how to buy corporate bonds?

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HotRod140
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Joined: Tue Apr 15, 2008 12:24 pm

how to buy corporate bonds?

Post by HotRod140 » Sun Jan 11, 2009 7:13 pm

Does anyone know how to buy individual corporate bonds ?

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soaring
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Post by soaring » Sun Jan 11, 2009 7:31 pm

If you have an account with Vanguard and have a brokerage account too then just sign in on your account and select a brokerage account. Then click on Buy & Sell > view & trade > bonds & CD's > Select your brokerage acct if you have multiple. Then you can click on New issue corporates or secondary corporates.

There you will find thousands on secondary market and some on the new issue link.

If you don't have an account then open an account with them or another company which I'm sure someone will chime in and give you information.

gene
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larryswedroe
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Post by larryswedroe » Sun Jan 11, 2009 8:17 pm

No way should you buy individual corporates IMO---too much unsystematic risk unless you can build a very large portfolio of them.

Topic Author
HotRod140
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how to buy corporate bonds?

Post by HotRod140 » Mon Jan 12, 2009 6:44 am

Thanks Larry I hear you, it wont happen

larryswedroe
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Post by larryswedroe » Mon Jan 12, 2009 9:10 am

Hot Rod
BTW-no evidence that corporates outperform Treasuries on risk adjusted basis anyway--the main reason being the call features. Call risk has just not been rewarded. This is especially true for junk bonds

duhmel1
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Post by duhmel1 » Mon Jan 12, 2009 10:49 am

larryswedroe wrote:Hot Rod
BTW-no evidence that corporates outperform Treasuries on risk adjusted basis anyway--the main reason being the call features. Call risk has just not been rewarded. This is especially true for junk bonds
If you buy a bond that does not have a call feature, it cannot be called.

How can a high quality (AA) corporate bond with a 7% YTM not outperform a Treasury with a 4% YTM.

You must be talking about funds - this thread is about individual bonds.

By the way OP - the first thing you need to do if you are considering individual bonds is do a lot more reading a research than posting on a forum. You need to know what you are doing to play in this pond and snippets of wisdom on a forum will not give you sufficient knowledge to participate or decide whether you should. Second, if you are considering buying bonds you need to get another broker. Vanguard's commission structure is one of the worst.

dayzero
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Post by dayzero » Mon Jan 12, 2009 11:15 am

duhmel1 wrote:
How can a high quality (AA) corporate bond with a 7% YTM not outperform a Treasury with a 4% YTM.
Lehman Brothers was rated A2 immediately before it went bankrupt.

duhmel1
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Post by duhmel1 » Mon Jan 12, 2009 11:20 am

mike_slc wrote:
duhmel1 wrote:
How can a high quality (AA) corporate bond with a 7% YTM not outperform a Treasury with a 4% YTM.
Lehman Brothers was rated A2 immediately before it went bankrupt.
Nice information but the comment above was with respect to call features.

larryswedroe
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Post by larryswedroe » Mon Jan 12, 2009 12:41 pm

duhmel

First one should not buy individual bonds (unless you can buy a very large number of them) because you are taking uncompensated diversifiable risks. And that is illogical.

Second, you mistake yield and return. Takes awful lot of interest to make up for unpaid principal.

Third, if you intelligently buy a fund then it would have to be a fund that doesnt buy callables to avoid that problem. DFA is that type of fund.

But here is example from a study

7-10 year Treasuries returned 9.6 and 7-10year AAA/AA returned 9.6 and A/BBB returned 9.6 and High yields returned 8.8. And of course the non Treasuries all had higher YIELDS and the lower the credit rating the higher were the yields/

eurowizard
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Post by eurowizard » Mon Jan 12, 2009 4:17 pm

Im still trying to find a fund other than DFA that invests only in non-callable bonds.

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