Wells Fargo corp bond

[hoops777]

Wells Fargo individual corporates have decent yields.I am considering mixing a couple with some cds to help get a decent yield overall.Can anyone see the possibility of WF defaulting?Anything is possible but the odds of WF defaulting seem extremely low.Total system collapse low.

[CaliJim]

Hmm.

In general - seek wide diversification in both stock and bond investments.

3.6% on the ten year WF bond, according to this web page: http://quicktake.morningstar.com/stockn ... symbol=wfc

In comparison, 2.46% on the ten year treasury. So 1.1% for the non-systemic corporate credit risk. So... not a lot, but better than a sharp stick in the eye.

The Wells Fargo brand has recently taken a beating in the press due to the recent publication of some of their more loathsome business practices, although the stock is up ~10%+ in the last 12 months.

Investing in individual bonds tends towards the more speculative end of the Boglehead way of thinking....so I think the standard recommendation would be to put no more than 3 to 5% of your investments in any specific companies stock or bond like this, and no more than 10% - 15% of the entire portfolio in speculative investments and investments with high levels of non-systemic risk. Of course - YMMV depending on [anticipated | actual] retirement withdrawal rates.

Chasing bond yields like this is more work than I would be interested in doing myself. I like investing in good low cost bond funds (vanguard total bond market, and vanguard california munis) and letting the pro's earn their ER.

[hoops777]

Thanks.They have a couple that mature in 6 and 7 years at about 3.4.

[highercall]

viscx has a yield of 3.45% and duration of 6.5 years. Any reason not to use that?

[hoops777]

I am trying to eliminate seeing the nav lose 20 pct or something.I was actually thinking about combining VCIT that with the cd's and the Wells Fargo.Maybe 20-20-60 with the 60pct being cds.

[CaliJim]

I am trying to eliminate seeing the nav lose 20 pct or something.I was actually thinking about combining VCIT that with the cd's and the Wells Fargo.Maybe 20-20-60 with the 60pct being cds.

So... IMHO.... you talking about market timing...

because, like, you know, 'the nav' WILL IN FACT NO DOUBT 'lose 20 pct or something'.... and the rest of the bond market hasn't already factored this secret information into their calculations.

I think you are ignoring the other risk.... that the market won't lose 20 pct or something... and your money sitting in short term won't be earning the interest that it could have.

TANSTAAFL

[Geologist]

CaliJim reports an extra 1.1% return for the Wells Fargo bond over the Treasury, except that the Treasury is exempt from state and local income taxes. Therefore, the difference in income return in many states is even less.

[Kalo]

viscx has a yield of 3.45% and duration of 6.5 years. Any reason not to use that?

When I look up this ticker (viscx) I get Invesco Small Cap Discovery Y (VISCX).

Looked at Vanguard's bond funds and can't figure out what you might be referring to.

Kalo

[hoops777]

CaliJim....I am not market timing and I did not say in fact no doubt the nav will drop 20 pct.You said it not me.I inferred that it could.These would also be in an IRA.I believe there are quite a few on this board buying cds for the same reason.So are you saying Wells Fargo in your opinion is risky?A lot of people considered them to be one of the best banks in the country until they had the well publicized problem which they have addressed.They still are one of the very best banks.
I also do not see any treasuries yielding 2.3 pct for a 6 or 7 year duration which is the duration of the bonds I am talking about.