Any bond ivestors out there

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NanoWest_IHB

New member
I have all of my money in CD's at about 4%.



Been looking at corporate bonds as an alternative, 2 year AA trading at about 10%. Anyone with experience in the risks of corporate bonds ? It seems that this may be a great investment for a few years.
 
Keep your ratings high (for what its worth). I am also finding extremely good buys in the Preffered and Convertible preffered markets. Be careful though and don'd just fall for the pretiest yield, she bites.
 
[quote author="morekaos" date=1228259182]Keep your ratings high (for what its worth). I am also finding extremely good buys in the Preffered and Convertible preffered markets. Be careful though and don'd just fall for the pretiest yield, she bites.</blockquote>


Regarding ratings, check to see if it is the underlying issuer, or a bond guarantee firm. Be cautious when it's an older rating. Some sites will show you the rating when issued, and you have to dig or look elsewhere to find the current rating.



There is also a tendency for bond ratings to follow major stock price moves. There is some interesting academic research that the sequence is: bond price change, stock price change, bond rating change.
 
somewhat related...



Bill Gross Says Stocks Aren?t as Cheap as They Appear



By Michael J. Moore



Dec. 2 (Bloomberg) -- Bill Gross, manager of the world?s biggest bond fund, said stocks aren?t as cheap as they appear given that the era of deregulation, low borrowing costs and tax cuts is over.



?Stocks are cheap when valued within the context of a financed-based economy once dominated by leverage, cheap financing and even lower corporate tax rates,? Pacific Investment Management Co.?s Gross wrote in a market commentary posted on the Newport Beach, California-based company?s Web site. ?That world, however, is in our past not our future.?



Gross said that while equities appear inexpensive according to price-to-earnings multiples and the so-called Q ratio, which compares prices with the replacement cost of net assets, the new economic reality means traditional techniques are sending false signals. The 64-year-old money manager didn?t say whether he expects stocks to climb or fall, although he argued that corporate bonds are better investments.



<a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=a7XsZc_xbKpM&refer=home">http://www.bloomberg.com/apps/news?pid=20601087&sid=a7XsZc_xbKpM&refer=home</a>
 
Be carefull of Bill when he talks about stocks...he is notoriously (by his own words) wrong.



Here I go again! Gosh it was only six years ago that <strong>I cemented my place in stock market history by predicting that the Dow would fall from 8,500 to 5,000, instead of going up to 14,000 where it peaked in October of 2007</strong>. Well, I could use the standard set of excuses: 1) No one else saw it coming, 2) I was misinterpreted, and taken out of context, 3) I was tired, overworked, and had family problems, or 4) I had just come out of rehab. But these days what really works is a full confession. I mean, like, uh, it was totally my fault and I take full responsibility. The fact is I was only off by 9,000 points. That?s my story, and I?m stickin? to it.



<a href="http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+Dow+5000+Gross+Dec+08.htm">Gross comments</a>
 
I agree with gross......stocks started to correct in 2002 but the government was able to get the party started again.......stocks are overpriced and will continue to correct unless the government can get the party started one more time. Today's markets are being driven by news stories and not any financial reasoning.



If you value stocks based on future growth and dividends, then the S&P 500 should be around 400 or so. No way are these companies going to grow in the next 5 years so the value should be based on dividends.
 
[quote author="NanoWest" date=1228281356]I agree with gross......stocks started to correct in 2002 but the government was able to get the party started again.......stocks are overpriced and will continue to correct unless the government can get the party started one more time. Today's markets are being driven by news stories and not any financial reasoning.



If you value stocks based on future growth and dividends, then the S&P 500 should be around 400 or so. No way are these companies going to grow in the next 5 years so the value should be based on dividends.</blockquote>




Unfortunately, the market is being driven by government action. So far, it's mostly US govt action causing the swings, but more and more it will also be asian and european governments. I am becoming more concerned about internal strife in China, India vs Pakistan, Thailand unraveling, and rebellions in corrupt oil-rich nations. It will be a very bumpy ride.
 
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