Wall Street for Dummies Dec 13, 2024

“Bond…..James Bond.” ?An iconic line from an iconic movie. Ian Fleming, the master mind behind the Bond films and books, deliberately choose the name James Bond. He wanted a name that was bland, not assuming, one that blended in. He crafted the character of James Bond in a similar fashion. Fleming’s portrayal of Bond was one of quiet, unassuming sophistication. What was important went on behind the scenes; lots of chases, explosions, killings, and just enough sex to sell books and movie tickets.

Which leads me back to where I left off in my last incredibly insightful musing. And that is that?? ?somewhere on the market’s autobahn, is a curve. It is time to perk up our alien antenna ears and develop a strategy for its eventual arrival.

The first possibility is the Wall Street “sit on you thumbs approach.” Which I have already dismissed as good for the goose, but horrible for the gander. My mission is education, not mandatory response, so if this approach floats your boat, I wish you God’s speed.

A proactive solution is to shift assets from the stock market into the bond market. (Notice the incredible way I began with James BOND to create a segway into the BOND market).

The conventional wisdom is that bonds, particularly Treasury bonds, are 100% safe, and on one level that is true. If you buy a government bond and hold it to maturity, you will receive your quarterly interest payments, and on the maturity date you will get 100% of your principle back.

The problem is that individual investors don’t have the option of buying individual bonds, they must rely on bond mutual funds. Bond funds are not as simple as holding individual bonds. They are the product of Wall Street’s profit driven marketing departments. Because they are actively managed, they have a lot more moving parts? They have the potential of either a capital gain or a capital loss. Then throw in the fees paid to the fund manager and the quite unassuming bond has become more like a James Bond movie filled with lots of chases, explosions, killings - but forget the sex part.

Inquiring minds all agree, somewhere out there in the stock markets future lies a curve. They also agree that making the decision to move into the bond area requires more than just a Diamonds are Forever approach.

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