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Showing 1-10 of 22 reviews(Verified Purchases). See all 40 reviews
on November 21, 2016
This book is quite old (originally written back in 2005) and things have changed a bit in the decade since...but I had a hope that there was some "timeless" advice in here. Maybe not 100% of it would be timeless but....enough. I came away being severely disappointed, which was not expected since I am normally a fan of Swedroe's writings. Here's why I think you should look elsewhere when picking a book on bonds.

The vast majority of the book is essentially a catalog of various kinds of bond and bond-like (for instance, certificates of deposit) financial instruments. I sometimes struggled to understand whether this comprehensiveness was warranted. I felt like the descriptions were too long to be a good summary and too short to be useful in making real decisions about investing. For instance, say you're considering buying a municipal Variable Rate Demand Obligation (VRDO). The minimum to buy one is $100,000. There's about 2 pages describing them. Would you invest $100,000 on something relatively complicated after reading just 2 pages? What about a Tax Anticipation Note? After reading this book do you understand how one fits into a well diversified portfolio?

The authors spend a fair amount of time talking about buying individual bonds. At one point they mention that this only makes sense if you're buying at least $500,000 of bonds; which means we're probably talking about people who have a total portfolio of over $1,000,000. I know that those people need to read books too much of the audience for this book really falls into that category?

When it comes to "strategy" I felt like most of the book was fluff and the strategy is: "pick an ETF or mutual fund that is primarily/entirely short or intermediate term federal or municipal government bonds".

I didn't find many of the analyses very convincing. I was disappointed at the general lack of rigorous references and analysis. For instance, when talking about international bonds we are told "owning bonds denominated in foreign currencies can provide a diversification benefit [...] at the price of accepting currency risk". Okay. How much of a diversification benefit? How much currency risk? Later on when talking about mortgage backed securities they write, "rising interest rates, caused by rising inflation, would likely have a negative impact on both stocks and MBS." How likely? How much of an impact?

At times, the authors remind us that the market does a good job of pricing risk. In other cases, they tell us that it doesn't but they don't provide any explanation for why. For instance, why does the market fail to price high-yield bonds properly?

A small nitpick: there were a few areas where I felt like the inclusion of a simple graph or chart would have help illustrate things. The almost complete lack of that is a surprising oversight. Instead of spending paragraphs explaining yield curves and what an "inverted yield curve" means...why not have two charts? There were a few other points in the book where I felt like the explanations would have been tremendously helped by the inclusion of a chart or two.

Finally, it is interesting to see how things have progressed over the past decade. As of late 2016, the authors recommend that investors largely/primarily invest in (brokered) certificates of deposit over Treasuries, judging that the increased yield makes up for the (small) additional risks. I'd argue that there is nothing in this book that would have led you to believe they'd ever be making that recommendation. The thin chapter on CDs gives them a lukewarm recommendation and gives you no idea how to make tradeoffs between them and other securities.

If you can't get to there from here -- that is to their current recommendations from a book that is "only" 10-years old -- you can't help but wonder at the title's claim of being "the only guide you'll ever need".
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on March 31, 2017
Swedroe, Bernstein, Bogle, Larimore, Buffet. Get them. Then get online to the "Bogleheads forum", or Morningstar forum.
They are a must for personal investment finance for retirees and those working toward a healthy retirement.
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on January 17, 2014
I bought this book because I was overwhelmed by the number of options in the bond market. Swedroe breaks down the entire fixed income market into categories and then details the advantages and disadvantages of each type of investment. He details "bond speak" so you can decipher the lingo used in the fixed income world, and shows you how to calculate and use yield to maturity, yield to worst, average duration, etc. The closing chapters show you how to use the knowledge of the different options to put together the fixed income part of your portfolio.

Note that all of Swedroe's books that I have read so far advise a passive/rebalancing approach to investing. If you think you can beat the market, his books may not be for you. In addition, each of his books preach the gospel of efficient markets, so there is some repetition among them. Finally, this book was written in an era (pre QE) with higher interest rates, and some of his "rules of thumb" (e.g. require at least 20 basis points per year of duration to increase the length of your investment) will today result in very long term bond investments, which may not be ideal in this environment. For those reasons, I gave it 4 stars instead of five. But I highly recommend this book.
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on February 14, 2015
I guess I should have looked at the dates on the comments, and the publication date of the book. All the example use interest rates that haven't been seen since the 2008 collapse. Although much of the information on the various categories of fixed investment is interesting and reasonably clear, I some (like opacity of price information) is a little dated. I can't help but wonder if the greater availability of price info and good tools (like on Fidelity's web site) makes some of the advice much less relevant... still worth the modest price and the effort to read though.
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on May 9, 2014
I was needing to fill in the gaps I had in my investment knowledge. I was especially lacking in the area of bonds. This book was a bit dry, but not nearly as dry as it could have been. And since I wanted the knowledge, it wasn't at all hard to read. Everything is explained clearly, progressively, and well. It covers the basics, and then dives into the specifics of government, municipal, corporate bonds, and more. It also discusses creating an investment strategy for the fixed-income portion of your portfolio. Recommended.
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on July 30, 2010
I have two other bond books that are supposed to be classics. Unfortunately they talk about bonds in total abstraction. The power of this book is that it is well organized and gives information from an individual investor's reference point. I've read other reviews about this book where the readers were far more knowledgeable about the bond market and were disappointed with the book. It is a basic bond book, written for the individual investor. It is like no other bond book I've read. I recommend it highly with the caution that it may not satisfy readers who know the bond market well. The reason for 4 stars instead of 5 is style. While bonds as a subject is probably a pretty dry subject, so is their writing style.
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on March 23, 2006
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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on December 22, 2013
Gives comprehensive introduction to different types of fixed income assets and strategies, but with many details.
Very helpful for someone who wants to know more about fixed income investing and or who wishes to be more involved in fixed income investment strategy.
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on October 3, 2015
I think this book does a great job of explaining how bonds and the bond market works. People who invest in bonds, whether individual ones, or bond funds would benefit from this book. I did.
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on November 16, 2012
Contains all the essential information about bonds and some caveat emptors about certain types. Out of date as far as CDOs are concerned, based upon the past several scare years. Runs on at times without proper structural organization. Needs better referencing, more descriptive tables, and examples.
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