Bonds right now

[explanade]

Some guy on CNBC was touting federally-backed housing bonds yielding 6-7%.

He said they were as "safe" as treasuries yielding only 3%.

Also said buy munis and even some tax-deferred bonds.

Calls for 50/50 now and only move more to stocks as the credit market improves.

Said buy corporate bonds now before stocks.

He didn't specifically list these bonds. Anyone buying bonds along these lines now?

 

[FIREd]

I have been buying TIPS, intermediate term munis and intermediate term corporate bonds lately. I have a healthy stake in a GNMA fund but I am not adding any money to it anymore because it's done pretty well already this year.

 

[explanade]

Would you mind naming some of them? Like the trading symbols?

Here is the interview BTW, for anyone interested. It's 4.5 minutes long.

Video - CNBC.com

 

[FIREd]

For TIPS: VIPSX
For intermediate term munis: VWITX
For intermediate term corporates: VWINX and VWELX (balanced funds)
For GNMA: VFIIX

I also own short term munis (EF): VWSTX

 

[explanade]

Thanks.

Anyone buying bonds directly?

 

[FIREd]

After reading a few books by Larry Swedroe lately, I have decided to stick with bond funds instead of buying individual bonds.

 

[RonBoyd]

Some guy on CNBC was touting federally-backed housing bonds yielding 6-7%.

Some guy? There was an article in the NYTimes a couple of weeks ago that speaks to that:

“All too often, [extremely wealthy individuals] make relatively easy marks because the pitch is, ‘You’re special, you can get something that other people can’t get.’ ”

But you are probably not special. Bill Gates is special, and he is the beneficiary of the best investment opportunities from the smartest people in the business. The Ford Foundation is special. The people who run Harvard and Stanford and Yale’s endowments are special.

You, however, are probably hearing about the second- or third- or fourth-tier ideas in the world of alternative investments. That does not mean the managers pitching them cannot make them work. But be honest with yourself: if you are in on them, how special could they really be, given the enormous demand for truly unique investment opportunities?

And how "special" are you for watching CNBC along with many (millions?) others.

 

[haha]

Some guy? There was an article in the NYTimes a couple of weeks ago that speaks to that:

“All too often, [extremely wealthy individuals] make relatively easy marks because the pitch is, ‘You’re special, you can get something that other people can’t get.’ ”

But you are probably not special. Bill Gates is special, and he is the beneficiary of the best investment opportunities from the smartest people in the business. The Ford Foundation is special. The people who run Harvard and Stanford and Yale’s endowments are special.

You, however, are probably hearing about the second- or third- or fourth-tier ideas in the world of alternative investments. That does not mean the managers pitching them cannot make them work. But be honest with yourself: if you are in on them, how special could they really be, given the enormous demand for truly unique investment opportunities?

And how "special" are you for watching CNBC along with many (millions?) others.

I don't see the connection at all. OP isn't saying that he thinks that he is "special". Or that this is a special opportunity. Only that all markets are not at all times perfectly efficient.

That this is true ought to be pretty clear by now.

ha

 

[RonBoyd]

I don't see the connection at all.

Oh! I seem to have had a "Roseanne Roseannadanna" moment. Never mind.

 

[brewer12345]

Thanks.

Anyone buying bonds directly?

I've started buy a bit here and there of individual names I know and like. The yields are pretty impressive.

The other way to skin this particular cat is to buy bond ETFs. There are scads of them trading at fat discounts to NAV, so pick one without a really ridiculous expense ratio.

 

[Stevewc]

After reading a few books by Larry Swedroe lately, I have decided to stick with bond funds instead of buying individual bonds.

Keep in mind that Larry is buying individual muni's for his personal portfolio. He has recently suggested checking with Tax Exempt municipal bonds and corporate bond investments at Stoever Glass & Co., Inc. if anyone is interested. I have not used or talked with them and I do not claim to know anything about them myself.
Steve

 

[FIREd]

Keep in mind that Larry is buying individual muni's for his personal portfolio. He has recently suggested checking with Tax Exempt municipal bonds and corporate bond investments at Stoever Glass & Co., Inc. if anyone is interested. I have not used or talked with them and I do not claim to know anything about them myself.
Steve

In one of his books he lists the pros and cons of individual bonds Vs. bond funds. In particular, he writes that, unless you have a very sizable bond portfolio ($500K if I remember well), you should stick with cheap bond funds (because of cost considerations). He also notes that MFs are far more liquid than individual bonds. Given the kind of credit environment we are living in, I think that liquidity is worth a small premium. So, after careful consideration, I decided to stick with MFs.

 

[Stevewc]

In case any of you folks are interested there is a mother load of information and good, knowledgeable people on investing at the www.bogleheads.org web site. Larry Swedroe and several other well know authors post there often.
Most of you already go there but thought I would mention it.
Steve

 

[Dennis]

my 2 cents on CNBC? Entertaining,but Keep in mind..What is their Job? Who Owns Them? Who is their Employer? What Industry are they primarially Supposed to Support and if they don't, what would happen to them?
> They wouldn't get the Kind of people they get to appear
> They have to support their Own Co.> GE and Who is GE? A Large cap Co..
> Where does Wall street make The Most $ from? Selling Stocks and Supporting Brokerage Firms and Brokers or Selling Bonds?
> Aren't most Bond Funds have a Load Fees Tied to them? Just look at the top25 list all the time..
> Ever Listen to Mark Hanes Little comments all the time? I love Him... He tells it like it is... and I am surprised they keep him on the show..He is Constantly Critzing Stocks and related Stock Firms..
> And Now that ERIN has lost 35% of her $? She's starting to Question alot more and not being the " Little naive Littlle Lady" anymore..
>Even Fast Money Guys are Synical...even CRAMER has Capitulated...!
> And "If the Pro's have been wrong 80% of the time for the past 20+ yrs? What chance do you think you have being right?"

Bottom Line> For Entertainment Purposes Only..and be Very Skeptical...

A Compramize? For Doing alittle gambling> How about Just go buy the Newer Bull Leverage /Margin Bond Funds paying 125%..Ck out Pro Funds for their Bond Funds..and you get the best of both worlds...ie; More bang for your buck..

My Investment firm had me in them for the Treasuries ( GVPIX) last yr and Into Some Bear Funds like it's UXPIX and A couple of others and Now, since Nov 21? Are in it's Bull Funds of Small Caps..( since 11/21 = + 43% for 08'..)

And ck your bonds Since 98' to give you some idea of the future..

 

[Dennis]

ie; On Junk /Hyld Corp bonds..
Let's say they do well this yr and do a +30%
You pay Ordinary taxes of lets say 26% on them?
Any State Taxes?
vs say the equities do at least that?
And pay CG taxes of only 15%

and how's the likes of a Hyld Corp. fund like VWEHX done for say the past 5 and 10 yrs now? even with a +30% gain this yr in 09'?

Alot of hype on Corporates..wonder why? Could it be Corporations Need more $ to Pay it's CEO's and can't get it thru traditional means? Go ahead and buy some bonds on co.'s like AIG, GE and GM, Ford, etc.. you might get lucky.. and then again, you might not... In the Famous Words of C. Eastwood> Do you feel Lucky? Well, Do yah...
LOL..

 

[youbet]

ie; On Junk /Hyld Corp bonds..
Let's say they do well this yr and do a +30%
You pay Ordinary taxes of lets say 26% on them?
Any State Taxes?
vs say the equities do at least that?
And pay CG taxes of only 15%

and how's the likes of a Hyld Corp. fund like VWEHX done for say the past 5 and 10 yrs now? even with a +30% gain this yr in 09'?

Alot of hype on Corporates..wonder why? Could it be Corporations Need more $ to Pay it's CEO's and can't get it thru traditional means? Go ahead and buy some bonds on co.'s like AIG, GE and GM, Ford, etc.. you might get lucky.. and then again, you might not... In the Famous Words of C. Eastwood> Do you feel Lucky? Well, Do yah...
LOL..

The capital gains rates for profits made from selling equities and from selling bonds is the same. I think you might be confusing the difference between bond interest taxed at ordinary income rates vs. dividend tax rates as compared to capital gains tax rates.

If bonds pay 30% in 2009, as you suggested, much (most) of that will be from capital appreciation, not interest payments. And taxes on realized capital gains for bonds are the same as for equities.

 

[brewer12345]

The capital gains rates for profits made from selling equities and from selling bonds is the same. I think you might be confusing the difference between bond interest taxed at ordinary income rates vs. dividend tax rates as compared to capital gains tax rates.

If bonds pay 30% in 2009, as you suggested, much (most) of that will be from capital appreciation, not interest payments. And taxes on realized capital gains for bonds are the same as for equities.

Exactly. So if the 6% coupon bond I bought at 70 cents on the dollar goes to par and I sell it after a year and a day, my return will be 30 points at LT cap gains rates and 6 points at ordinary income rates. And I wouldn't exactly be crying about the taxes.