Dividend Growth Investing, Retirement Income, Stock Market Investing, Stock Market Timing, Uncategorized

Truth Be Told!

I took a call today, while I was coming home late this afternoon from out of Boston. It was a good friend of mine, Kasimer. He’d recently undergone surgery and was recovering. He was wondering if there was something wrong, that there had been no new update since September 27. Well, in one sense, there is. But, in another, I need to, and I will update everything over the weekend.

I’ll run the stock search, and list all the best looking safe-dividend growers, and I’ll post an update on what the OEXpert 7 Stock Market Timer is saying about market risk at this time. But first…

I’ve been learning about, and frankly, taken aback by some deeply valuable intelligence that has come my way in the most recent months. Without going into great detail. Common stocks, as in the stock market, is where common folk can try to generate some rather common returns, if I may put it like that. But, there’s a whole ‘nother market out there. I’ve always known it was there, but there was never any real source of intelligence for me whereby I could glean any valuable way of participating in it. I’m talking about the corporate bond market.

It’s far larger than the stock market. Those who participate in it, are far savvier and more sophisticated than the typical stock investor, and then, get this, after all the real research and analysis has been done; you can buy your bond, receive a fixed regular stream of income from it, that can be reinvested into more bonds later, to affect compounding, if that is what one is about… and, by pretty much ensuring that the face amount, typically $1,000, will be repaid upon maturity, you can calculate precisely what your return will be on each purchase… and you just buy and hold those bonds that will meet your criteria. Prices can go anywhere, but as long as you hold to maturity, and you are confident the company that issued them will make good on all its coupon payments, and redeem at full face value upon maturity… you get your total return as calculated upon purchase.

But, and here’s all the difference. The level or degree to which you need to do your homework, your due diligence before purchase is all important. The typical investor in common stock, can buy in, and sell out so quickly, he is lulled into thinking that all that work isn’t so important. If it’s not working as you had hoped… then just sell right out of it!

There’s more to it than that though, and I don’t want to go into it all, but I will close with what I was first told… and, then, after I looked into it, and how I could commence to participate intelligently in the corporate bond market, I truly realized, as my mentor in this said. “If you ever understand how to really invest in corporate bonds, you might never want to buy another share of common stock again.” I do believe that he is right. So, let me update for you, as I said I would. But, learning all that I have been able to, the past couple or three months, I know that I’d rather get involved in these safer, and more predictable, returns to be had in the corporate bond market. It’s a very different kind of animal, but by doing all the work first, and carefully selecting your candidates for purchase, and then holding to maturity, the actual total return that one is both able to calculate before going in, and can actually generate, when buying at opportune times, when bonds get sold off some, the best are handily beating stock returns… and that is a primary reason why the really big, savvy and sophisticated pros and hedge fund guys, and all the real titans of Wall Street work in this market and don’t even care for there to be any kind of news told about it.

You know of its existence right? But just how much do you actually know about it, and how it works, how you could participate, and what can be accomplished there… next to nothing, right? There’s a reason for that. They purposely keep that market pretty much all to themselves! That’s why. Well, I’ve got an in on it. I’m learning how it really works, and I’m letting someone else do all the real serious research, boring right down into all the details of the complicated financial statements these corporations issue… reading every number, and detailing what those numbers really say and mean. When the real work is done, if the answer is: This company can pay. It will always pay, and it will almost certainly return your capital at full face upon maturity. If you can acquire this bond for X amount of dollars, your interest will be Y%, and your total return upon maturity will by Z%, and it can be a pretty decent number, unlike anything your likely to find anywhere else.

I’ll do the stock thing, and the timing thing this weekend, but my head and heart is headed for another market altogether. It’s bigger, way safer, and the manner of measuring your likely return, and buying to hold, while it generates that to you… well, once you really get it, you may never want to buy another share of common stock again!

Here’s to your successful investing!
Harold F Crowell

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4 thoughts on “Truth Be Told!

  1. Jonathan Glaser says:

    Harold

    That is a very interesting concept re the corporate bond market. In your research, are you highlighting investment grade bonds, or are you also entertaining lower then investment grade? The problem with investment grade is the current premiums seem rather high, therefore lowering the yield. Where are you starting your research on this market?

    Thanks

    Jonathan

    >

  2. Vicky says:

    Are you planning on sharing what you learn on bonds…perhaps we can participate with Corporate Bonds ETFs of Mutual Funds???? Thanks, Vicky

  3. Vicky, most emphatically I urge you not to touch any corporate bond mutual fund or ETF. I’ll write of the reason why soon. You bring up an excellent question, and the answer is incredibly important! Than you, Harold

  4. Excellent question, Jonathan, and I will address that as I post about this subject. I think, just for the briefest of starters, think in terms of the lowest among the investment grade, right about BBB, and what I’ll have to share about that soon. You’ll find it very interesting. Harold

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