The Bond Book, Third Edition: Everything Investors Need to Know About Treasuries, Municipals, GNMAs, Corporates, Zeros, Bond Funds, Money Market Funds, and More Hardcover – Nov 17 2010
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About the Author
Annette Thau, Ph.D., (Teaneck, NJ) is a former municipal bond analyst with the Chase Manhattan Bank and a visiting scholar at Columbia University’s Graduate School of Business.
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Top Customer Reviews
But for the average investor who is just looking at self educating himself without too much fuss I can't recommend this book.. I have bought and read a few other books based on investments such as "the millionaire teacher, The RESP book by Mike Holman, Your life or your money" and they were all interesting to read. This is the first book in which I have not finished because I couldn't take it anymore. 420 pages of bond talk is just too much for me, after 100 pages (and a few skipped pages) I decided to close the book and not look back at it.
If you are seriously interested in BONDS go ahead (this book received excellent overall reviews on amazon.com).
For the first time I am returning a book on amazon :(
Most Helpful Customer Reviews on Amazon.com (beta)
first, it is very common for people to overestimate their risk tolerance. like many investors with a long time horizon, i initially toyed with the notion of 100% stocks for the long run (cha-ching!). if retirement is far far away, you should just have no fear, right? or so i naively thought at first. most people need to experience a bad bear market where they sell their stocks low before coming to the sad realization that they needed bonds in their portfolio to face the vicissitudes of the financial markets. it is of course better to prepare yourself before going through such a trial by fire.
thau's book includes everything you'll need to know to decide on exactly how you'll want to set up the bond portion of your portfolio. here's a sampling of the topics covered in her exposition: the bond desk, bond ladders, collateralized debt obligations, convexity, corporate bonds, credit default swaps, duration, the federal reserve, ginnie maes, i-bonds, money market funds, mortgage-backed securities, municipal bonds, prepayment risk, strips, tips, tranches, zeros, and so forth. as with most things in finance, the words might look intimidating at first, but the concepts are not difficult to understand. thau wrote this book with the individual retail investor in mind and she lucidly explains everything. she also compares and contrasts buying individual bonds versus buying bond mutual funds. heck, she even guides you on how to analyze and buy bonds online.
one type of bond that i want to highlight in this review is the series i savings bond, or "i-bond" for short. i-bonds are backed by the government and essentially carry no credit risk. i-bonds keep up with inflation (hence their name). they are tax-deferred on the federal level, and tax-free on the state and local levels. you can buy i-bonds commission free on the treasury direct website (treasurydirect.gov). and on top of all that, there is no risk of losing any of your principal, even during times of deflation. check out the full details on the treasury direct website and/or in thau's book. the positives overwhelmingly outweigh the negatives. i-bonds deserve much wider attention from the investing public.
bonds definitely don't get as much love as stocks. hopefully as you go through thau's "bond book," you'll come to realize that bonds are every bit as intriguing as stocks, perhaps more so. and after getting to know them, hopefully you'll find a suitable place for bonds in your portfolio.
I just finished reading the Kindle version of the current edition which served as a refresher of everything I've learned about fixed-income investing over the years.
While the book probably isn't for the "professional", it will serve as a valuable tool for the beginning investor or anyone who wants to learn more about fixed-income investing.
This is not some "rah, rah, rah, everything is fine" book written by someone with a vested interest in getting investors to line up to buy the latest product. Instead, it provides a very factual and candid explanation of just about every fixed income product an investor would want to buy....and many that they should stay far away from.
This revised edition was written just after the 2008 "financial crisis" and gives quite a bit of background information as to its causes. It should serve as a warning that what many always thought of as safe investments (like money market funds and funds of U.S. Treasuries/agencies) have their own set of risks and aren't a guaranteed investment by any means.
Anyone interested in adding fixed income investments to their portfolios (and that should include every investor) should consider this "required reading".
Thau's book contains some historical perspective comparing bonds to stocks, and various classes of bonds: Treasuries, Muni's, and Corporates. The author also gives her two cents with regards to rating agencies and how they are compensated by the issuer creating a "conflict of interest environment" and contributed to the 2008 meltdown. And some of us know that a similar scenerio played out during the mid 1990's, where compensation was tied to research analysts and investment banking clients during the "Internet Bubble" in the area of equities. After the "Interent Bubble" burst in 2000, and the decline in the NASDAQ, followed by the accounting scandals involving Enron and WorldComm to name a few that came to the foreground, did research analysis and compensation become seperated from investment banking and the fees generated by such deals. The book's importance is that the bond market is 3x the size of the stock market as indicated by the author - so this area of investing and its impact is too big to ignore.
For those investors out there that do not own this book: BUY IT! Even if you don't invest in bonds. THE BOND BOOK by Annette Thau is simply a must read for anyone interested in the Financial Markets.
What's more, there's horrendous errors in the text, so I can't help but feel that the author is just restating what others have said without actually being able to ensure that the facts stated are indeed correct.
For example, at Kindle location 668, the author states that a 4% bond needs to be repriced to $300 in a 10% market. Now, I'm no bond expert, but I'd say that's got to be $400. Again, the author doesn't reveal how this was computed, so I have no idea who's correct.
At Kindle location 706, it is stated that 30.9% of a $1,000 bond is $31. Umm, don't you mean $310? On location 849, it says "only have only one rating". At location 2680, it says "rating scales, as noted in Chapter 3, rating scales in use". At location 3722: "But remember that that whatever". At location 5076: "interest rate risk A bond". Hello, editor, still awake at this hour?
On top of that, the material is apparently dated, the text refers to the year 2009 regarding current events (last updates seem to have been made in 2010) and warns that "downloading a prospectus requires fast Internet delivery. Don't try it with dial-up". Seriously, people still had dial-up in 2010? The web sites referenced in the text are unsurprisingly no longer up-to-date either, investinginbonds.com has 404 errors on some links and apparently no bond data anymore. The site says "Please be advised that, as of October 1, 2012, investinginbonds.com will cease to provide certain bond pricing information currently available on this site.", apparently two years after the last update of this book.
Looks like an update of this book is long overdue and someone needs to sit down and fix all the typos. The content isn't that bad, there's good explanations of various bond-related financial instruments and what to look out for when investing in them. It also provides some interesting insights into the events the lead to the 2008 bond crisis, but it would be prudent to get an update of what happened to the bond market in the 6 years after, leading up to today, which is early 2014.
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