-60 15.5 15.2 * 14.0 7.1
60-80 19.3 20.9 1.4 23.2 14.6
80-90 19.9 26.2 1.8 30.5 18.9
90-100 27.7 26.1 8.9 47.5 35.5

If their data can be trusted, the necessary conclusion is that very few people own individual bonds, which I find totally incomprehensible. Bond-investing is an easy, easy gig that pays decent money. There’s a tiny bit of vocab to be learned, and you’ve gotta be able to do at least rudimentary, financial-statement analysis if you're buying corporates or munis. But if you can buy bell peppers or broccoli, you can buy bonds, and do so responsibly. The process is no different: Inspect, and then accept or reject and move on.
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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34220 of 35400
Subject: Re: Fed Report on Who Owns What Date: 6/19/2012 4:20 PM
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Charlie says:

If their data can be trusted, the necessary conclusion is that very few people own individual bonds, which I find totally incomprehensible. Bond-investing is an easy, easy gig that pays decent money.

But Charlie also says:

Lastly, into (or out of) a market comes the public money, the Dumb Money, the audience that reads monthly financial magazines like Kiplingers, Forbes, etc. and that buys at the top from the Smart Money as they make their exit. This is also the audience that The Motley Fool targets with their articles and financial products, because they know they are an easy sale.

So which is it?
Actually, I'm not so surprised. If investing in bonds was so easy, anyone would do it. Procedurally, of course it is. But having an idea of what you're buying is not so intuitive; and many people find it confusing. And then they ask a question here, and get insulted for asking a stupid question.

The table in the OP didn't indicate, though the data sources may, how much of the "mutual funds" owners were invested in bond funds vs. stock funds. I should think a decent percent. And there are advantages, as well as disadvantages, to bond funds.

Bill

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Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34222 of 35400
Subject: Re: Fed Report on Who Owns What Date: 6/19/2012 6:30 PM
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very few people own individual bonds

I'll bet very few people even know what an individual bond is or what a "unit of 1" might cost. Typical cost, face or current value, that is, as I've purchased exchange-traded bonds in the past with face values of $25 per "share".

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34224 of 35400
Subject: Re: Fed Report on Who Owns What Date: 6/19/2012 10:06 PM
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I'll bet very few people even know what an individual bond is or what a "unit of 1" might cost. Typical cost, face or current value, that is, as I've purchased exchange-traded bonds in the past with face values of $25 per "share".
===================================
Hmmm. Fixed-income securities that sell for $25/share are usually preferred stocks. I'll grant you, the difference has become blurred in recent years.

Bill

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34230 of 35400
Subject: Re: Fed Report on Who Owns What Date: 6/20/2012 7:17 PM
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Wradical,

You wrote, Hmmm. Fixed-income securities that sell for $25/share are usually preferred stocks. I'll grant you, the difference has become blurred in recent years.

There are also exchange traded notes (ETNs)...

- Joel

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Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34233 of 35400
Subject: Re: Fed Report on Who Owns What Date: 6/22/2012 11:04 AM
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Hmmm. Fixed-income securities that sell for $25/share are usually preferred stocks. I'll grant you, the difference has become blurred in recent years.

Usually. But not always. These have face value of $25 but currently trade below that level. We discussed the ones that I own here previously (a few years ago). They've performed reasonably well for me, and I've also traded them over the years as they've gone up and down. If you are interested, their symbols are ISM and OSM. They are CPI-linked bonds issued by SLM Corp (the former Sallie Mae) and have a monthly coupon.

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