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Does anyone have a book recommendation on buying individual bonds or preferreds?
Old 08-13-2015, 10:02 AM   #1
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Does anyone have a book recommendation on buying individual bonds or preferreds?

Does anyone have a book recommendation on buying individual bonds or preferred stocks?

I've been buying individual stocks for years but never got into bonds or preferred stocks. I would just like to have a better understanding of what to look for in those.
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Old 08-13-2015, 12:46 PM   #2
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I read "Bond Investing for Dummies, 2nd Edition" by Russell Wild. I found it to be very easy to read and a good primer for someone who doesn't have a clue how to buy individual bonds.

After reading the book, I concluded I'd have to be crazy to buy individual bonds when the fees Vanguard charges for bond funds are so low, and the manager of those funds clearly knows how to buy the bonds at better prices than I would ever get as an individual investor.
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Does anyone have a book recommendation on buying individual bonds or preferreds?
Old 08-13-2015, 01:17 PM   #3
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Does anyone have a book recommendation on buying individual bonds or preferreds?

I bought a book last year to see if there was anything more I really needed to know about preferreds. And quite frankly I felt dumber for it, as I knew more than the book presented. Just google preferred stock investing and you will get quite a bit of info. Many of it repetitive as that will help you soak it in better.
Income investing forums will have some good threads to research. Google "Lord Xot" and you will get some good info. Many people follow his thoughts.
You definitely need an investing philosophy if you ever choose to invest in these, and be cognizant of interest rate changes on them as well as "call dates".
Just as an example I will use myself. I like preferreds that are not quite as "jumpy" yield between 6.25%- 7%, have retained earnings, have a history of payment, a guaranteed ROE, and are cumulative. This means I pretty much have all my money in transmission and distribution only electrical utility preferreds.
Most preferreds are financial stocks due to the inherent benefits of offering for their capital structure. Though many such as energy companies will offer them because they cannot get loans the traditional way, or that avenue is "tapped out". I stay away from them. I do not understand REIT accounting so I stay away from them also, but doesn't mean they are inherently a bad investment.
I know nothing about bonds other than they get fed before me and yield less. So I invest where there is plenty of food to eat for the people at the "end of the lunch line".



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Old 08-14-2015, 04:22 PM   #4
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ESR, the below link is an excellent background primer on preferred stocks without going into details yet of what to buy or how to buy.

http://wps.prenhall.com/wps/media/ob...chapter_16.pdf
If you ever decided to consider purchasing any, you would want to play around with Quantomonline. You can type in company ticker symbols and then it will list any preferreds with ticker symbols that the company has. It gives a brief thumbnail description of issue and usually a link to read the prospectus of the issue.
Not all are there though. I stumbled unto a little honey hole in my local utility yearly annual report and found a tiny issue that rarely trades (17 months since a 100 share block traded) and has a BAA2 investment grade rating as a preferred. I was patient and fortunately snagged a bunch of them yielding me 7.2%. It will be my heirs problem to figure out how to sell them if they never get called and I doubt they will since the company owns 96% of them from a previous merger and never bothered to call them years ago.


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Old 08-14-2015, 05:01 PM   #5
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Thanks Mulligan and Ready!
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