No. of Recommendations: 1
Quill,

These are the bond trades I did yesterday:

Issue YTM If B&H Achieved YTM from Trading
JCP’s 7.950’s of ’17 8.8% 15.3%
JCP’s 6.375’s of ’36 8.9% 30.2%
Dell’s 5.400’s of ’40 6.9% 28.5%

Earlier in the week, I did the following:

Issue		         YTM If B&H        Achieved YTM from Trading 
JCP’s 7.125’s of ’23 9.3% 242.4%

A belief in Buy-and-Hold is responsible for destroying more wealth than trading ever did. Yet trading is regarded as ‘risky’. The mistake most self-identified investors make is to confuse ‘volatility’ with ‘risk’. They can’t manage the latter. So they try to avoid the former, and they make tiny money that is then doubly-taxed, once by the enforcement arm of the Treasury Dept (the IRS), and then a second time by the Fed's shenanigans (i.e., currency depreciation). The net-result is that it takes an 8% return just to break even with respect to preserving one's purchasing-power.

But Dalbar's 20-year studies of investor results document that the "average" stock investor doesn't achieve even half of that. What they are buying --when they buy stocks or funds -- is just a social club membership. Worse, TMF is committed to encouraging that foolishness, because it profits from selling subscriptions to their "advisory services".

Is the solution to the so-called "retirement crisis" to give "investors" the tools they need to make profitable financial decisions? "No", say those who train traders. "The undisciplined can be given a tested, proven trading system, and they will still lose money. They didn't build the system. Therefore, they don't trust it, and they won't follow its rules." It's a Catch-22 situation. Them that can, trade for their own account. Them that can't, believe it shouldn't be attempted. Results reflect intentions, and most investors fail to pull more money out of markets --on an after-taxes, after-inflation basis-- than they bring to them.

Charlie
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Charlie,

I'm new to bond trading. What system are you using to achieve these higher yields with trading?
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Ruf,

The post you replied to was written in 2013. Now, it's 2019, and the opportunities it described are no longer available, mainly due to the Fed's easy money policies.

As with stock investing/trading, there are lots of ways bond investing/trading can be done. But they fall into two main approaches: bets about the level/direction of interests rates and bets about the level/direction of and issuer's credit-worthiness. The former is mainly an institutional game. The later is just classic, Ben Graham-style investing, easily done by small accounts.

C
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