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Author: imdajunkman Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35271  
Subject: Loki's FAQ: Bond Books, a Short List Date: 12/30/2005 3:23 PM
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The following snippet is quoted from TMF's FAQ on Bonds (found at http://www.fool.com/FoolFAQ/FoolFAQ0010.htm ). I think it is woefully inadequate and volunteered an alternative, which you'll find further below.

Wow, there's a lot to bonds. Are there any books I can read about them to learn more?
Here are two books you may want to look at. The first is The Bond Book by Annette Thau (Probus Publishing, 1992). It was written for the individual investor and covers all areas of the bond market, including governments, municipals, and corporates.
On a more professional level is Frank J. Fabozzi, editor, The Handbook of Fixed Income Securities (4th edition, 1994, Irwin). This is loaded with more information than most people want or need to know. However, it is a great resource.


Loki's FAQ: the Bond Books

The first thing you need to understand about bonds is that it is an institutionally and professionally dominated market place that gives scant access to small investors. In fact, small investors are actively discouraged from buying their own bonds though a variety of FUD tactics (which is a rant for another time), but which has these practical consequences.

(1) The entry-level books, though a readable way to learn basic terminology, are not how-to-do-it manuals. You'll get yourself in trouble fast if you attempt to launch your bond investing on the basis of reading just one of them. And reading all of them isn't going to do anything more for you than reading just one of them.

(2) There are few entry–level books, and there is almost no middle ground. The next step up in term of depth of coverage are what amount to monographs directed toward professionals who are managing very large portfolios (or might be of interest to true bond aficionados). By all means, dip into a few of them. Fabozzi is a prolific writer/editor, and one or more of his titles are likely to be found on the shelves of your local library, or can be borrowed through InterLibraryLoan. Some of the chapters will be engaging and informative. Others are the highly mathematicized stuff that you encounter in The Journal of Finance and others of such ilk. The ideas are important, well-discussed, but nearly totally unreplicable at the retail level of bond investing. You just won't be dealing with those sums of money, those kinds of time frames, or have access to those kinds of research resources.

For introductory books, the FAQ writer touts the book by Annette Thau. I strongly prefer Sharon Saltzgiver Wright's Getting Started in Bonds The book in now in its second edition, but the first one is quite adequate, and it's what I own. For being the first edition, it will be dirt-cheap to buy used. But any of the obviously introductory books you find in the dropdown list that www.amazon.com provides when you type <bonds> into their book search engine will serve you well as an introduction.

I suggest that you ignore the customer reviews you'll find for each book. Instead, get a hold of the book –-perhaps by visiting Barnes & Noble some Saturday morning and perusing it-- and then make up your own mind. Books are very personal things and seemingly small matters like type font, the way the book is illustrated or indexed, will make a huge difference in your pleasure in using the book (and in re-using it, as it becomes a familiar part of your reference library.)

If you are merely curious about bonds, then borrow an introductory book from your local public library. If you suspect that you'll be buying your own bonds one of these days, buy the book of your choice and start marking it up the way you would a college textbook. Also, get a hold of a handheld calculator that does compound roots, so you can work through the numbers yourself as the books explain things like how to calculate yields. (Note: you don't need a dedicated financial calculator at this stage of your learning, and maybe never.)

There are two middle-ground books I would highly recommend. The first is Anthony Cresceni's “The Strategic Bond Investor: Strategies and Tools to Unlock the Power of the Bond Market, which could even serve as your introductory book. The second is Theodore Barnhill, et el High Yield bonds: Market Structure, Valuation, and Portfolio Strategies. Even if you are absolutely sure you will never be buying anything but investment-grades bond, you need to listen what these guys say about how the high-yield market works. The book isn't cheap, but if it instills enough market savvy to keep you out of one bad situation (or get you into one highly profitable one) the book will have more than have paid for itself.

Lastly, if you want to learn about bonds, books aren't the only source of information. Scour the web as well. There's a lot of information to be found, maybe even too much, which is why I like books. They are a one-source, take-anywhere resource that don't need batteries or electric cords. Plus, you can mark them up with notes and underlining, making them your own.

(Charlie, Amanuensis for Loki. First Version. December 2005)
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Author: jackcrow Big gold star, 5000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14672 of 35271
Subject: Re: Loki's FAQ: Bond Books, a Short List Date: 12/31/2005 12:15 AM
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Charlie,

Thank you for your book hints. I'll have to run down a copy of Barnhill's and Wright's. I agree Crescenzi's books a good one, his web site can be useful also. http://www.bondtalk.com/global.cfm?S=about

For a primer I like and Richelson and Richelson "The money making guide to bonds" its an awful title but a practicle and pragmatic book.

jack

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Author: imdajunkman Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14675 of 35271
Subject: Re: Loki's FAQ: Bond Books, a Short List Date: 12/31/2005 12:39 AM
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Jack,

Since you know Cresenzi's book and website, skip Wright's book. She does a good job, but you're beyond that.

Follow up on Barnhill. Also get a hold of Altman. Also, if the topic of high yield interests you, Google it and follow the links. You can get a free, two-week trial at a place called HYMart. Subscription fees are prohibitive, $250/month, but the peek they give should suggest how you can duplicate some of what they offer and apply it to upper-tier stuff as well.

Charlie

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Author: imdajunkman Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14930 of 35271
Subject: Re: Loki's FAQ: Bond Books, a Short List Date: 1/12/2006 8:29 PM
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Charlie writes: “Lastly, if you want to learn about bonds, books aren't the only source of information. Scour the web as well. There's a lot of information to be found.”

Besides the usual suspects found by entering the term "bonds" into a search engine like Google, I've also discovered (to my chagrin) that Fidelity's FAQ on bonds is excellent. The information is accurate, impartial as could be hoped for, and very attractively presented. Here's the link:

http://personal.fidelity.com/products/fixedincome/basicapproaches.shtml


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