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/biz/ - Business & Finance

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204199 No.204199 [Reply] [Original]

Cramer says if you are young owning bonds is retarded. Do you agree?

>> No.204218

Going bond heavy? Yes
Owning bonds period? No

>> No.204215

>>204199
I've heard other people express similar opinions too.

What's Cramer's reasoning?

>> No.204237

>>204218
I was going to explain why but this sums it up in the best way.

>> No.204243

First time he is right.

>> No.204255

bonds seem like a nice safe investment with low returns

I think it's definitely good for hyper-bears and always better than day trading, but you could get better returns by investing in another relatively safe, reliable company

>> No.204285

If you're young, I think you should be playing riskier positions

But to say you should go 0% bonds...eh, I don't really agree

Graham said you should never go 75stock-25bond or the reverse if the market is weaker. Usually he advises 50-50 split

I think if youre young, you should be on that 75% stock, 25% bond

>> No.204304

>>204285

If you're young and bullish, 80-20 can be good. If you're feeling a bit bearish you can go down to 70-30.

>> No.204305

>>204285
Your age in bonds tend to work well.
(20 years = 20% bonds.)

>> No.204357

>>204285
>>204304
>>204305

While these tried-and-true benchmarks may have been wise in the past, the reality is that bonds are economically undesirable in the current market conditions. Given current interest rates and the position of the stock market, there is no assurance that bonds will provide any hedge against stocks going down.

>> No.204354

This is the same retard that advocates expanding the welfare state. Nobody should be taking Cramer seriously.

>> No.204390

What are some good bond options for a novice to put 20% into (couple thousand)?

>> No.204398

>>204390
BND

>> No.204401

Warren buffet says you should be 90% stock and 10 % bond in his latest report.
He says when he passes away his money will be split this way for his wife to manage

>> No.204397

I bought SHYD which is short term municipal junk bonds. Yields about 6% if you add in the tax effect. Should I dump it for equities and just pay the taxes?

>> No.204410

>>204199
Bonds are shit. Even many fellow Bogleheads feel this way. We invest to preserve purchasing power. History shows Bonds don't provide a return suitable enough to do that. 100% stocks for me. I can take 50% drops.

>> No.204421

>>204357
What would you advise instead then?

>> No.204424
File: 85 KB, 804x543, 1394566564507.png [View same] [iqdb] [saucenao] [google]
204424

>>204401
I think he actually said 10% short term bonds, so essentially cash or cash equivalents. Which would rhyme with how he runs Berkshire. I don't suggest listening to anything he says anyway.

>> No.204533

>young
>investing in anything right now while prices are so high instead of waiting until it goes comes down

He's right.

>> No.204729

>>204533
so just do nothing? sit on usd? lol

>> No.204745

Proportion stocks and bonds based on the market. When the market is dangerously high you want around 75% of your money in bonds, when it takes a dive change it up to 75% stock 25% bond. Based Graham

>> No.204760

>>204745
Wow, market timing and bad allocation all in one strategy. Forever poor.

>> No.204769

>>204760
can you elaborate

>> No.204848

>>204760
This guy's trolling. you are right Uy7eDliw

>> No.204977

should you even bother investing if you have less than £10,000?

>> No.204996

>>204199
In any other financial climate, yes.

But since we are due for a correction, no.

>>204255
Bonds lose to inflation half the time and their use as a risk-hedge is backed purely on the strength and solvency of the budget (which no longer exists.) Gold is a better store of value, and 9/10 years stocks are not only safer, but grow faster.

Right now you should be looking for an exit from equities, but long term bondholdings are fucking stupid for a young guy

>> No.205022
File: 10 KB, 450x263, stockbond2.gif [View same] [iqdb] [saucenao] [google]
205022

>ignoring asset class diversification

>> No.205041

>>205022
Why would the curve be parabolic?

I know you probably don't have the formula behind it, but if bonds provide risk hedging then why does the effect mysteriously disappear at 20% allocation?

>> No.205052

>>204977
It beats doing nothing with it, but you arn't going to make a whole lot

>> No.205071

>>205052
Not necessarily. There are different types of bonds.

I had a portfolio of FDIC insured high yield bonds that yielded just 1% less than the stock market, and corrected at 30% instead of 50% in 08.

To OP: the important thing is to be careful about the bond fun and the vehicle you use. Bonds CAN and DO beat stocks. Indexes beat mutual funds in high growth environs, mutual funds beat indexes in bear markets. Bonds are particular to certain laws and types, as their growth is regulated primarily on laws and regulatory environment rather than on actual market conditions (barring high inflation.)

If you're interested in bonds, you have to investigate particular types, the same way you'd have to investigate the individual stocks in any portfolio.

>> No.205119

Cramer is the king of /biz/

>> No.205143

>>205071
The FDIC doesn't insure bonds you fucking retard. They only insure bank deposits

>> No.205163

>>205143
Yeah, the FDIC isn't a sprawling and out of control organization that insures the principal of any bond funds.

Corruption? NO WAY. Impossible.

>> No.205173

>>205022
That chart is showing the efficient frontier; finding the optimal balance of risk and reward.

If you increase the bond allocation past 20%, you are sacrificing reward for risk. And vice versa for equities