EmperorPicks - Applying Sociocultural Perspective and Geopolitical Analysis to Investment Strategies I tried to set up a bond ladder last month - before I started Tweeting my picks and posting my summaries here on Bull Market Boards. Yeah, I know, interest rates are too low and the bond market sucks. Regardless, I was willing to take lower rates to get a collection of muni bonds and sit on them for a while. For those of you that might not be as familiar with bonds, municipal bonds are completely exempt from both federal and state taxes - but only in your state of residence. It was during this search that I found out for myself why so many investors are so frustrated with the bond market. In my state, there were very few offerings. So, I gave up on the tax break and decided to search for a decent return in corporate bonds. But, there was no decent return to be found from any corporation with a decent rating. When I got down to bbb rating and lower, the rates were still minimal, and I began to ask myself why I was even considering pumping cash into these dogs for 6% returns? Then, there are the minimum investment requirements... All bonds seem to have different issue packages. Some want you to buy $1000 bonds, with a 10 bond minimum. Really? So, I should give you $10K for 1 year to make 3%? There was a time when bonds made sense for risk-adverse investors. Hell, there was a time when bonds made sense as a hedge against stock or commodity risk. But, for me, today, bonds make no sense. So, if you are like me, then you would like a safe alternative to hedge your risk, but with a potential for a fair rate of return. I have found an investment that I bought earlier this month, and Tweeted a buy recommend on June 8th. MSD - Morgan Stanley Emerging Markets Debt ETF. First of all, the ETF is over 96% bond holdings, so we are still technically working the bond market. Second, although outside of the U.S., the bonds are primarily in countries with strong ties to the U.S. and interconnected economic interest. In other words, we aren't going to let Turkey, Mexico, Hungary, Poland, or Indonesia default on their debts - we would renegotiate before default. There are also some energy company bonds with decent coupon values in the fund. Below is a link to Morningstars MSD holding report - The best part of MSD - the price is right. When I tweeted the buy recommend, MSD was trading at $10.21. Today it opens at $10.33 (up 1%). Take a look at the charts. This investment is stable. This is your replacement bond strategy, and at $10 per share, you can customize it for any portfolio. Don't be someone that searches everywhere for good information and is afraid to act when you find it. Check this pick out for yourself. It is the safest play I have posted. Good luck and God bless your investments.
It sounds very affordable and more safe than not. Thanks for the tip. Doing the homework on this shouldn't take long and I'm in a position to where I can jump on something good. God bless you sir.
One thing I like to do is look for bonds trading at a pretty big discount pretty close to their maturity. This is typically seen with a bond paying a lower coupon during a time when interest rates are increasing and likely relatively high or going higher. Finding a decent quality bond not in any apparent danger of default, 5 years away from maturity trading at half its par value can be an excellent investment when the issuer has to pay you par value in 5 years - that's basically 15% a year over those 5 years, plus whatever (likely low) interest they were paying you. When rates start going up, US treasuries and longer term bonds in general will feel it the most. I do like a couple of bond funds in mine and others' retirement accounts, although I have very little in them now, and very little of any investors' monies who are not needing income now or anytime soon: http://quotes.morningstar.com/fund/f?t=TGEIX®ion=USA http://quotes.morningstar.com/fund/f?t=TGBAX®ion=USA http://quotes.morningstar.com/fund/f?t=FEHIX®ion=USA
