Larry Swedroe, the author of The Only Guide to a Winning Investment Strategy You'll Ever Need, has collaborated with Joe H. Hempen to create an up-to-date book on how to invest in today's bond market that covers a range of issues pertinent to any bond investor today including: bond-speak, the risks of fixed income investing, mortgage-backed securities, and municipal bonds. The Only Guide to a Winning Bond Strategy You'll Ever Need is a no-nonsense handbook with all the information necessary to design and construct your fixed income portfolio. In this day and age of shaky stocks and economic unpredictability, The Only Guide to a Winning Bond Strategy You'll Ever Need is a crucial tool for any investor looking to safeguard their money.
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Editorial Reviews
From Publishers Weekly
Awkwardly organized and unduly complicated, this book provides a recitation of everything Swedroe and Hempen—co-principals of Buckingham Asset Management—know about bonds, which is a lot. The problem is that their book isn't pitched to a specific enough audience. Sophisticated investors may not mind the authors' heavy reliance on bondspeak and analytical jargon, but they will wonder why so many pages are devoted to explaining Series EE Savings Bonds. And novices will appreciate the extensive glossary, but they'll be frustrated by the book's lack of explanatory diagrams and its tendency to talk about concepts before properly introducing or defining them. The actual strategy discussion alluded to in the title is addressed only in the book's 25-page, penultimate chapter, where Swedroe and Hempen explain how to use standard techniques like laddering to construct a fixed-income portfolio. If only the preceding 10 chapters had been as succinctly written. (Mar.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
Review
"One of the great untold tragedies of modern finance is the mayhem wreaked upon an unsuspecting public in the bond markets. Whether you're a small investor or an institutional player, the odds are that not only have you been savaged by this machine, but that you don't even know it. Few people know fixed income investing as well as Larry Swedroe; "The Only Guide to a Winning Bond Investment Strategy You'll Ever Need" will steer you through these dangerous waters in safety and comfort." --Bill Bernstein, author of The Four Pillars of Investing, The Intelligent Asset Allocator, and The Birth of Plenty
"There's an ol' saying in personal finance and investing: 'You build wealth in stocks, and you preserve it in bonds." Well, here's a book that offers the best of both worlds! These guys show you how bonds can not only preserve your wealth, they can help you build wealth too!" --Paul B. Farrell, JD, PhD, columnist, CBS MarketWatch, author of The Millionaire Code, Lazy Person's Guide to Investing, The Winning Portfolio, and others
"A bond book for our time. Clearly, given that most financial observers believe the equity premium is going to decline over the foreseeable future making bonds a relatively better investment, we need to start focusing more on bonds as an investment vehicle. This book provides an excellent roadmap of the bond markets and bonds as a personal investment." --Edward R. Wolfe, Ph. D., Professor of Finance, and Director of the Financial Planning Program, Western Kentucky University
"A MUCH NEEDED BOND BOOK. In The Only Guide to a Winning Bond Strategy You'll Ever Need, the authors cover the very complex issue of bonds in great detail. This book is a must-read for anyone who's thinking of investing in bonds and really wants to understand what they're all about. Readers will also gain insight into how the bond market works. I feel every bond investor could benefit from reading this book; I know I did. This book definitely should be a part of every bond investor's library." --Mel Lindauer, Forum Leader, Morningstar's Vanguard Diehards Forum and co-author, The Bogleheads' Guide to Investing
"This remarkably clear and well-organized book covers just about everything the typical investor needs to know about bonds and other fixed income securities. A real pleasure to read." --Kenneth R. French, Carl E. and Catherine M. Heidt Professor of Finance at the Tuck School of Business at Dartmouth
"Bonds and other types of fixed income investments are very complex and difficult to understand. Larry Swedroe and Joseph Hempen have collaborated in a book about bonds and fixed income investments that even I can understand. In their easy-to-read manner, they take us through the various fixed-income investments and tell us how and why each security may or may not be suitable for our portfolio. The Only Guide to a Winning Bond Strategy You'll Ever Need is destined to become a bond book classic." --Taylor Larimore, Dean of the Morningstar Vanguard Diehard Forum, co-author of BogleheadsGuide to Investing
"At some point -- perhaps soon -- the Federal Reserve will stop raising interest rates, a decision that is bound to add to the allure of bonds, because bond prices rise as rates fall.
To cater to the potential growing demand for information, Larry E. Swedroe and Joseph H. Hempen, principals at Buckingham Asset Management, an investment firm based in St. Louis, have put together an excellent primer: "The Only Guide to a Winning Bond Strategy You'll Ever Need" (Truman Talley, $25.95)....they cover the bases extremely well. Even better, they lay out a strategy for investing in bonds that will make sense for most people:
-Buy bonds with the highest ratings, or invest in bond mutual funds that do.
-Buy bonds with short to intermediate maturities. "Holding assets with a maturity of about one to two years is the prudent strategy for those investors wishing to maximize the risk-reward relationship," the authors write.
-Avoid buying hybrid securities -- like convertible bonds and preferred stocks -- because their risks outweigh their potential rewards.
-Don't try to time the market. "Buy and hold" is the safest approach, as with stocks." --The New York Times, Sunday Business Section, 3/5/06
"Coming up with a bond strategy takes time, but it's time well spent. Because the same instruments that are sold as safe and secure hedges against trouble can bite you if you're holding the wrong kind in the wrong way and interest rates turn.
A couple of St. Louis financial advisers, Larry Swedroe and Joseph Hempen, have written a straightforward book to address all of those choices.
The Only Guide To A Winning Bond Strategy You'll Ever Need, to be published in March by St. Martin's Press, may sound a bit hyperbolic.
But it's notable because at least one of the authors, Swedroe, has a reputation as an exponent of the "you can't beat the market" philosophy and the inexpensive stock index-fund investing that typically goes with it.
He typically tells clients that they shouldn't try to beat the market, but instead should hold diversified portfolios of low-cost stock funds for years and years. So it's worth seeing how such a philosophy would translate to bonds.
...[It] is also informative and direct when it comes to making bond investment choices." --Linda Stern (Freelance writer), published on Reuters.com and in Jackson News-Tribune
"You create wealth with stocks; you preserve it with bonds.
Those of us on the wrong side of 50 are starting to pay more attention to an asset class that just doesn't get the respect it merits: fixed income.
A few weeks back, we noted the recent publication of a Canadian-focused primer on bonds: Hank Cunningham's In Your Best Interest.
I noted such books are rare compared to the glut of material on the more glamorous subject of stocks and equity funds. Barely was the ink dry on that column when another bond book came through the transom, from an author I've read and respected for some time: Larry Swedroe.
Swedroe is one of those indexing evangelists who has made the case for indexing equities in such prior books as What Wall Street Doesn't Want You to Know and The Only Guide to a Winning Investment Strategy You'll Ever Need. (St.Martin's Press, New York, 2001 and 2005).
I guess Larry's that much closer to retirement now because he's about to release his fifth investment book and it's focused on bonds. He has teamed up with partner Joseph Hempen to write The Only Guide to a Winning Bond Strategy You'll Ever Need. The publication date is March 7.
Judging from the endorsement the book got from personal finance writer Jane Bryant Quinn -- "The bond book for our times" -- this one is destined for strong sales. Unlike Cunningham's book, Swedroe's is aimed at American investors. Thus, certain chapters -- like the one on tax-exempt municipal bonds -- aren't of much relevance to Canadian investors. (More's the pity).
Swedroe lists three reasons to include bonds in portfolios: for liquidity to meet unexpected expenses; to reduce portfolio risk; and to create streams of income to meet ongoing expenses.
He then lists the rules of prudent fixed-income investing: buy only investment-grade bonds rated AA or better; avoid long-term bonds by restricting yourself to bonds with maturities that are short- to intermediate-term; avoid trying to guess interest rates or find mispriced securities; avoid hybrid securities such as preferred stocks or convertible bonds; and invest only in low-cost vehicles.
You'll note both the emphasis on low costs and the point about avoiding market timing reinforces Swedroe's long-established indexing bona fides.
Like Cunningham, Swedroe is critical of how brokerage houses price bonds and disclose broker compensation. Swedroe thinks investors should avoid buying individual bonds from banks or brokerage firms because of large invisible mark-ups and because brokers sell mostly what they have in inventory and wish to dispose of.
Swedroe devotes the early chapters to an overview of how the bond market works and the risks that attend it. He scrutinizes how bonds are priced for retail investors and surveys the dominant species inhabiting the fixed income
landscape: government bonds, corporates, international bonds, mortgage-backed securities, money market funds, certificates of deposit (we call these GICs in Canada), and inflation-indexed securities. The latter include U.S. specific iBonds and TIPS (Treasury Inflation Protected Securities), versions of which are called real return bonds in Canada.
But the key chapter is the penultimate eleventh one, which explains how to design and construct a fixed-income portfolio. Here Swedroe looks at the pros and cons of owning bonds through mutual funds or exchange-traded funds, holding individual securities directly or owning bonds in separately managed accounts.
Like Cunningham, Swedroe devotes considerable time to laddering bonds with different maturities. This he describe as "a prudent tactical approach to portfolio construction" that both cuts costs and lets investors balance price risk and reinvestment risk. He also looks at tax efficiency and asset location (as opposed to asset allocation) and describes the importance of getting a financial advisor to craft an Investment Policy Statement (IPS). He suggests investors create a separate Fixed-Income IPS that focuses on investment vehicles, average maturities, minimum acceptable credit ratings and maximum allocation to any one type of debt instrument.
In a canned "interview" the publishers include in a press kit, Swedroe says he wrote the book because "fixed income is a neglected investment tool." As I'd noted when I reviewed Cunningham's book, Swedroe says "there are hundreds of books out there on stocks, far fewer available on fixed income." Too many investors overlook the asset class. That's a mistake because "it's an essential part of a hea...
"There's an ol' saying in personal finance and investing: 'You build wealth in stocks, and you preserve it in bonds." Well, here's a book that offers the best of both worlds! These guys show you how bonds can not only preserve your wealth, they can help you build wealth too!" --Paul B. Farrell, JD, PhD, columnist, CBS MarketWatch, author of The Millionaire Code, Lazy Person's Guide to Investing, The Winning Portfolio, and others
"A bond book for our time. Clearly, given that most financial observers believe the equity premium is going to decline over the foreseeable future making bonds a relatively better investment, we need to start focusing more on bonds as an investment vehicle. This book provides an excellent roadmap of the bond markets and bonds as a personal investment." --Edward R. Wolfe, Ph. D., Professor of Finance, and Director of the Financial Planning Program, Western Kentucky University
"A MUCH NEEDED BOND BOOK. In The Only Guide to a Winning Bond Strategy You'll Ever Need, the authors cover the very complex issue of bonds in great detail. This book is a must-read for anyone who's thinking of investing in bonds and really wants to understand what they're all about. Readers will also gain insight into how the bond market works. I feel every bond investor could benefit from reading this book; I know I did. This book definitely should be a part of every bond investor's library." --Mel Lindauer, Forum Leader, Morningstar's Vanguard Diehards Forum and co-author, The Bogleheads' Guide to Investing
"This remarkably clear and well-organized book covers just about everything the typical investor needs to know about bonds and other fixed income securities. A real pleasure to read." --Kenneth R. French, Carl E. and Catherine M. Heidt Professor of Finance at the Tuck School of Business at Dartmouth
"Bonds and other types of fixed income investments are very complex and difficult to understand. Larry Swedroe and Joseph Hempen have collaborated in a book about bonds and fixed income investments that even I can understand. In their easy-to-read manner, they take us through the various fixed-income investments and tell us how and why each security may or may not be suitable for our portfolio. The Only Guide to a Winning Bond Strategy You'll Ever Need is destined to become a bond book classic." --Taylor Larimore, Dean of the Morningstar Vanguard Diehard Forum, co-author of BogleheadsGuide to Investing
"At some point -- perhaps soon -- the Federal Reserve will stop raising interest rates, a decision that is bound to add to the allure of bonds, because bond prices rise as rates fall.
To cater to the potential growing demand for information, Larry E. Swedroe and Joseph H. Hempen, principals at Buckingham Asset Management, an investment firm based in St. Louis, have put together an excellent primer: "The Only Guide to a Winning Bond Strategy You'll Ever Need" (Truman Talley, $25.95)....they cover the bases extremely well. Even better, they lay out a strategy for investing in bonds that will make sense for most people:
-Buy bonds with the highest ratings, or invest in bond mutual funds that do.
-Buy bonds with short to intermediate maturities. "Holding assets with a maturity of about one to two years is the prudent strategy for those investors wishing to maximize the risk-reward relationship," the authors write.
-Avoid buying hybrid securities -- like convertible bonds and preferred stocks -- because their risks outweigh their potential rewards.
-Don't try to time the market. "Buy and hold" is the safest approach, as with stocks." --The New York Times, Sunday Business Section, 3/5/06
"Coming up with a bond strategy takes time, but it's time well spent. Because the same instruments that are sold as safe and secure hedges against trouble can bite you if you're holding the wrong kind in the wrong way and interest rates turn.
A couple of St. Louis financial advisers, Larry Swedroe and Joseph Hempen, have written a straightforward book to address all of those choices.
The Only Guide To A Winning Bond Strategy You'll Ever Need, to be published in March by St. Martin's Press, may sound a bit hyperbolic.
But it's notable because at least one of the authors, Swedroe, has a reputation as an exponent of the "you can't beat the market" philosophy and the inexpensive stock index-fund investing that typically goes with it.
He typically tells clients that they shouldn't try to beat the market, but instead should hold diversified portfolios of low-cost stock funds for years and years. So it's worth seeing how such a philosophy would translate to bonds.
...[It] is also informative and direct when it comes to making bond investment choices." --Linda Stern (Freelance writer), published on Reuters.com and in Jackson News-Tribune
"You create wealth with stocks; you preserve it with bonds.
Those of us on the wrong side of 50 are starting to pay more attention to an asset class that just doesn't get the respect it merits: fixed income.
A few weeks back, we noted the recent publication of a Canadian-focused primer on bonds: Hank Cunningham's In Your Best Interest.
I noted such books are rare compared to the glut of material on the more glamorous subject of stocks and equity funds. Barely was the ink dry on that column when another bond book came through the transom, from an author I've read and respected for some time: Larry Swedroe.
Swedroe is one of those indexing evangelists who has made the case for indexing equities in such prior books as What Wall Street Doesn't Want You to Know and The Only Guide to a Winning Investment Strategy You'll Ever Need. (St.Martin's Press, New York, 2001 and 2005).
I guess Larry's that much closer to retirement now because he's about to release his fifth investment book and it's focused on bonds. He has teamed up with partner Joseph Hempen to write The Only Guide to a Winning Bond Strategy You'll Ever Need. The publication date is March 7.
Judging from the endorsement the book got from personal finance writer Jane Bryant Quinn -- "The bond book for our times" -- this one is destined for strong sales. Unlike Cunningham's book, Swedroe's is aimed at American investors. Thus, certain chapters -- like the one on tax-exempt municipal bonds -- aren't of much relevance to Canadian investors. (More's the pity).
Swedroe lists three reasons to include bonds in portfolios: for liquidity to meet unexpected expenses; to reduce portfolio risk; and to create streams of income to meet ongoing expenses.
He then lists the rules of prudent fixed-income investing: buy only investment-grade bonds rated AA or better; avoid long-term bonds by restricting yourself to bonds with maturities that are short- to intermediate-term; avoid trying to guess interest rates or find mispriced securities; avoid hybrid securities such as preferred stocks or convertible bonds; and invest only in low-cost vehicles.
You'll note both the emphasis on low costs and the point about avoiding market timing reinforces Swedroe's long-established indexing bona fides.
Like Cunningham, Swedroe is critical of how brokerage houses price bonds and disclose broker compensation. Swedroe thinks investors should avoid buying individual bonds from banks or brokerage firms because of large invisible mark-ups and because brokers sell mostly what they have in inventory and wish to dispose of.
Swedroe devotes the early chapters to an overview of how the bond market works and the risks that attend it. He scrutinizes how bonds are priced for retail investors and surveys the dominant species inhabiting the fixed income
landscape: government bonds, corporates, international bonds, mortgage-backed securities, money market funds, certificates of deposit (we call these GICs in Canada), and inflation-indexed securities. The latter include U.S. specific iBonds and TIPS (Treasury Inflation Protected Securities), versions of which are called real return bonds in Canada.
But the key chapter is the penultimate eleventh one, which explains how to design and construct a fixed-income portfolio. Here Swedroe looks at the pros and cons of owning bonds through mutual funds or exchange-traded funds, holding individual securities directly or owning bonds in separately managed accounts.
Like Cunningham, Swedroe devotes considerable time to laddering bonds with different maturities. This he describe as "a prudent tactical approach to portfolio construction" that both cuts costs and lets investors balance price risk and reinvestment risk. He also looks at tax efficiency and asset location (as opposed to asset allocation) and describes the importance of getting a financial advisor to craft an Investment Policy Statement (IPS). He suggests investors create a separate Fixed-Income IPS that focuses on investment vehicles, average maturities, minimum acceptable credit ratings and maximum allocation to any one type of debt instrument.
In a canned "interview" the publishers include in a press kit, Swedroe says he wrote the book because "fixed income is a neglected investment tool." As I'd noted when I reviewed Cunningham's book, Swedroe says "there are hundreds of books out there on stocks, far fewer available on fixed income." Too many investors overlook the asset class. That's a mistake because "it's an essential part of a hea...
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Most Helpful Customer Reviews
52 of 54 people found the following review helpful:
5.0 out of 5 stars
Don't venture into the bond market without this book...,
By Thomas Duff "Duffbert" (Portland, OR United States) - See all my reviews (VINE VOICE) (TOP 500 REVIEWER) (HALL OF FAME REVIEWER) (REAL NAME)
This review is from: The Only Guide to a Winning Bond Strategy You'll Ever Need: The Way Smart Money Preserves Wealth Today (Hardcover)
I always thought that investing in bonds would be a pretty basic activity... You see an interest rate, you buy the bond, you get the payments. Wrong! I've been set straight by the book The Only Guide to a Winning Bond Strategy You'll Ever Need : The Way Smart Money Preserves Wealth Today by Larry E. Swedroe and Joseph H. Hempen.
Contents: Introduction; Bondspeak; The Risks of Fixed-Income Investing; The Buying and Selling of Individual Bonds; How the Fixed-Income Markets Really Work; The Securities of the U.S. Treasury, Government Agencies, and Government-Sponsored Enterprises; The World of Short-Term Fixed-Income Securities; The World of Corporate Fixed-Income Securities; The World of International Fixed-Income Securities; The World of Mortgage-Backed Securities; The World of Municipal Bonds; How to Design and Construct Your Fixed-Income Portfolio; Summary; Afterword; Appendices; Notes; Glossary; Acknowledgments; Index While not an expert investor by any means, I thought I understood the basics about bonds. I figured that buying a bond meant that you looked at the rating on how strong the company is, chose something that was investment grade, and then buy the security that provides the interest rate that you want to achieve. The reality is far, far different. I didn't realize there's really eight risks you have to manage when buying bonds: interest rate risks, credit risk, reinvestment risk, inflation risk, event risk, tax risk, liquidity risk, and agency risk. I didn't understand that the lack of transparency in the broker market means that you can get severely burned on a bond purchase and end up losing your stated interest rate *and* your principal. And of course, there are a myriad number of products, each with benefits and risks, and you can easily end up buying something that was designed to be "sold", not designed to be "invested". Swedroe and Hempen do a great job in outlining these things and many more in a relatively clear way. I say "relatively" because there is a fair amount of math and financial concepts presented here that you *do* need to understand and think about. This book would never be mistaken for a "Bonds for Dummies" title, but for serious investors looking to thoroughly understand the subject matter without delving into all the minutiae of formulas and calculations, you'd have a hard time topping this offering. I'd definitely recommend this book to anyone who is serious in their financial investments and takes personal responsibility for them. While you may be at the stage of life where equities are more important to you than bonds, there's information here that will allow you to round out your financial education and acumen, and it's a purchase that will pay for itself many times over.
33 of 34 people found the following review helpful:
5.0 out of 5 stars
Not to be missed,
By Barnard D. Sherman (Iowa City, IA USA) - See all my reviews
This review is from: The Only Guide to a Winning Bond Strategy You'll Ever Need: The Way Smart Money Preserves Wealth Today (Hardcover)
The strength of this book is in combining thorough coverage of the published research with practical, easily applicable advice. The authors know all the academic studies, explain them in a way that we nonspecialists can understand, and digest them into a clear, very usable strategy. Both authors have years of real-world, top-level bond trading experience, which also makes their advice especially useful; but the coverage of research, for me, is what sets the book apart. If you know nothing at all about bonds, I wouldn't necessarily start with it (I think it assumes you are not an absolute beginner); but once you have a sense of the basics, this book is essential reading, on the shortest short list.
26 of 27 people found the following review helpful:
5.0 out of 5 stars
Bonds made clear,
By
This review is from: The Only Guide to a Winning Bond Strategy You'll Ever Need: The Way Smart Money Preserves Wealth Today (Hardcover)
This book strikes an unusually nice balance between comprehensive treatment of the subject and a style understandable by the average investor. Swedroe and Hempen's explanation of the pitfalls of the secondary bond market is particularly valuable, and the advice on Treasury Inflation Protected Securities more than paid for my copy. It's a great complement to Swedroe's first book ("The Only Guide to a Winning Investment Strategy You'll Ever Need"), which lays out Modern Portfolio Theory, but does not go into different types of bonds or the mechanics of the bond market in any depth. While Swedroe's advocacy of Modern Portfolio Theory comes across, I doubt that any reader would understand this theory from the book on bonds. The book ends with short, informative appendices on callable bonds and TIPS, plus a glossary that's particularly valuable because of the arcane terminology used in the bond market.
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Inside This Book
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First Sentence:
Despite its obvious importance to every individual, our education system almost totally ignores the field of finance and investments. Read the first page Key Phrases - Capitalized Phrases (CAPs): (learn more)
Ginnie Mae, Wall Street, Fannie Mae, Freddie Mac, Federal Reserve, Snow White, The Web New!
Books on Related Topics | Concordance | Text Stats Browse Sample Pages:
Front Cover | Table of Contents | First Pages | Index | Back Cover | Surprise Me!
Despite its obvious importance to every individual, our education system almost totally ignores the field of finance and investments. Read the first page Key Phrases - Capitalized Phrases (CAPs): (learn more)
Ginnie Mae, Wall Street, Fannie Mae, Freddie Mac, Federal Reserve, Snow White, The Web New!
Books on Related Topics | Concordance | Text Stats Browse Sample Pages:
Front Cover | Table of Contents | First Pages | Index | Back Cover | Surprise Me!
Citations (learn more)
This book cites 11
books:
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- Investment Management (Wiley Frontiers in Finance) by Peter L. Bernstein in Front Matter, and Back Matter
- Portfolio Management by S. Kevin in Back Matter
- Extraordinary Popular Delusions by Charles Mackay on page 140
- Following the Equator (National Geographic Adventure Classics) by Mark Twain on page 97
- The Bond Bible by Marilyn Cohen on page 49
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