In at 89 on 10/10/19. Out this morning at 182. The projected YTM was a decent-enough 4.9% for a 5.6 yr holding-period. The achieved YTM --assuming the same holding-period-- was a slightly better 7.9%.
Very nice! Well done.I've been reading and learning for years now -- via books, this forum, etc -- and using that knowledge helped me find and size positions in relatively risky areas to ultimately yield pretty good risk-adjusted returns. Your posts were part of that education. So thank you!
Stas, Much thanks for your kind words. I, too, have benefitted from this forum, both from what others have written and from having to think through a problem before I posted. (If I can explain it to someone else, I can explain it to myself. LOL)Suggestion: I have no idea what your financial goals are or the means you have to achieve them. But if bonds interest you and you don't have an account at E*Trade, you need to open one, because their fixed-income search-engine is the easiest to use. They're not the best shop to execute through. (Fidelity or IB are better in terms of commish.) But they're decent and often enough the only desk holding a lot. Secondly, if you're serious about bonds, then build a spreadsheet that will discount taxes and inflation and give you a means of comparing likely achieved yields. Where this comes in handy is dealing with 500 bonds at time and trying to find the few that might be worth digging into. Lastly, always remember this. It's fun to brag about annualized returns, but you can't spend them at the grocery store or gas pump. Inflation is real. Taxes are real. Expenses can't be avoided, and some losses are inevitable. But on a risk-adjusted basis, bonds offer roughly the same return as equities, or else the arbs step into make it so. The downsides of the bond game are the obscene amounts of money it requires, the abusive spreads one suffers, and the paucity of technical and historical data, though that is improving.Again, much thanks for your kind words.Arindam
Again, thank you! Well put.I've documented my frustration with buying and selling bonds via TD Ameritrade at some point on this board. I didn't do a whole lot of that there and happy about that. I'm mostly trading bonds via Fidelity. Don't sell much. Usually hold to maturity. There is a lot I like about bonds in general and while the amount of time I currently dedicate -- or have available -- to this is very limited, I can see how much more I know now vs when I first joined the forum but also see full well there are other things I need to get up to speed on in terms of conducting analysis.Oh and, yes, spreadsheets! I have some tools that I've built myself. Some I "copied" from others. I know these tools can make quite the difference.
Stas, TD's platform is the best there is *if* it's equities you're trying to trade. But they suck for bonds, and I escaped them 20 years ago. Fido, OTOH, got their act together a couple years back, and they're now one of the best shops to execute through, though their bond search-engine can't match E*Trade's in terms of ease, speed, and flexibility. I don't mean to pry, but I'd be curious to know which tools you've built for yourself. Arindam
No problem, Arindam! My creations are nothing that would be impressive to experts on this board. One of the things I built was a "calculator" of sorts. Built it myself from scratch. This "calculator" is basically spreadsheet that helps determine YTM and other metrics as well as basic cash flow such as what the outlay would be initially incl. accrued interest (and how to calculate accrued interest), impact of fees, what the final payout would look like, etc. I've been tracking certain issuers and issues of those issuers off and on but not consistently. Some I've done a few things here and there for bills, bonds, preferreds as well as some CEF's esp. target-term CEF's which are interesting although certainly have some quirks/problems.One thing I've found is that understanding how a business approaches financing and what various options are available for companies of various sizes is very helpful. Hard to get that experience though. But at least you can sort of try to put your business owner hat on and think of re-financing from that point of view and then take that "hat" off and consider, is participating in this or that transaction worthwhile as a lender? After all, bonds is just one of many ways that a company can raise capital. Another thing is that actually buying (and selling) bonds yourself is a key area of learning -- there is only so much that a spreadsheet or a book can teach.
Stas, Don't underestimate your investing skills. You're talkin' the talk --and walkin' the walk-- just fine. Also, it needs to be remembered, there's no one right way to do any of this stuff. As long as your methods help you meet your goals, you're doing what you should be doing, and what others do doesn't matter. Jack Schwager makes that point in his series of books on 'market wizards'. Methods claimed by one wizard to work for him or her are loudly condemned in a later chapter by a different wizard as "useless", and vice versa. Jake Bernstein makes much the same point. "We don't trade markets. We trade our beliefs about markets. Hence, we create our wins and losses, by what we see and don't". To me, bond investing is just classic, Ben Graham-style, value investing --especially spec-grade investing-- where bets are made about an issuer's credit-worthiness --not just the level and direction of interest-rates-- , and the trick to taking away from markets more money than you bring to them is to keep making small, even-sized bets --good markets and bad-- in a consistent, disciplined manner and to try never to overpay. Losses are inevitable, and should not try to be avoided. ("Scared to lose is scared to win.") It's stupid losses that have to be minimized. The smart losses --where good due-diligence was done, but prices moved against you anyway-- are just a cost of doing business. Yeah, books can only teach so much. But they're where we all need to begin, and where we all need to return to from time to time to re-learn the wisdoms we didn't fully understand the first --or second, or tenth-- time through. Arindam
Thanks. I've definitely learned a good bit from a variety of sources incl. books and forums such as this one but want to learn more and wish I could allocate more time to it. We'll see if I can do that. But here's to keeping this board going - lots of good information already and hoping to see many more helpful posts in the future!
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