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Author: charliebonds Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35392  
Subject: Re: Ford’s 6.350’s of ‘14 Date: 4/22/2011 2:27 PM
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What are the top 3 or 4 books or other periodicals/literature you would recommend one read regarding bond investing? This could be for someone with novice or intermediate knowledge.


LONGREITS,

The bond literature can be divided into two groups, that targeted toward beginners and that intended for professionals. There are almost no intermediate handbooks.

Of the beginners books, one is mostly as good as another. I like the way Wright introduces the topic, but others prefers Tau's book, or Cohen's or whomever's, and I wouldn't disagree. Begin wherever it makes sense to do so. They're all going to cover the basic vocab and concepts.

The lit meant for bond professionals can be interesting to dip into, but it tends to be overly-mathematicized and mostly applicable to larger portfolios than the average retail investor will be managing.

Of the few intermediate books there are, my bet is that by the time a bond-investor is ready to read them, they won't need them, for already having worked out a philosophy and method of doing bond-investing. So reading the intermediates is fun to do but not really helpful in any practical sense, because implementing their implied strategies would require more capital than the average bond investor can bring to bear on the problem.

Therefore, the task of learning bond-investing is the task of defining for oneself what is meant by "investing" and how it differs (or doesn't) from ""trading", "speculating" and "gambling". All four are value-neutral terms for clusters of activities that can be analytically distinguished from each other, but, at heart, are no different than each other. All make bets about an unknowable future. Once that intellectual (and emotional) break-through is made, and once the moral nonsense is set aside that "I'm an investor (not one of them other naughty persons)", then the real work can begin of identifying and managing risk in all its forms, and some good people to read are Taleb and Mandelbrot who never even mention bonds, but who do understand risk-management. The rest is just details that anyone whom the market gods meant to play the bond-game will work out for her or himself.

In other words, "There are no roads but by walking."

Charlie
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