Another point is that there can be mark - ups in bonds and thus it isn't necessarily that you are making more in
trading bonds assuming one is buying bonds on the secondary market that may not be as liquid as a mutual fund.
Not exact matches
I personally believe that the above are good enough reasons to add pressure to Treasuries, but if we want more food for thought, we can not forget that China is the largest holder of US government
bonds after the Fed and if the rhetoric around a
trade war escalates we can
assume that this point would most likely be touched by Chinese counterparties.
I talk often about the «democratization» of the
bond market that ETFs have driven, and it seems natural to
assume that the big winners are everyday investors who can have difficulty buying and
trading bonds themselves.
The heart of my question is really this: Is the advice to put part of your portfolio into
bonds assuming you are buying and holding to maturity, or
trading them based on market value fluctuations?
Assuming one of these
bonds is
traded on a public exchange while the other is not, the investor is not willing to pay as much for the nonpublic
bond, thus receiving a greater premium at maturity.
I talk often about the «democratization» of the
bond market that ETFs have driven, and it seems natural to
assume that the big winners are everyday investors who can have difficulty buying and
trading bonds themselves.
If you invest in
bonds,
assume you will earn the current yield; don't
assume you can make money
trading in
bonds.
Both academics and professional investors
assume that a country's capital markets will function smoothly: banks will make loans to credit - worthy borrowers, corporations and governments will be able to access the
bond market to finance longer - term projects and stocks will
trade regularly, transparently and at rational expense.