Money and Finance
- Investing And Speculation...
From Brandes on Value: Benjamin Graham addressed the differences between investing and speculation on the very first page of his book The Intelligent Investor: “An investment operation is one which, upon thorough analysis, promises safety of principal...
- Stewart Cowley, The Bond-fund Manager Who Can't Stand Bonds
Thanks to Matt for passing this along. Stewart Cowley manages $1.5 billion in the Old Mutual (ODMTY) Global Strategic Bond Fund. One place he generally avoids investing that money: bonds. Mr. Cowley doesn't hold conventional U.S. Treasury bonds. He...
- A Negative Art...
From Security Analysis: Sixth Edition:Our primary conception of the bond as a commitment with limited return leads us to another important viewpoint toward bond investment. Since the chief emphasis must be placed on avoidance of loss, bond selection is...
- No Safety In Numbers - By Roger Lowenstein
Is there such a thing left as a safe investment? Stocks have been massacred, real estate all but wiped out. Each was promoted in its day — as was gold — as safe and secure, appropriate for widows and orphans. - If there is a truly last bastion of...
- Little Logic To Bond World Amid Current Risk Phobias - By Jim Grant
"There are no bad bonds, only bad prices," the traders used to say. They should say it again, only louder. In the spring of 1984, long-dated Treasuries went begging at yields of nearly 14 per cent in the context of an inflation rate of just 4 per cent....
Money and Finance
James Montier: Bond bubble - a sterile debate on semantics
Much ink has been spilt over the question of whether government bonds are in a bubble or not. The bond bubble believers love to cite stats along the lines that bonds are witnessing inflows at the same pace as equity funds did during the TMT bubble.
The bond lovers respond an asset with a finite life and no hope of limitless capital gain can’t really be a ‘bubble’, and beside they argue the ‘fundamentals’ warrant current valuations. (i.e. inflation is low and will remain so).
However, to me this is largely a sterile debate over semantics. The issue shouldn’t be whether bond are a bubble or not, but rather are bonds a good investment or not? Ben Graham defined “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative”.
Do bonds offers long term investors a sensible level of return?
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So unless you believe that Japan is correct template for the US (i.e. inflation will be zero for the next decade), government bonds don’t offer an attractive return as a buy and hold proposition.
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It is possible to build a speculative case for bond investment (i.e. riding the deflationary news flow down), however, as ever this leaves participants with the conundrum of Cinderella’s ball as described by Warren Buffett “The giddy participants all plan to leave just seconds before midnight. There is a problem though: They are dancing in a room in which the clocks have no hands!” Personally I prefer to stick to investment rather than speculation.
- Investing And Speculation...
From Brandes on Value: Benjamin Graham addressed the differences between investing and speculation on the very first page of his book The Intelligent Investor: “An investment operation is one which, upon thorough analysis, promises safety of principal...
- Stewart Cowley, The Bond-fund Manager Who Can't Stand Bonds
Thanks to Matt for passing this along. Stewart Cowley manages $1.5 billion in the Old Mutual (ODMTY) Global Strategic Bond Fund. One place he generally avoids investing that money: bonds. Mr. Cowley doesn't hold conventional U.S. Treasury bonds. He...
- A Negative Art...
From Security Analysis: Sixth Edition:Our primary conception of the bond as a commitment with limited return leads us to another important viewpoint toward bond investment. Since the chief emphasis must be placed on avoidance of loss, bond selection is...
- No Safety In Numbers - By Roger Lowenstein
Is there such a thing left as a safe investment? Stocks have been massacred, real estate all but wiped out. Each was promoted in its day — as was gold — as safe and secure, appropriate for widows and orphans. - If there is a truly last bastion of...
- Little Logic To Bond World Amid Current Risk Phobias - By Jim Grant
"There are no bad bonds, only bad prices," the traders used to say. They should say it again, only louder. In the spring of 1984, long-dated Treasuries went begging at yields of nearly 14 per cent in the context of an inflation rate of just 4 per cent....