Headlines of Interest to Owners of Preferred Stock and Baby Bonds

2 thoughts on “Headlines of Interest to Owners of Preferred Stock and Baby Bonds”

1. Does anyone know what the return is on an average Bond fund? I mean all I hear about is how Bonds suck. Stay away from them is what I hear. Why? Are they no more a good compliment to stocks?

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   1. I mostly stayed very light on bonds for years. That has changed.

      I own a fair number of individual bonds (agencies, some corporates) and a variety of treasuries.

      I know I am not the best at this, but for better or worse, I tend to stay away from bond funds. I think they tend to overreact to major negative market events (panic among fund holders) and they often hold bonds I wouldn’t buy personally. I feel the same way about preferred funds.

      I am much more comfortable owning individual bonds where I can just hold until maturity (or recovery) if things go south in the markets – rather than getting hammered in a fund where the managers are forced to sell when panicky investors bail out.

      As this market gets “frothier”, I am thinking more and more about trying to own things than can “weather the storm” of a big market correction. I will probably miss some good opportunities, but I will (hopefully) sleep better….

      That said, there are a lot of folks on this board who are dramatically better than at bond investing than I am – so hopefully we can get some better input from folks who actually know what they are doing.

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      I mostly stayed very light on bonds for years. That has changed. I own a fair number of individual bonds (agencies, some corporates) and a variety of treasuries. I know I am not the best at this, but for better or worse, I tend to stay away from bond funds. I think they tend to overreact to major negative market events (panic among fund holders) and they often hold bonds I wouldn't buy personally. I feel the same way about preferred funds. I am much more comfortable owning individual bonds where I can just hold until maturity (or recovery) if things go south in the markets - rather than getting hammered in a fund where the managers are forced to sell when panicky investors bail out. As this market gets "frothier", I am thinking more and more about trying to own things than can "weather the storm" of a big market correction. I will probably miss some good opportunities, but I will (hopefully) sleep better.... That said, there are a lot of folks on this board who are dramatically better than at bond investing than I am - so hopefully we can get some better input from folks who actually know what they are doing.

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