Warning

 

Close

Confirm Action

Are you sure you wish to do this?

Confirm Cancel
Member Login

Site Notices
Posted: 9/16/2009 2:41:28 PM EST
[Last Edit: 9/16/2009 2:42:11 PM EST by capnrob97]
Fixed income is not always a safe haven from the stock market.

Do you guys know how to calculate the present value of a bond?

Do you know that the price of a bond is inverse to interest rates?
Link Posted: 9/16/2009 2:43:24 PM EST
Sounds familiar from college but that was a long time ago. But isn't a bond really just PAPER with a promise to pay? So it's useless anyway.
Link Posted: 9/16/2009 2:49:23 PM EST
Yes I do!!
Link Posted: 9/16/2009 2:50:10 PM EST

Originally Posted By GunLvrPHD:
Yes I do!!

Good for you!

Most only think equities.
Link Posted: 9/16/2009 2:51:50 PM EST
[Last Edit: 9/16/2009 2:52:32 PM EST by ar-jedi]
another stellar ARFCOM GD investing thread.

Originally Posted By capnrob97:
Fixed income is not always a safe haven from the stock market.

no shit. bonds and other debt security instruments are complements to equities, cash, real estate, and PM's. to the individual investor, bonds are an integral element of overall asset allocation strategy.

Originally Posted By capnrob97:
Do you guys know how to calculate the present value of a bond?

yes. but this is needed for what purpose in this thread?

Originally Posted By capnrob97:
Do you know that the price of a bond is inverse to interest rates?

really? you've been reading Wikipedia again, haven't you?

Originally Posted By No-Worries:
Sounds familiar from college but that was a long time ago.

now there is the response GD was expecting!

Originally Posted By No-Worries:
But isn't a bond really just PAPER with a promise to pay? So it's useless anyway.

your mortgage company vehemently disagrees.

ar-jedi

Link Posted: 9/16/2009 2:53:50 PM EST

Originally Posted By ar-jedi:
another stellar ARFCOM GD investing thread.

Originally Posted By capnrob97:
Fixed income is not always a safe haven from the stock market.

no shit. bonds and other debt security instruments are complements to equities, cash, real estate, and PM's. to the individual investor, bonds are an integral element of overall asset allocation strategy.

Originally Posted By capnrob97:
Do you guys know how to calculate the present value of a bond?

yes. but this is needed for what purpose in this thread?

Originally Posted By capnrob97:
Do you know that the price of a bond is inverse to interest rates?

really? you've been reading Wikipedia again, haven't you?

Originally Posted By No-Worries:
Sounds familiar from college but that was a long time ago.

now there is the response GD was expecting!

Originally Posted By No-Worries:
But isn't a bond really just PAPER with a promise to pay? So it's useless anyway.

your mortgage company vehemently disagrees.

ar-jedi

Negative ghost rider.

Supported trading desks doing this stuff, I dumb it down for GD.

Link Posted: 9/16/2009 2:56:36 PM EST
[Last Edit: 9/16/2009 2:57:03 PM EST by PAEBR332]

Originally Posted By No-Worries:
Sounds familiar from college but that was a long time ago. But isn't a bond really just PAPER with a promise to pay? So it's useless anyway.
"Promises of payment
Are neither food nor raiment…”
Thomas Love Peacock, 1825

It really doesn't add anything to the topic, but I really like that quote.

Link Posted: 9/16/2009 3:06:38 PM EST
Of course; investing in bonds is far more complex than investing in equities.
Link Posted: 9/16/2009 3:11:52 PM EST
Originally Posted By America-first:
Of course; investing in bonds is far more complex than investing in equities.

this is way too broad of a brush. for example, demonstrate how investing in Treasury bonds and holding them to maturity is "far more complex" than investing in individual companies, or even a market index.

ar-jedi

Link Posted: 9/16/2009 3:16:48 PM EST
Originally Posted By capnrob97:
Supported trading desks doing this stuff, I dumb it down for GD.

cool, i didn't realize we had more pros on board.

question for you... MPT suggests decoupling of economic business cycles of geographically disparate equity and bond markets. ergo, by spreading your asset allocation across various currencies, global equities, and uncorrelated bonds *should* reduce portfolio risk. however, recent events –– and negative returns everywhere –– have put a dent in this premise. what do you think of this going forward?

ar-jedi
Link Posted: 9/16/2009 3:18:29 PM EST
I know the stuff - did you have a question, or are you just checking the general knowledge of GD?

Speaking from experience, most people really don't understand bonds. Actually, many investment pros have only cursory understanding.
(I was sitting on a bond-trading desk on Oct 19, 1987 - VP of Equities for a Muni house - what a day / week!).
Link Posted: 9/16/2009 3:21:44 PM EST
yes....it's a little fuzzy, but I've had a couple tonight.
Link Posted: 9/16/2009 3:22:28 PM EST
I have never heard of "bond math"

What is it?
Link Posted: 9/16/2009 3:28:11 PM EST
Bond math=007
Link Posted: 9/16/2009 3:32:15 PM EST
I ran a brokerage firm for 20 years I am familiar with all types of fixed income investments.
Link Posted: 9/16/2009 3:41:25 PM EST
[Last Edit: 9/16/2009 3:44:46 PM EST by wheel]
Buy bonds with a good rating and hold them to maturity. That's "fixed income". If you plan on trading them before they mature then you're taking your chances with the market - that's not fixed income. Might as well just buy a mutual fund if you're doing that.

Also, investing in municipal bonds gives a real rate advantage over taxable bonds.

If you have a decent sized portfolio (i.e. number of different bonds, not necessarily $$) and stay away from risky stuff (like hospital bonds etc) you'll do fine. Much more conservative and stable than stock or mutual funds IMHO. The rate of return may be lower, but as the fable goes, the tortise wins over the hare in the long run. And you can sleep at night
Link Posted: 9/16/2009 3:50:32 PM EST
Learn something new every day.
Link Posted: 9/16/2009 3:53:37 PM EST
This thread is rather condescending. This is GD on a gun board. "Can you calculate YTM or immunize a bond portfolio from interest rate risk? No? RETARD!!!!"
Link Posted: 9/17/2009 5:16:34 PM EST
Originally Posted By BustinCaps:
This thread is rather condescending. This is GD on a gun board. "Can you calculate YTM or immunize a bond portfolio from interest rate risk? No? RETARD!!!!"


actually i think the OP condescended *himself* while trying this approach...

ar-jedi
Link Posted: 9/17/2009 5:20:40 PM EST

Originally Posted By ar-jedi:
Originally Posted By BustinCaps:
This thread is rather condescending. This is GD on a gun board. "Can you calculate YTM or immunize a bond portfolio from interest rate risk? No? RETARD!!!!"


actually i think the OP condescended *himself* while trying this approach...

ar-jedi

Yes, poor form on my part, I admit.
Link Posted: 9/17/2009 5:22:02 PM EST
[Last Edit: 9/17/2009 5:22:14 PM EST by ar-jedi]
Originally Posted By capnrob97:
Yes, poor form on my part, I admit.


well, i'll throw a couple of basis points your way for coming clean about it.

ar-jedi


Link Posted: 9/17/2009 5:30:38 PM EST
Originally Posted By ar-jedi:
Originally Posted By capnrob97:
Supported trading desks doing this stuff, I dumb it down for GD.

cool, i didn't realize we had more pros on board.

question for you... MPT suggests decoupling of economic business cycles of geographically disparate equity and bond markets. ergo, by spreading your asset allocation across various currencies, global equities, and uncorrelated bonds *should* reduce portfolio risk. however, recent events –– and negative returns everywhere –– have put a dent in this premise. what do you think of this going forward?

ar-jedi


always diversify.
Link Posted: 9/17/2009 5:33:19 PM EST

Originally Posted By aplehr:
Originally Posted By ar-jedi:
Originally Posted By capnrob97:
Supported trading desks doing this stuff, I dumb it down for GD.

cool, i didn't realize we had more pros on board.

question for you... MPT suggests decoupling of economic business cycles of geographically disparate equity and bond markets. ergo, by spreading your asset allocation across various currencies, global equities, and uncorrelated bonds *should* reduce portfolio risk. however, recent events –– and negative returns everywhere –– have put a dent in this premise. what do you think of this going forward?

ar-jedi


always diversify.

Yep, trading desks don't spread it around, it is all concentrated on what they do, and do very well.
Link Posted: 9/17/2009 5:34:47 PM EST
Not too good with the bond math but, pretty good with bond spelling:

O.r.a.n.g.e. C.o.u.n.t.y, C.a.l.i.f.o.r.n.i.a.
L.e.h.m.a.n. B.r.o.t.h.e.r.s.

Link Posted: 9/17/2009 5:36:34 PM EST
0+0+7 = licensed to kill?
Link Posted: 9/17/2009 5:37:49 PM EST

Originally Posted By Circle_Cutter:
I have never heard of "bond math"

What is it?

Simple answer: Math that tells you what a bond should be worth, given a certain set of conditions & a known 'quality' of the bond...

Link Posted: 9/17/2009 5:39:51 PM EST
Originally Posted By ar-jedi:

question for you... MPT suggests decoupling of economic business cycles of geographically disparate equity and bond markets. ergo, by spreading your asset allocation across various currencies, global equities, and uncorrelated bonds *should* reduce portfolio risk. however, recent events –– and negative returns everywhere –– have put a dent in this premise. what do you think of this going forward?

ar-jedi


I've often said that myself....



Link Posted: 9/17/2009 5:40:00 PM EST
[Last Edit: 9/17/2009 5:45:46 PM EST by Ryan1021]
You talking about things like

r=r*+IP+DRP+LP+MRP?

Edit: Nevermind, that is not what you are asking.
Link Posted: 9/17/2009 5:40:31 PM EST

Originally Posted By Dave_A:

Originally Posted By Circle_Cutter:
I have never heard of "bond math"

What is it?

Simple answer: Math that tells you what a bond should be worth, given a certain set of conditions & a known 'quality' of the bond...

Calculating the present value of the future income stream of coupon payments, principal repayment, taking into account current interest rates, bond interest rate, etc.

Link Posted: 9/17/2009 5:49:30 PM EST

Originally Posted By ar-jedi:
Originally Posted By capnrob97:
Supported trading desks doing this stuff, I dumb it down for GD.

cool, i didn't realize we had more pros on board.

question for you... MPT suggests decoupling of economic business cycles of geographically disparate equity and bond markets. ergo, by spreading your asset allocation across various currencies, global equities, and uncorrelated bonds *should* reduce portfolio risk. however, recent events –– and negative returns everywhere –– have put a dent in this premise. what do you think of this going forward?

ar-jedi
This stuff will earn you a bond sales job at most.

The trading is now done by quants with PHd's your finance degree could only dream of.

Link Posted: 9/17/2009 5:51:40 PM EST
Hrm... "bond math"

Is that a prerequisite for Bailout 104?


More seriously, I need fresh ice for my gold label "liquid asset" but my fundamentals aren't sound enough to make the walk.
Link Posted: 9/17/2009 5:51:55 PM EST
[Last Edit: 9/17/2009 5:55:46 PM EST by Shooter42]

Originally Posted By capnrob97:
Fixed income is not always a safe haven from the stock market.

Do you guys know how to calculate the present value of a bond?

Do you know that the price of a bond is inverse to interest rates?

oh god you're bringing me back to those horrible days of studying for the series 7....

and yes, I know how to calculate the value of a bond based on the coupon rate and what it's trading at.... and yes I know that bonds have an inverse relationship to interest rates, interest rates go up, bond return go down, interest rates go down, bond returns go up....

in fact, I've been making a killing getting clients to rollover CD money from their bank into munis, why get like 1-2% return and pay taxes on CD money when you can get like 5-6% on a muni bond and it's tax free at the federal level, they'd have to have a CD yielding like 8% to compete with muni's right now.
Link Posted: 9/17/2009 5:55:03 PM EST

Originally Posted By capnrob97:

Originally Posted By ar-jedi:
Originally Posted By capnrob97:
Supported trading desks doing this stuff, I dumb it down for GD.

cool, i didn't realize we had more pros on board.

question for you... MPT suggests decoupling of economic business cycles of geographically disparate equity and bond markets. ergo, by spreading your asset allocation across various currencies, global equities, and uncorrelated bonds *should* reduce portfolio risk. however, recent events –– and negative returns everywhere –– have put a dent in this premise. what do you think of this going forward?

ar-jedi
This stuff will earn you a bond sales job at most.

The trading is now done by quants with PHd's your finance degree could only dream of.


I remember reading a story a couple years ago about how firms were hiring people with PhD's in physics, math, or other analytic fields because of their quantitative background. Is that still true?
Link Posted: 9/17/2009 5:56:02 PM EST
If I think about it long enough, I could. But I got out of college with a finance degree two years ago and im so old now.
I never liked bonds. I still dont like bonds. If I invest in bonds it would be a bail bond and that would be for my wife or family
Id rather invest in property or a business than the bond market or stock market
Link Posted: 9/17/2009 5:59:01 PM EST
[Last Edit: 9/17/2009 6:00:51 PM EST by Shooter42]

Originally Posted By Ryan1021:

Originally Posted By capnrob97:

Originally Posted By ar-jedi:
Originally Posted By capnrob97:
Supported trading desks doing this stuff, I dumb it down for GD.

cool, i didn't realize we had more pros on board.

question for you... MPT suggests decoupling of economic business cycles of geographically disparate equity and bond markets. ergo, by spreading your asset allocation across various currencies, global equities, and uncorrelated bonds *should* reduce portfolio risk. however, recent events –– and negative returns everywhere –– have put a dent in this premise. what do you think of this going forward?

ar-jedi
This stuff will earn you a bond sales job at most.

The trading is now done by quants with PHd's your finance degree could only dream of.


I remember reading a story a couple years ago about how firms were hiring people with PhD's in physics, math, or other analytic fields because of their quantitative background. Is that still true?

they aren't getting hired in this economy.... My broke/dealer is cleaning house on under producing reps because their bill for SIPC insurance just went from 12K to 250K..... there's a lot of risk so the SIPC is bumping up it's premium a lot to cover it's ass, making b/d's trim off all the fat they can,
Link Posted: 9/17/2009 6:07:30 PM EST
Bond guys: do you think Barack Obama understands the bond market?
Link Posted: 9/18/2009 12:48:45 AM EST
[Last Edit: 9/18/2009 12:49:28 AM EST by ar-jedi]
Originally Posted By capnrob97:
This stuff will earn you a bond sales job at most.
The trading is now done by quants with PHd's your finance degree could only dream of.


one of us has a pair of engineering degrees. and it's not you.

ar-jedi



Top Top