Bonds 01 (May 08 - Aug 10)

[persistentone]

Hi persistentone,

It's a newslettter. I dont read it but this is the link:-
https://www.web-purchases.com/TIN/ETINK ... 281&r=Milo

I'm only interested in Bonds when interest rates are very high. Right now, it's so low so I think there are better opportunities elsewhere.

That's a link to purchase the newsletter, and I'm not ready to buy yet. Is there a homepage that actually has a sample of the newsletter?

Also, bonds do well in stable or declining interest rate environments. If interest rates are rising, bonds typically sell off.

In any case, I only invest in bonds very selectively, typically when I think the bond is massively undervalued or the stock has liquidity risks that the bonds do not have.

[winston]

No, that's the only link I can find.

I've not seen their newsletter before and I dont buy bonds when interest rates are low.

[b0rderc0llie]

I was not interested in bonds before, but now I am exploring some ideas regarding bonds.

Since interest rates are low now and bond prices are high, it is appealing to me if I can take a short position on bonds. If possible, then I have 3 ideas.

1. Sell bonds as a source of funding. Take risk by investing in other bonds which gives a higher coupon rate, or in dividend yielding stocks, to get a positive cashflow.

2. Trade bonds. When yields are low, I sell. When yields are high, I buy.

3. Junk bonds. Risk premium on junk bonds over treasuries (spread) is low now. Short junk bonds and wait for risk premium to be "normal" again. Also, there is a way to take additional risk by investing in equity of the company issuing the junk bond. If the company turns around, all is good. If the company goes bankrupt, then hopefully it is bankrupt in a way that it defaults on its junk bonds.

[persistentone]

I was not interested in bonds before, but now I am exploring some ideas regarding bonds.

Since interest rates are low now and bond prices are high, it is appealing to me if I can take a short position on bonds. If possible, then I have 3 ideas.

1. Sell bonds as a source of funding. Take risk by investing in other bonds which gives a higher coupon rate, or in dividend yielding stocks, to get a positive cashflow.

2. Trade bonds. When yields are low, I sell. When yields are high, I buy.

3. Junk bonds. Risk premium on junk bonds over treasuries (spread) is low now. Short junk bonds and wait for risk premium to be "normal" again. Also, there is a way to take additional risk by investing in equity of the company issuing the junk bond. If the company turns around, all is good. If the company goes bankrupt, then hopefully it is bankrupt in a way that it defaults on its junk bonds.

First of all, do you understand that corporate bonds are not liquid? You typically lose 5% to 8% of your principal trading either direction. So bonds are not a good vehicle for trading.

Second, shorting bonds that pay 12% interest implies *you* are going to be paying that interest rate. You really want to pay out 12% interest per year waiting for the bond to lose 12% of its principal value?

[kennynah]

Bonds

[b0rderc0llie]

I have found an instrument which allows me to execute my idea of being on the short side of bonds. A bond futures such as 10 Yr. U.S. T-Note DEC 2009 (TYZ9).

I am also interested in issuing bonds, but that is not possible now on personal level. Maybe in the future, I can set up a finance company and do that.

[kennynah]

I am also interested in issuing bonds, but that is not possible now on personal level. Maybe in the future, I can set up a finance company and do that.

can...why not? how much you want to borrow and for how long? and most importantly, how much you are willing to pay for the discount? current rate is about 20% upfront...monthly instalment payment...although usually for a very short term... but can discuss lengthening the period...wahahaha...

[b0rderc0llie]

Its illegal to lend money on a personal level right? Eg..loan sharking

Is it legal to borrow money then? I want to borrow at a rate which the bank is willing to offer me Also, I am looking for long term borrowings. The banks can offer me up to a 1 year loan, with a spread of about 1% above SIBOR. I think I can negotiate the spread though hehe. How about a 10 year loan at current 10 year interest rate level?

[kennynah]

illegal in this country, is likely. Immoral? I'm not so sure. Better to be morally acceptable than illegal..
I was kidding around with u lah;)
I'd imagine that you'd have to pay more interests on the debenture even if it's secured. But if u r really serious n if u r talking of seriously substantial amount, n if especially to purchase commodities, I can link you up with a credit banker who specializes in such loans. This, I'm not kidding

[b0rderc0llie]

Thanks Kenny for the recommendation. I'll look for you in the future if I want to borrow to purchase commodities.