When Will The Bond Bubble Burst With Joseph Hogue Mark Falter – April 16, 2017
Guest: Joseph Hogue
The point is that simple concepts like the one behind this idea of a Bond Bubble are rarely sufficient in today’s financial world and are oftentimes it extreme over simplification. So here’s another simple but misleading concept about bonds. When interest rates go up bonds values go down and vice versa. Now based upon that idea so might try to argue that right now is a terrible time to buy bonds again why because interest rates are so low that hey, after all, they must go back up again. But we’ve already debunk that myth. But even if it were true, let’s just say for a moment that it is true. There are other factors to consider factors that many analysts’ advisers and unfortunately investors for get or ignore. For example, this thing called the risk premium but this concept is defined as the amount of additional interest that any rational investor would require to move from a theoretically default free US government bond to a corporate bond or a Preferred. So why is such an important concept hard to understand? Stick around and find out, but right now it’s time to get some insights on this topic from a very knowledgeable source. My guest today, Joseph Hogue is a chartered financial analyst who has worked as an economist since 2008. He provides research and analysis for small and mid-sized firms in the investment management industry and also manages a consulting firm focusing on emerging in frontier markets. He is also a guest panelist for Bloomberg and an author whose latest book is called Step by Step Bond Investing, a beginner’s guide to the best investments in safety in the bond market.Well right now you know investing has always been a much more personal idea than most people realize that start from your own returnees and your tolerance for risk. That said, there are opportunities in callable bonds, bonds with call options so if interest rates go down companies can buy the bonds back and reissue bonds at lower rates. Well, the odds of interest rates going down are much lower slower bonds, which you get a little bit higher premium most likely aren’t going to be called. So, so there are opportunities and bonds to have those call options on them for investors in the higher tax bracket 25, 28% or higher, there is there are also opportunities in those municipal bonds. Those are federal income tax-free and local and state tax-free as well if you live within those jurisdictions. And of course, as always, you want to hold those municipal bonds were tax-exempt bonds within your taxable account and your taxable bonds, bonds and other bonds in retirement accounts to, to get the most, best of both tax advantages.
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