Just a personal opinion but, this isn't the time for a non professional to be buying bonds. The same buy low sell theory of trading stocks works with fixed income as well. Rates on generational lows you'll evenmtually have boughts rates low and sold them high. Not good if you're a bond trder-as rates rise, bond prices drop.
Butch basically said to diversify a portfolio, and the diversification should be based on one's particular economic needs and stomach for risk. Basic advice, standard advice and generally accepted as sound advice for the overwhelming majority of people. I don't think Bruce was suggesting to dump all one's stocks and dive into bonds. I think he was saying bonds (and other lower-risk securities) should be a part of any balanced and diversified portfolio. And a money-manager with an eight figure income that has to engage in credit repair doesn't sound like he's been very good at managing money. But maybe he's counting the two spots on the right of the decimal in the eight figures...... Wichita
I don't see where level of income is an issue where credit is concerned. Credit problems can strike anyone. If anything, I would say good for him that he took the time to work on it himself and not just hire a law firm to do it for him. To most of us, it is unfathomable that someone with that much money could have credit problems, but I can easily how it could happen. Just ask all the people that won millions in the lottery and are now pennyless. Gib
Gib was correct: Butch, I think she is referring to the Enron employees who had no choice in the matter. They were locked in while the top execs were bailing. quote: -------------------------------------------------------------------------------- Originally posted by sassyinaz Just making sure I'm reading this right -- You have little to no sympathy for (Enron employees having lost their retirement funds) those who don't follow our advice. Am I understanding? Sassy -------------------------------------------------------------------------------- I'm not nearly as heartless as you're trying to catch me being. (( I wasn't trying to catch you being anything, Butch, I only asked if I was understanding correctly. I'm referring to people in general. As I thought was Marie when she said: like Enron. I feel VERY badly for these older people who've lost everything, yes. Because they were lied to and cheated. To that extent I feel for them. hmmmmm, maybe we don't watch or read the same news programs. I don't recall those who lost everything to have been specific to "older people." Nor am I recalling that those that worked for Enron (worldcom, qwest, and martha) were the only ones that were lied to and cheated. I'm also saying that "part" of the responsibility rests with them as well. Let's not pretend that a 70 year old who puts "all his eggs in the Enron basket" because they told him he could make a fortune, is anything other than an unfortunate combination of uncontrollable greed AND misinformation in "most" of those cases. In fact it's plain stupid. But don't worry, those execs will do the time. As will Martha Stewart and her chronies. Now - if you can agree that everyone can share in the culpability, then it's just a matter of degrees. That's an argument I shall avoid. I don't agree. Please don't assume I give two flying-ones where those "execs" or "martha stewart and her chronies" go or don't go. And that's the truth Sassy, regardless of how sympathetic you feel. In this instance, truth is defined by one's self-inflated opinion of themselves and career choice. I never indicated I was sympathetic or not sympathetic. I only asked if I was understanding YOU correctly. You have clarified that I was. Sassy
I don't think there is anything wrong with putting all of your eggs in one basket as long as you WATCH that basket(famous quote from mark twain). Afterall have any of you actually collected eggs? You would feel pretty stupid carrying around two baskets when only one was needed!!
Marie - I would recommend looking into self directed IRAs.. check out: www.midoh.com that is one company that allows you to CHOOSE where you're money goes.. you can invest in real estate and use leverage as power.. this way, your money grows tax free in your roth IRA..
A True understanding of credit, CA's, errors, unathorized inquires and all of the problems with a society whose whole existince is based on a number that is generated from a defective system can only be gained from a setting such as this one. Suze lives in a perfect world that does not take into account the way the system works (FICO) credit profiling the difference between 5.9% and 23.9%. For the real story with all the guts and glory this is the place to be. The planner who said you get what you pay for, never counted a group of people freely sharing information and technique. I am back in the 600 club, yes it took more income, two jobs, but any gain in points was do 100% to information from all of you. Many thanks, I am half way there.
Wow.. you guys have been busy here Let me clarify I used Enron as an example of a stock I watched my friends ride down and down and down.. and they kept hoping.. praying it'd go up so they could get back to where they once were... and when they started not only losing their profits but also their initial investments... I got irritated with them b/c they saw it declining and yet refused to do anything... refused to sell and keep SOME profit.. and then refused to protect their capital by selling and taking some loss.. and not a loss of their whole account.... after all..who says once you make money in a stock that you have to stay all in it? You don't. You can take part of it out (say: your original investment) and then have fun with the money left... keep it there.. sell it off in increments... whatever you desire... I could also quote other stocks: Webvan is one. in Atlanta a lot of people invested b/c they were here. The stock bounced around and then went lower and lower and lower over the course of months it died a painful death ... it wasn't a one day deal... and I loved their service and food... hated to see them go...anyway.. so people watched and watched and watched. I'd bought and sold on 3 webvan cycles (month trading baby amounts for fun) and I'd made money on 2.. then I bought a bit more and watched... and watched.. and sweated... and within a month I'd lost 10% or so... and when I'd bought I put in a limit order to sell if it reached $4... and it almost did.. and I lowered it to $3.90 or so...$3.80 or so and it kept going down... and so I let it sell and I fussed at myself for investing that time more than I had previously.. I'd gotten excited by some easier money in my Roth... and so by not sticking to my plan I lost .20 per share more than I needed to.. not big money.. but still... a good lesson in emotion management... and then I watched... I had one friend who had a lot of his Roth there... and it went down and down and down.. and then months later I felt lucky that the last time I invested I'd done so and lost a bit... but only a bit... not all my money in my Roth.. his roth lost 50% on that one stock.. all b/c he kept thinking it had to go back up... my grandmother said we are spoiled.. hadn't seen a depression so we think losing all our money can't happen to us... well... I guess that perspective changed esp after Enron... anyway... so my point was really this: it sucks that these companies don't always make money for whatever reason...but I learned the hard way that when it comes to money.. make a plan... stick to it and be logical (leave the emotions at the door) and then if you pick wrong.. it's ok... but make sure to have enough money to still be in the 'game'. The deal with Enron employees ... is a whole other story. I feel sorry for them not only b/c they lost their incomes but likely most of their retirement funds were Enron... stock options etc. But I do think you have to be careful... no matter how much you like your company.. not to become too heavy in its stock in your 401k... but I've become very cautious now with my retirement money (likely too much so)... I want it to be there for me later... I don't want to have to re-earn my retirement all over again... and I'm going to marry someone who's into real estate... so I'll diversify naturally into that too I guess I am wondering about funds b/c I no longer want to watch the retirement money as closely as I used to... I will watch it... but I don't want to have to look quite so compulsively (every hour or 2... every day mon to fri gets tiring) so if you guys have any specific advice on other funds to invest in.. I certainly would thank you Butch always gives great advice and I thank him for any he throws my way... and regarding the millionaire... while I'm taken.. I have both a great looking sister and a brother ... might I interest you in either ??? oh... and of course.. if you have any good fund or stock tips... please feel free to post them
Hey Jeff, I am very curious about the answer Also, if you have any books you could recommend on bonds (I always learn as much as I can about a subject b/f investing).. thank you for any suggestions...
Marie, Not Jeff but, I can tell you why professionals prefer individual bonds over funds. They are more cost efficient. When you buy a fund you also buy management fees and administrative expenses. In an individual credit, once you pay commissions {basically buying the offer} and the accured interest, you have no more expense. You can talk with an institutional trading desk and give them parameters. Say, I have $5 million to spend and I want a 15 year duration with a credit rating of either "A" or, "BBB" but the "BBB" can't be over 25% of the trade. They'll give you list of bonds meeting that criteria. You can then compare them with any fixed income fund of similar characteristicsand they'll always beat the fund because the fund will always have a drag. Of course, a professinal is going to be able to analyize the credit quality and then trade large enough that the bid offer won't be excessive. That's the huge problem with an individual trying to buy bonds in drips and drabs. The other side of the trade will be someone who wants to move 6 figures at a time. The smaller trader will really pay through the nose for a 2 or 3 lot trade.
The reason why most people buy bonds directly or an indexed bond fund (kind of like the S&P500 for bonds) is because bond managers rarely if ever beat the unmanaged index over the long term. AND then there is their fee on top chipping away at a large part of the principle.
Hi Marie, Bonds are fixed-income investments, bond funds really are not. Individual bonds have a fixed yield and a contractual obligation to pay investors back their principal at a later maturity date. Bond funds have no future maturity date and your principal is at risk of loss due to falling net asset value. Fund managers constantly trade their positions so the risk-return profile of a bond fund investment is continually changing. An individual bond investment carries less risk the longer it is held. A bond fund has a risk profile in this respect closer to an equities investment than to individual bonds. A bond fund can be an appropriate investment but it is not the same as owning individual bonds. BTW, If your sister is ever in Seattle I would be happy to show her around. I am in my mid thirties and very single.
Thanks Jeff Since you're well-educated in this area, can you recommend any specific bonds or any material I can read to help me choose several bonds? I'm getting a large settlement from a car accident and I want to be good and invest it all instead of spending a dime. thanks again!
Jeff, I disagree that bond funds have no future maturity date, the last I checked investors use an average weighted maturity, which in essence says that the bond fund will perform similarly to a bond with that same maturity when interest rates go up or down. For anyone who didn't know interest rates affect the values of long term bonds much more than short term bonds. I agree though that this maturity can change depending on which bonds the manager buys and sells. Of course if you buy an indexed bond fund and its maturity should stay fairly constant(as far as I understand). Also Bond Funds share price is based directly on the NAV(net asset value) of all of the bonds in its portfolio. How is it the value of a bond fund and its bonds can diverge? Jeff, I'm wondering a little about your resume...who are you working for...top three, it wouldn't be Buffet, so that leaves what Bill Gates and who is #3, Ellison?
I'm watching her on Oprah right now and she really is making good sense with these guests (as I've seen her do in the past). BUT when I watch her own show I'm really disappointed and blown away at the advice she sometimes gives. It's like: Are you the same lady?? I can't understand it, maybe Oprah is a good influence on her! LOL! Newstdt
I saw the show and I agree with you. Just keep the good you like and trash the other advice.She is good and right about the market if my dad had listern to her I would not be hearing how he lost money in the market.
