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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35351  
Subject: Re: Thinking about the "Bond FAQ" Date: 11/24/2006 5:09 PM
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It has been made very explicit from the beginning that anyone interested in bond trading or even picking bonds below high investment grade needs to know a lot more than what can be provided by these or any other introduction.

What is different and important about these FAQs, and this board, for which Paul deserves the credit, is that we attempt to explore all the options for those interested first and foremost in getting the best yield they can for limited risks to principal. There are plenty of places and books that try to explain bond trading and picking.

I regret we do not have a Part V to the FAQs that does deal with bond picking and trading, since at the very least it would be nice to have easy access, in some organized fashion, the Charlie's personal explorations into bond picking, which would be highly educational even for those with more advanced knowledge. I'm sorry we don't even have the bond picking primer Jack started before his sudden departure (I hope his membership just ran out or he got bored with us, not something bad in his life happening).

I fear there are some factual errors that are yet to be corrected. I'll see if I notice anything on my read through—we have corrected many on previous edits. Conceptually, I'm pretty comfortable. Talking about interest rates in terms of being difficult to predict is, I think, a good way of saying they aren't some mystical process, but there are many factors that go into supply and demand for debt securities of various maturities and risk, so even if we identify these factors (which we try to do, to some extent), choices that depend on evaluation of future interest rates will always be an educated guess. Helping people make educated guesses, instead of, for example, assuming when they hear about "interest rates" on the news, meaning what the Fed is up to, that's the be all and end all, is a good starting point. If someone wants to play the day to day, week to week, momentum trading game with bonds, they need to look somewhere else. I know I have a much better understanding of interest rates than I did a few years ago, which allows me to make informed decisions between a 20 year corporate, 5-year CD, and 6-month Treasury, which does not mean my informed decision will be proven correct in hindsight.
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