Carlos should buy bonds

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May 15, 2007 12:18 pm

Not Barry Bonds, tax free bonds. That was the advice Jim Cramer gave when sought out at last night's Mets game and asked "What investment advice would he have for someone like Carlos Beltran, a 120 mil player?"  Cramer reponded by saying he should buy only tax free bonds. Ball players don't need to get rich, they're already rich. They don't need common stocks, they need to relax and just buy bonds.


Whether you're a Cramer fan or not, that's good advice.


My credo "Just buy bonds"

May 15, 2007 12:25 pm

I would tell Carlos to hit over .300 and 40 HR in his next contract year.  That's solid advice.

May 15, 2007 12:46 pm
BondGuy:

Not Barry Bonds, tax free bonds. That was the advice Jim Cramer gave when sought out at last night's Mets game and asked "What investment advice would he have for someone like Carlos Beltran, a 120 mil player?"  Cramer reponded by saying he should buy only tax free bonds. Ball players don't need to get rich, they're already rich. They don't need common stocks, they need to relax and just buy bonds.


Whether you're a Cramer fan or not, that's good advice.


My credo "Just buy bonds"




Just buy annuities.

May 15, 2007 1:12 pm
Bobby Hull:
BondGuy:

Not Barry Bonds, tax free bonds. That was the advice Jim Cramer gave when sought out at last night's Mets game and asked "What investment advice would he have for someone like Carlos Beltran, a 120 mil player?"  Cramer reponded by saying he should buy only tax free bonds. Ball players don't need to get rich, they're already rich. They don't need common stocks, they need to relax and just buy bonds.


Whether you're a Cramer fan or not, that's good advice.


My credo "Just buy bonds"




Just buy annuities.




That's what OJ did, and he's still rich.

May 15, 2007 1:39 pm

I would tell Carlos to hit over .300 and 40 HR in his next contract year.  That's solid advice. "


Shoot... He'll have 40 knocks by Aug 1st, with about90 RBI's by then... And Reyes will be batting about .325 and about 75 stolen bases... Oh yeah.... The Mets will be 15 games up in first, with the best record in the NL (majors even???)

May 15, 2007 2:26 pm
Philo Kvetch:
Bobby Hull:
BondGuy:

Not Barry Bonds, tax free bonds. That was the advice Jim Cramer gave when sought out at last night's Mets game and asked "What investment advice would he have for someone like Carlos Beltran, a 120 mil player?"  Cramer reponded by saying he should buy only tax free bonds. Ball players don't need to get rich, they're already rich. They don't need common stocks, they need to relax and just buy bonds.


Whether you're a Cramer fan or not, that's good advice.


My credo "Just buy bonds"




Just buy annuities.




That's what OJ did, and he's still rich.



Yep. Also, VA's only have a 7 year surrender period and bonds have a 30 year surrender period.

May 15, 2007 6:13 pm
Philo Kvetch:
Bobby Hull:
BondGuy:

Not Barry Bonds, tax free bonds. That was the advice Jim Cramer gave when sought out at last night's Mets game and asked "What investment advice would he have for someone like Carlos Beltran, a 120 mil player?"  Cramer reponded by saying he should buy only tax free bonds. Ball players don't need to get rich, they're already rich. They don't need common stocks, they need to relax and just buy bonds.


Whether you're a Cramer fan or not, that's good advice.


My credo "Just buy bonds"



Just buy annuities.




That's what OJ did, and he's still rich.



Actually the reason that he's still rich is that he had a lot of $ tucked away in his profit sharing plan.  That money is protected from judgements by ERISA(or perhaps by CA state law).

May 15, 2007 6:44 pm

Carlos should do both.  Bonds for current tax free income that mature in the future for return of principal and deferred annuities for guaranteed income later. 

May 15, 2007 6:49 pm

Yep. Also, VA's only have a 7 year surrender period and bonds have a 30 year surrender period.

[/quote]



Bobby, as you once so eloquently put to me: You just made yourself look dumb!

May 15, 2007 9:20 pm
Ashland:

Yep. Also, VA's only have a 7 year surrender period and bonds have a 30 year surrender period.




Bobby, as you once so eloquently put to me: You just made yourself look dumb![/quote]


How does that make him dumb?  He's absolutely correct.


I'd imagine being a pro ball player, he's gonna have a rude awakening when he retires and he's not making the same kind of scratch he was when he was playing ball.  Annuities can provide a steady income that he cannot outlive.  More importantly, he can't outspend it.

May 15, 2007 9:29 pm
deekay:
Ashland:

Yep. Also, VA's only have a 7 year surrender period and bonds have a 30 year surrender period.



Bobby, as you once so eloquently put to me: You just made yourself look dumb!


How does that make him dumb?  He's absolutely correct.


I'd imagine being a pro ball player, he's gonna have a rude awakening when he retires and he's not making the same kind of scratch he was when he was playing ball.  Annuities can provide a steady income that he cannot outlive.  More importantly, he can't outspend it.

[/quote]

He made himself look dumb because bonds don't have a surrender period.

May 15, 2007 9:44 pm
ManagedMoney:
deekay:
Ashland:

Yep. Also, VA's only have a 7 year surrender period and bonds have a 30 year surrender period.




Bobby, as you once so eloquently put to me: You just made yourself look dumb!


How does that make him dumb?  He's absolutely correct.


I'd imagine being a pro ball player, he's gonna have a rude awakening when he retires and he's not making the same kind of scratch he was when he was playing ball.  Annuities can provide a steady income that he cannot outlive.  More importantly, he can't outspend it.




He made himself look dumb because bonds don't have a surrender period.
[/quote]


Sure they do.  How many bonds do you see selling below par?  How many times has someone had to sell a 30-year note at a loss? 


And frankly, putting anyone 100% in any one asset class is poor investment planning.  What if he wants to maintain his standard of living, but create a bigger legacy for his family/friends/important causes? 

May 15, 2007 11:34 pm

And frankly, putting anyone 100% in any one asset class is poor investment planning. What if he wants to maintain his standard of living, but create a bigger legacy for his family/friends/important causes?

[/quote]



when do ball players retire? Before or after 40?
May 16, 2007 12:35 am

Sorry... baby started screaming & I hit the button by mistake.



1 - Ball players retire much before 59 1/2. Last time I looked a VA bought at 30 yrs old locks you into that product type for about 30 yrs. I've got a good idea - let's use an L-share & add the income rider to it!!!



2 - Carlos will have enough money to hire a couple of muni bond managers that will cost him less than the 2 - 3% mark-up we demand on our bond sales. They'll manage the duration of the portfolio & take the appropriate(we hope) interest rate, credit, reinvestment, etc. risk. So, we don't worry so much about 'surrender periods' in bonds. Also, since interest is constantly thrown off, he'll be able to move or $$ to take advantage of opportunities as they present themselves.



3 - Hopefully he chooses a good planner that gives him a budget that he follows on what he can spend today & what he has to put away to have for after he can't play.



4 - Statistically it's less risky to have a component of your $$$ in stocks vs. 100% in bonds. For very conservative investors this may be as little as 5%, but as we all know more is better!



An interesting article:

http://www.efficientfrontier.com/ef/998/hell.htm

May 16, 2007 3:25 am
BondGuy:

Whether you're a Cramer fan or not, that's good advice.

My credo "Just buy bonds"





And when the inflation goes up past %4...



I have an old framed State of Israel War Bond from 1973 war. A few years of %60+ inflation made short work of that bond.



When Israel did 10-1 currency exchange (Old ISR Lira for Old ISR
Shekel) in 1980 the bond was cooked, when they did a second exchange
in 1985 (1000 Old ISR Shekel for 1 New ISR Sheckel) it was not worth very much at all.



Now if Cramer said to buy TIPS, I could understand. But to buy nominal bonds is making a very dangerious bet on low inflation.

May 16, 2007 3:28 am
Ashland:

2 - Carlos will have enough money to hire a couple of
muni bond managers that will cost him less than the 2 - 3% mark-up we
demand on our bond sales. They'll manage the duration of the portfolio
& take the appropriate(we hope) interest rate, credit,
reinvestment, etc. risk. So, we don't worry so much about 'surrender
periods' in bonds. Also, since interest is constantly thrown off,
he'll be able to move or $$ to take advantage of opportunities as they
present themselves. [QUOTE]



Vanguard can take of his muni needs for less than 30bp.



[quote]
4 - Statistically it's less risky to have a component of
your $$$ in stocks vs. 100% in bonds. For very conservative investors
this may be as little as 5%, but as we all know more is better!


An interesting article:

http://www.efficientfrontier.com/ef/998/hell.htm





IMHO a good portfolio will include



1) Straight Investment grade debt

2) TIPS

3) Floating Agency Mortgages.


May 16, 2007 6:28 am

The question with the ballplayers, rockstars, ect. is whether they need to be saved from themselves.


Is he going to spend millions and millions of dollars every year?  If so, he may be doomed regardless of what he does with the money.


Is he going to live "relatively conservatively" based upon his income?  If so, regardless of how he invests his money, as long as it's not all in one stock, etc, he should be wealthy for the rest of his life.

May 16, 2007 7:43 am

[quote=Ashland]Sorry... baby started screaming & I hit the button by mistake.

1 - Ball players retire much before 59 1/2. Last time I looked a VA bought at 30 yrs old locks you into that product type for about 30 yrs. I've got a good idea - let's use an L-share & add the income rider to it!!!

2 - Carlos will have enough money to hire a couple of muni bond managers that will cost him less than the 2 - 3% mark-up we demand on our bond sales. They'll manage the duration of the portfolio & take the appropriate(we hope) interest rate, credit, reinvestment, etc. risk. So, we don't worry so much about 'surrender periods' in bonds. Also, since interest is constantly thrown off, he'll be able to move or $$ to take advantage of opportunities as they present themselves.

3 - Hopefully he chooses a good planner that gives him a budget that he follows on what he can spend today & what he has to put away to have for after he can't play.

4 - Statistically it's less risky to have a component of your $$$ in stocks vs. 100% in bonds. For very conservative investors this may be as little as 5%, but as we all know more is better!

An interesting article:
http://www.efficientfrontier.com/ef/998/hell.htm[/quote]


Corky, you have almond shaped eyes, dont you?

May 16, 2007 7:46 am

Surprised All Reit didn't suggest to invest in alternative asset classes...

May 16, 2007 9:07 am
deekay:
ManagedMoney:
deekay:
Ashland:

Yep. Also, VA's only have a 7 year surrender period and bonds have a 30 year surrender period.



Bobby, as you once so eloquently put to me: You just made yourself look dumb!


How does that make him dumb?  He's absolutely correct.


I'd imagine being a pro ball player, he's gonna have a rude awakening when he retires and he's not making the same kind of scratch he was when he was playing ball.  Annuities can provide a steady income that he cannot outlive.  More importantly, he can't outspend it.




He made himself look dumb because bonds don't have a surrender period.


Sure they do.  How many bonds do you see selling below par?  How many times has someone had to sell a 30-year note at a loss? 


And frankly, putting anyone 100% in any one asset class is poor investment planning.  What if he wants to maintain his standard of living, but create a bigger legacy for his family/friends/important causes? 

[/quote]

The fact that some bonds sell below par has absolutely nothing to do with a surrender period.