3 November 2018

Tempted by High-Yielding Bonds?

When you see a promotion for a bond that offers eye-watering returns you have to ask the following questions:
1 - How does the yield compare to rates of comparable issuers?
2 - Is the bond issue rated by one of the top three Rating Agencies (Moody's, Fitch, S&P)?
3 - Who is giving any Guarantee or Insurance?
4 - Is that entity rated?
5 - What is the track record of the promoter?
Experience tells that the ordinary retail investor is in no way capable of giving the right answers to these basic due diligence questions.
Investors are urged to consult a financial adviser with no connection to the issuer or promoter before even considering any investment in bonds.
While many bonds issued by seasoned companies can be sold in a recognised secondary market this could be (extremely) difficult or practically impossible with bonds issued by lesser entities.

Taking Emotion out of your Investment Decisions

Understanding Markets, Company Accounts and Macro Economic and Political factors all are critical for investment success. But your Emotions are an often overlooked aspect that can frustrate the best investment plans, especially when faced by a rollercoaster bear market. And even the most seasoned investment professionals sometimes find it difficult to keep a clear head when bombarded with emotional language by media and market pundits.
How to Take Fear Out of Your Investing Decisions (Barron's, Pay Wall)