Bond Market Rules [Secure eReader]
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eBook by Michael Sheimo
eBook Category: Business
eBook Description: Quick, direct guidelines for understanding--and profiting from--the bond market. Bond Market Rules is a valuable, easy-to-read compendium of the fixed income market's 50 most beloved and respected axioms. It is also a concise resource covering every basic bond investing concept, from the nature and structure of bonds to the ways in which hedging and speculating with bond futures can give an investor remarkable equity-style returns. Investors and traders at all levels will be astonished at the wealth of comprehensive bond information packed into this one book. Whether using bonds for conservative income or aggressive growth, they will gain a tremendous market advantage from Bond Market Rules and its: detailed analysis of fixed income products and risk; analysis of strategic risk versus return; illustrative charts and graphs.
eBook Publisher: McGraw-Hill Companies, Published: 2002
Fictionwise Release Date: June 2002
Short chapters based on single concepts, it's the same approach that worked so well in Stock Market Rules, a popular guide on stock investing since 1990. This is a great book to read during lunch.
Bond Market Rules is for beginning-to intermediate-level investors who want to learn or review the basics of investing in bonds. Prices, price action, interest-rate analysis, fundamental and technical analysis, new types of bonds (Bradys, DANs, TIPS), tax-exempt bonds, bonds that increase in face value with inflation, bonds that have a "survivors' put option": all are explained and examined. Bonds have changed. They aren't your father's "bearer bonds" anymore, hidden in the basement.
Although bonds are not the simple investment they once were, many of the newer innovations benefit the investor. Even an old standard, the T-bill, has changed from a $10,000 to a $1000 minimum investment, thereby making it available to a larger group of investors.
Brady bonds from developing countries have enabled investors to take advantage of higher foreign yields without extreme risk (Chapter 49).
Direct access notes (DANs), offer the income flexibility of six-month or monthly payments on bonds, which can be put back to the company at face value by the investor's estate (Chapter 31). That can be a terrific advantage if interest rates have risen and the heirs have bills to pay.
Even the U.S. government is trying to be accommodating to the investor's concerns. Inflation can be the enemy of fixed-income investing. Rising to this concern are inflation protection bonds (TIPs). When are they a bargain and when are regular bonds better (Chapter 24)?
Income, asset allocation, and defensive investing are just some of the concepts examined. Strategies like the "ladder" (Chapter 16) make a wonderful inflation hedge when interest rates rise. A simpler version of the ladder is the "barbell," which combines some of the advantages of both short-term and long-term bond investing (Chapter 29). Easier yet are the Treasury Inflation Protection bonds (TIPs), which are tied to the Consumer Price Index. But how much does that "protection" cost?
Asset allocation is explored in Chapter 21. What is meant by allocation? How is it done? What are some variations? The information presented can enable the investor to choose between an approach suitable for profits and one suitable for defensive investing.
Always check the yield curve before buying bonds (Chapters 3 and 4). Checking the yield curve will instantly let you know if the longterm yields are worth the holding period. The curve can also give signals as to what might happen next with interest rates. Bond and bond market analyses are discussed in several chapters. Chapters 3, 4, 7, 8, 20, 30, and others contain analysis -- from the uncomplicated to the detailed.
BOND FUTURES AND OPTIONS
Options trading can be speculative or conservative, and some of the details are examined in Chapter 16. Although not appropriate for every investor, some basics of bond futures, hedging, and speculating are explored in Chapter 23.
Unless otherwise noted, the data used in this work comes from the Federal Reserve Bank of St. Louis. Much of their data originates from the Bureau of Labor Statistics. Both of these sources are available on the Internet.
It's almost as if the Internet was designed for investors. Hundreds of thousands of pages of economic data and investing information are now available to individuals. Until the Internet came along, much of this information was only available to institutional investors. Now the individual can access the information for analysis and strategic planning.
The only caution with Internet pages is to always look for a date showing when the page was created and the source of the data. Many times pages look new, but are outdated. Several Internet information sources are cited throughout the book.
Chapter 50, Learn the Language of Bonds, is an extensive glossary that will help you become familiar with some of the terminology of bond investing. Some of the terms and concepts have endured for decades; some are of very recent origin.
SUITED TO YOUR OBJECTIVES
No matter what your investment objectives are, Bond Market Rules can help you plan and organize the bond portion of your portfolio. This book will give you an understanding of what a bond is and how the different types of bonds function. The understanding can make you a better-informed, more prudent, and more profitable investor.
Copyright © 2000 by The McGraw-Hill Companies, Inc.