Liquidating bonds

15-Apr-2019 07:21

Tetra Images/Getty Images Many new, and even experienced, investors often make the mistake of repeating the old saying that "investing in bonds is always safer than investing in stocks". Benjamin Graham said that a better question investors should ask themselves is, "On what terms, and at what price [am I buying this investment? The first is a bond that pays 8.5% interest annually.

If the company goes bankrupt, this particular bond is third in line after other creditors for anything that remains once the assets have been liquidated, the real estate sold, etc. As a general rule, bond holders come first, then preferred stock holders, then common stock holders. Of course, typically, you want to avoid investing in bankruptcy situations; they are complex and most new investors lack the knowledge, experience, and resources to take advantage of these special circumstances.)The second investment is common stock of a debt-free company that trades at a p/e ratio of 10, which is an earnings yield of 10%.

Investing in bonds isn't always necessarily safer than investing in stocks.

As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.

Outflows from government funds accelerated further to -.43bn this past week from -

As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.

Outflows from government funds accelerated further to -$2.43bn this past week from -$1.73bn and -$1.00bn in the prior two weeks, respectively.

But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.

In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?

Because most new and inexperienced investors mistake volatility with risk.

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As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.Outflows from government funds accelerated further to -$2.43bn this past week from -$1.73bn and -$1.00bn in the prior two weeks, respectively.But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?Because most new and inexperienced investors mistake volatility with risk.

.73bn and -

As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.

Outflows from government funds accelerated further to -$2.43bn this past week from -$1.73bn and -$1.00bn in the prior two weeks, respectively.

But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.

In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?

Because most new and inexperienced investors mistake volatility with risk.

||

As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.Outflows from government funds accelerated further to -$2.43bn this past week from -$1.73bn and -$1.00bn in the prior two weeks, respectively.But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?Because most new and inexperienced investors mistake volatility with risk.

.00bn in the prior two weeks, respectively.

But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.

In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?

Because most new and inexperienced investors mistake volatility with risk.

As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.Outflows from government funds accelerated further to -.43bn this past week from -

As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.

Outflows from government funds accelerated further to -$2.43bn this past week from -$1.73bn and -$1.00bn in the prior two weeks, respectively.

But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.

In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?

Because most new and inexperienced investors mistake volatility with risk.

The Fund had a distribution yield in excess of 4.0% at the time of this writing.

||

As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.Outflows from government funds accelerated further to -$2.43bn this past week from -$1.73bn and -$1.00bn in the prior two weeks, respectively.But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?Because most new and inexperienced investors mistake volatility with risk.The Fund had a distribution yield in excess of 4.0% at the time of this writing.

.73bn and -

As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.

Outflows from government funds accelerated further to -$2.43bn this past week from -$1.73bn and -$1.00bn in the prior two weeks, respectively.

But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.

In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?

Because most new and inexperienced investors mistake volatility with risk.

The Fund had a distribution yield in excess of 4.0% at the time of this writing.

||

As long as the investor is planning to hold his Treasury until maturity, he can ignore changes in market value of the bonds.Outflows from government funds accelerated further to -$2.43bn this past week from -$1.73bn and -$1.00bn in the prior two weeks, respectively.But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?Because most new and inexperienced investors mistake volatility with risk.The Fund had a distribution yield in excess of 4.0% at the time of this writing.

.00bn in the prior two weeks, respectively.But more concerning for corporations than even fund flows, which will surely see even bigger outflows now that both yields are spreads are set to blow out making debt issuance far less attractive to corporations whose cash flows continue to deteriorate, is what the NY Fed reported as activity by Primary Dealer, i.e., the most connected, "smartest people in the room" who indirectly execute the Fed's actions in the public markets, in the most recent week.In this scenario, I would consider investing in the stock to be safer than investing in the bond. Why, then, does the myth that investing in bonds is safer than investing in stocks continue to persist when it clearly isn't true in all cases?Because most new and inexperienced investors mistake volatility with risk.The Fund had a distribution yield in excess of 4.0% at the time of this writing.