Category: Bonds

The bond market is absolutely nuts – devoid of any common sense. Back in the days when professors used chalkboards, and actually taught classes, I studied Business Economics. We learned how capital and labor come together to produce goods and services, create jobs and profits. If capital was needed, you could borrow and pay interest. Interest is the rent you […]

Realizing you are wrong about a basic belief is tough. The last two weeks we discussed “The Bond Fund Risks Your Broker Won’t Tell You” and “Closed-End Bond Funds, Friend or Foe?” We concluded holding top-rated bonds is OK – individually, not in a publicly traded fund. Fund managers, chasing high returns, take risks I’m not comfortable with. If bonds […]

Historically, funds holding investment-grade bonds have been considered a safe investment. Lending money to hundreds of well-known companies had little chance of major default and provided interest income. Has your broker mentioned new risks emerging? Bonds ratings fall into two major groups, investment grade and high yield (called junk bonds). The bond rating generally determines the interest rate borrowers have […]