Bonds, Muni's and BAB's
I've been buying up the First Trust Senior Loan fund which is made up of floating rate CEF's. It looks like we're in the first couple innings of this game, wouldn't be a bad thing to cold call on. Edit: Thought about it for a minute. Here's how I would cold call on it. "What is your advisor doing to protect your bond positions from rising interest rates? Would you find it worth 15 minutes of your time to learn how rising interest rates can decrease the value of your bonds and how you can also take advantage of this opportunity?" Something to that effect. Not perfect, but may get people thinking.
Close-ended floating rate funds.
what happened in sept-dec 2008 in fixed income will NEVER happen again. [/quote]
For the sake of us all I hope you are right. Still, Shania, sweetheart, you miss the point. The point is FINDING opportunity in the bond markets. Then using that opportunity to add value to clients. Not a small thing in the cookie cutter off the rack world that the investment advice biz has become. That opportunity is there. Do you want to add value?[/quote]
But you must know your sh#t (like it sounds like you do).
I think retail punks like me who are not buying size and do not not have the research and insights are at a huge disadvantage to the trader whores, the bond desk whores, the real players (mutual funds, calpers etc etc) etc etc.
PLUS, the new horrible angle of the GD liquidity going bye bye.
If you HAD to sell bonds during that meltdown period in 08 you were screwed. that was NOT a market. their normal screw job spreads went to insanity. the bid-ask was a joke. it was not a market
its like gambling in vegas. you will not win.
You said it in one of your posts. fixed income to me is a necessary evil. a risk reducing parking place.
I guess Ive been f#cked enuf times where I am humble to not try to beat them at THEIR game. I buy stocks to make money and I understand the risk.
I just dont want to buy GM,fre,ene,fnm,dec,leh etc etc etc for 150 basis points going in.
I'm talking to opportunity side of things here not the mechanics of how the markets work. Traders giving the old KY treatment is nothing new. And has always been a complaint coming from retail. However, the fall of 2008 was a new world for retail. Institutional was selling and in the absence of bids prices were hitting new lows every day. The only buyers of bonds in that market was retail. Now we've come full cycle in many credit markets. Advisors who bought bonds for their clients in that 08 market are looking like geniuses right now. It's the same old story; while most people run from the flames other run towards them. It is those individuals who are the heros. It takes big balls (sorry ladies) to step up in a situation like that. But if you want to add value, that's the deal. Otherwise you are just a me too adviser giving clients products, services, and advice they can get anywhere. And here's the thing with this; many of you will think that what i did or what Ranks did was reckless or only for high risk clients. No no no! It was for everybody. The risk wasn't that great. Why? Because we weren't having a credit crisis, we were having a liquidity crisis. As Shania pointed out you couldn't get a bid. But the credits were still good. Back here on main street the lights were still on, the trash was getting picked up, you know, people were still paying their property taxes , business as usual. The fact is the only way these bonds wouldn't pay off is if we had a total economic collapse. If we were headed for total economic collapse it wouldn't have mattered where your money was invested. Or even if it was invested. Money would be worthless to the point of being better used as insulation for your house than as legal tender. So exactly what risk were we taking? Lastly, here we go again with California. S&P lowered them to A- today. Talking the GOs here nothin' else. Ok lets look at this 1. No state can go Chapter 9 on their bond debt. It's not legally possible. 2. By constitution California must pay the debt on its bonds second only to paying for education. That puts bond holders at number two on the payee list. I like being #2 ! 3. By constitution, California like every state, must balance its budget every year. What does this mean? Unless California plans to not exist past June of this year they've got to balance their budget. By constitution the bondholders get paid before the state workers get paid. It's gonna be tough running the state without any workers. As it will be running the state without the ability to pay anyone for anything. Still, the kids go to school and the bondholders get paid. In practical terms this means California will find a way to balance its budget. And they will do whatever is necessary to maintain their ability to borrow. Because, again, unless they are going the way of the dinosaur they are going to need that ability. Now, I gotta tell ya Calfornia's situation is different than the one i described up above about last year. California's situation is a credit crisis. A credit crisis caused by a lack of liquidity. That's serious stuff. And not a risk all clients should take. Knowing all that you have to ask yourself a question: Run towards the flames or away from them? Only you can answer that for yourself.
small guy sold in fear in march
afraid of stocks
cant deal with .3873827387213812732173821% cash
buying bonds now (safer then stocks logic-duh)
this guy gonna get killed.
I’ve been following this thread and several others on this blog. I want to thank you all for your comments. I’ve learned a lot here and I’m very impressed with your knowledge. I noticed a few of you that I have had run-ins with. Sorry about that. I’ve had a couple of health issues that make me grumpy. The thing I like most about this business is how mentally stimulating it is. What I like least is prospecting. You all have helped me with both. Thanks!