Monthly Hi Yield Portfolio

[pb4uski]

http://www.early-retirement.org/forums/f28/net-worth-poll-55244.html

I believe it was a semantic "dig" at this site as being an overly conservative closed minded retirement website that is not interested in learning new ideas unless they are relevant to people retiring with more than enough money to live on already. At least that is how I read that comment.

Personally, I found the discussion of the high yield topic at Morningstar informative, very well balanced and better than most discussions of financial matters here.

My educated guess based on posts that I have read here is that if the poll asked $2,$3,$4 and $5 million rather than the range of $2-$5 that most of the responses would have been closer to the lower end of the range - but perhaps I am wrong.

 

[nun]

http://www.early-retirement.org/forums/f28/net-worth-poll-55244.html

I believe it was a semantic "dig" at this site as being an overly conservative closed minded retirement website that is not interested in learning new ideas unless they are relevant to people retiring with more than enough money to live on already. At least that is how I read that comment.

Personally, I found the discussion of the high yield topic at Morningstar informative, very well balanced and better than most discussions of financial matters here.

Yes I get that as well. The dividend and income forum on Morningstar is probably close to the hearts of many on this board as it deals with dividends and income investing. I think the area of concern is that high yield investments should form only part of a balanced AA and that anything with 10% plus returns has inherent risks that must be understood and factor into your risk/return calculations.

 

[brewer12345]

Yes I get that as well. The dividend and income forum on Morningstar is probably close to the hearts of many on this board as it deals with dividends and income investing. I think the area of concern is that high yield investments should form only part of a balanced AA and that anything with 10% plus returns has inherent risks that must be understood and factor into your risk/return calculations.

I like high yield just fine, but there are times you do not want to chase yield. When everyone else is doing it is a good time to stay away.

 

[haha]

Every few months someone shows up who has excellent returns because they stretch for yield. Sometimes it works; sometimes it doesn't. We never know until quite a bit later.

I believe that most of us would be better off if we filed these stories under "possible, but unlikely over the long term".

Ha

 

[brewer12345]

Every few months someone shows up who has excellent returns because they stretch for yield. Sometimes it works; sometimes it doesn't. We never know until quite a bit later.

I believe that most of us would be better off if we filed these stories under "possible, but unlikely over the long term".

Ha

Remember the original John galt douche who bought tons of general motors bonds? That cannot have ended well.

 

[MooreBonds]

Remember the original John galt douche who bought tons of general motors bonds? That cannot have ended well.

I remember JG, but don't recall if he had GM or GMAC bonds.

A [-]typical self-serving, knowing far less than my competent financial markets knowledge[/-] financial 'advisor' that was managing my grandmother's portfolio before I took over in 2005 had her buy a newly issued GMAC SmartNotes bond that matured in 2014.

During the 2008 meltdown, the bonds traded as low as $.48 on the dollar (with a 7 1/8% coupon). I knew that GMAC wasn't the same as GM, and that it was on (relatively) stronger financial footing, but still was nervous that they would follow the path that GM took. So I sold half of her position in the $.60s in 2009. Managed to makeup the lost ground by shifting the proceeds into some MLP pipelines that did well.

The bonds ultimately recovered, and when we exercised the death put feature after her passing last year, they were trading at around $.98 So he either ended up fairly well screwed, or decently well off (if he stayed the course with GMAC bonds).

 

[Running_Man]

I remember JG, but don't recall if he had GM or GMAC bonds.

A [-]typical self-serving, knowing far less than my competent financial markets knowledge[/-] financial 'advisor' that was managing my grandmother's portfolio before I took over in 2005 had her buy a newly issued GMAC SmartNotes bond that matured in 2014.

During the 2008 meltdown, the bonds traded as low as $.48 on the dollar (with a 7 1/8% coupon). I knew that GMAC wasn't the same as GM, and that it was on (relatively) stronger financial footing, but still was nervous that they would follow the path that GM took. So I sold half of her position in the $.60s in 2009. Managed to makeup the lost ground by shifting the proceeds into some MLP pipelines that did well.

The bonds ultimately recovered, and when we exercised the death put feature after her passing last year, they were trading at around $.98 So he either ended up fairly well screwed, or decently well off (if he stayed the course with GMAC bonds).

http://www.early-retirement.org/forums/f28/low-interest-rates-15489-2.html

From the link you can see they were 20 year GMAC bonds. A 4 percent withdrawal rate adjusted for inflation and reinvested in the bonds would be quite a tidy sum today I surmise.