Bond Market Rules PDF

Bond Market Rules PDF (50 Investing Axioms to Master Bonds for Income or Trading) By presenting and explaining the usefulness of today’s top 50 professional bond trading rules, BOND MARKET RULES will tell you everything you need to know about this vibrant, potentially lucrative market.

Category: Bond

Author: Michael D. Sheimo

Language: English

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Introduction

Preface

Short chapters based on single concepts, it’s the same approach that worked so well in Stock Market Rules, a popular guide on stock investing since 1990. This is a great book to read during lunch.
Bond Market Rules is for beginning- to intermediate-level investors who want to learn or review the basics of investing in bonds. Prices, price action, interest-rate analysis, fundamental and technical analysis, new types of bonds (Bradys, DANs, TIPS), taxexempt bonds, bonds that increase in face value with inflation, bonds that have a “survivors’ put option”: all are explained and examined. Bonds have changed. They aren’t your father’s “bearer bonds” anymore, hidden in the basement.

NEW BENEFITS
Although bonds are not the simple investment they once were, many of the newer innovations benefit the investor. Even an old standard, the T-bill, has changed from a $10,000 to a $1000 minimum investment, thereby making it available to a larger group of investors.
Brady bonds from developing countries have enabled investors to take advantage of higher foreign yields without extreme risk (Chapter 49).
Direct access notes (DANs), offer the income flexibility of six-month or monthly payments on bonds, which can be put back to the company at face value by the investor’s estate (Chapter 31).
That can be a terrific advantage if interest rates have risen and the heirs have bills to pay.
Even the U.S. government is trying to be accommodating to the investor’s concerns. Inflation can be the enemy of fixed-income investing. Rising to this concern are inflation protection bonds (TIPs).

When are they a bargain and when are regular bonds better (Chapter 24)?

STRATEGIES
Income, asset allocation, and defensive investing are just some of the concepts examined. Strategies like the “ladder” (Chapter 16) make a wonderful inflation hedge when interest rates rise. A simpler version of the ladder is the “barbell,” which combines some of the advantages of both short-term and long-term bond investing (Chapter 29). Easier yet are the Treasury Inflation Protection bonds (TIPs), which are tied to the Consumer Price Index. But how much does that “protection” cost?

Asset allocation is explored in Chapter 21. What is meant by allocation? How is it done? What are some variations? The information presented can enable the investor to choose between an approach suitable for profits and one suitable for defensive investing.

ANALYSIS
Always check the yield curve before buying bonds (Chapters 3 and 4). Checking the yield curve will instantly let you know if the longterm yields are worth the holding period. The curve can also give signals as to what might happen next with interest rates. Bond and bond market analyses are discussed in several chapters. Chapters 3, 4, 7, 8, 20, 30, and others contain analysis—from the uncomplicated to the detailed.

BOND FUTURES AND OPTIONS
Options trading can be speculative or conservative, and some of the details are examined in Chapter 16. Although not appropriate for every investor, some basics of bond futures, hedging, and speculating are explored in Chapter 23.

DATA
Unless otherwise noted, the data used in this work comes from the Federal Reserve Bank of St. Louis. Much of their data originates from the Bureau of Labor Statistics. Both of these sources are available on the Internet.

THE INTERNET
It’s almost as if the Internet was designed for investors. Hundreds of thousands of pages of economic data and investing information are now available to individuals. Until the Internet came along, much of this information was only available to institutional investors. Now the individual can access the information for analysis and strategic planning.

The only caution with Internet pages is to always look for a date showing when the page was created and the source of the data. Many times pages look new, but are outdated. Several Internet information sources are cited throughout the book.

BOND LANGUAGE
Chapter 50, Learn the Language of Bonds, is an extensive glossary that will help you become familiar with some of the terminology of bond investing. Some of the terms and concepts have endured for decades; some are of very recent origin.

SUITED TO YOUR OBJECTIVES
No matter what your investment objectives are, Bond Market Rules can help you plan and organize the bond portion of your portfolio.

This book will give you an understanding of what a bond is and how the different types of bonds function. The understanding can make you a better-informed, more prudent, and more profitable investor.

Table of Contents- Bond Market Rules PDF

Preface ix
11 When Interest Rates Rise, Bond Prices Fall 1
12 The Coupon Is Not Always the Same as Yield 13
13 Follow the Yield Curve 17
14 Beware the Inverted Yield Curve 25
15 There Are Four Ways to Get a Higher Yield on Bonds 31
16 Utility Stocks—A Higher-Yield Alternative to Bonds 39
17 Long Maturities Have Greater Market Risk 47
18 Short Maturities Have Greater Reinvestment Risk 51
19 Bond Funds Are Not the Same as Bonds 55
10 Buy Bonds That Won’t Outlive You 59
11 Invest in Bonds If You Want Steady, Fixed Returns 61
12 Invest in Bonds If Your Risk Profile Is Lower 71
13 Invest in Bonds If You Do Not Want Capital Erosion 75
14 Why T-Bills Can Be Risky 79
15 Know the Bond Options 83
16 Build a Ladder 89
17 Bonds, the Buy-and-Hold Investment 95
18 Bonds Lower Portfolio Risk 99
19 Calls Always Benefit the Issuer 101
20 The Simplest Strategy 105
21 Bond Investing Is Prudent Asset Allocation 109
22 Pay Yourself First 113
23 Be a Futures Hedger or a Speculator 117
24 Buy Inflation Protection Bonds 123
25 Buy Stocks with Bonds (Convertibles) 127
26 Beware the GNMA 129
27 Put Compound Interest to Work with Zeroes 131
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28 Understand the Indexes 135
29 Do the Barbell 139
30 Do Bond Market Analysis 143
31 Check Out the DANs 155
32 Don’t Fight the Fed 159
33 Watch the Stock Market 165
34 Look for a Flight to Quality 171
35 Buy “Junk” Bonds for Higher Yield 173
36 Do “Swaps” for Money Now 177
37 You Don’t Have to Pay Taxes on Bonds 181
38 Bonds Are Safe If Held to Maturity 189
39 Know the Bond Rating 193
40 Watch the Consumer Price Index 199
41 Insured Municipal Bonds Are Safer 205
42 Watch the Long Bond 209
43 You Can’t Trade Bonds Like Stocks 215
44 Bonds Always Mature at Par 219
45 If a Yield Looks Too Good to Be True, It Probably Is 221
46 Beware of Personal Guarantees 223
47 Know the Types of Bonds 225
48 Consider a Managed Futures Account 229
49 Buy Brady Bonds for High Yields 233
50 Learn the Language of Bonds 239
Index 247

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About the author

Michael D. Sheimo has extensive experience as a Registered Representative and Registered Options Principal which he gained working as a broker at the full-service retail level for Merrill Lynch and Olde Financial Corporation. He is an internationally recognized expert on the Dow Theory and has had books published in India, Malaysia, and Japan. Since 1989, Mr. Sheimo has published eight investing books, including the critically acclaimed Dow Theory Redux and Stock Market Rules, a book that investors have been relying on since 1990 (2nd edition now available, McGraw-Hill, 1999). He currently works as an author and independent business consultant in the Minneapolis area.

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