- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
If they didn't, people would always hold cash instead. Peak oil is not an energy crisis. It is a liquid fuel crisis.
Also, you have proven by example that the amount of information and sophistication necessary to do "safe bond investment" properly probably exceeds that of your average widow or orphan :P
I mean, it did exceed that of the average bond portfolio mutual fund manager, to judge by the fallout from the recent crisis... En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
And currently there is no firewall between investment credit and operating credit. Making such a firewall would probably go a long way towards making banking boring again. But that will be then, and this is now.
Starvid:
make sure the bonds are short term, so you have time to get out if the company/country that issued it starts looking shaky
And if everyone follows the same strategy, at the first sign of wobbliness on the part of the issuer there will be a sell-off and your bonds will lose more of their value. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
So, instead of a lottery you pretty much guarantee yourself a constant default rate.
And if everyone follows the same strategy, at the first sign of wobbliness on the part of the issuer there will be a sell-off and your bonds will lose more of their value.
Not a problem if you have short term bonds and hold them to maturity.
And in a parallel comment you want to receive coupon payments from the bonds which, if they have maturities not exceeding a year, typically won't pay coupons. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
It doesn't really matter if you recieve a coupon, or if you but the bond for less than you get back from the issuer, at least if the maturities are short (the bond fund I have has an average amturity of 0.15 years). Peak oil is not an energy crisis. It is a liquid fuel crisis.
an average amturity of 0.15 years
