by The Investor
on August 26, 2009
We’ve previously looked at why corporate bonds should theoretically underperform stocks over longer time periods.
But is the theory right? How have corporate bonds done in reality?
I’ve found it very hard to get figures on the long-term performance of stocks versus bonds. Perhaps the financial community would rather sell us corporate bonds than explain why we should or shouldn’t buy them? (Perish the thought!)
However, the new 2009 Barclays Capital Equity Gilt Study does give the past 10 years of UK returns for corporate bonds as an asset class — and the past 20 years for the US — which I’ll share below.
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by The Investor
on August 25, 2009
Mark to market is the act of valuing an asset at its current market price, as opposed to its book price.
Primarily an accounting practice, mark to market is relevant for private investors in several ways:
- If you borrow money to invest, you could face margin calls if your account is marked to market.
- You mark to market when working out your current net worth, by estimating the value of your home and other illiquid investments.
- Discovering assets owned by listed companies that are NOT marked to market — and so are being carried on the books too cheaply — can unearth hidden value.
Some blame mark to market for the credit crisis of 2007 to 2009.
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by The Investor
on August 22, 2009
A quick introduction to this week’s suggested articles, as I’m keen to get outside — the sun is shining and it looks like the Great British Indian Summer of 2009 is underway.
It’s therefore time to dust off the BBQ, which I’ve barely used since the Great British Heatwave back in May.
Since then it’s been the Usual Great British ‘Meh’ Summer of Cloud and Intermittent Showers. It’s almost painful to contemplate that we’re nearly into September.
New motivation to invest: Creating an escape fund. 🙂
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by The Investor
on August 19, 2009
I was drinking with a friend last week when he congratulated me on my purchasing Lloyds shares.
Lloyds was up over 40% in just a few weeks. Result!
My friend had read about the initial trade on Monevator. Generally I don’t discuss share trades in real life because:
- Share trading bores most people.
- It’s extra pressure when the trade goes wrong.
- You have to buy the drinks when a trade goes right.
Sure enough, my friend decided I could afford to buy him an extra round.
Stock picking is hard — as I’ve said before, you’re usually much better off investing through index trackers. (I do with much of my money.)
Adding peer pressure or social chit chat brings new awkwardness to a difficult task.
Even when your trades go right, you can delude yourself you’re doing much better than you really are — especially when your friends are congratulating you.
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