Mastering Stocks and Bonds

Mastering Stocks and Bonds

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Imagine you had a choice between only two investments; stocks and bonds. What would be your choice? The question should be answered by not only the weights of each in the portfolio and by their risk characteristics. The answer should also focus on 'crossover return' between the two asset classes. What investors may yet have to appreciate and understand is how much bonds may experience in certain times returns that have equity characteristics, as well as how much stock returns during certain times could be closely correlated with bond returns. Understanding how future returns can be expected from bonds and stocks may significantly be influenced by what author Ben Emons calls the 'crossover return.' Investing in stocks and bonds goes with a certain style and an investment horizon. A successful mix in a portfolio should be supported by a 'crossover strategy' that is focused on increasing returns by investing in companies at numerous stages of the business life cycle. The strategy is the direct opposite of the buy and hold method, where the investor does not trade between the period when a security is first bought and when it's finally sold. The crossover strategy's goal is to get the best returns during shorter term periods (3 months up to a year). This book addresses the methods of picking in bonds and applies those methods in picking stocks, focusing on how to use bond strategies to enhance stock picking strategies. The same analysis is applied to equity strategy to identify value in individual bonds. Every investor makes her or his own judgment for why a stock or a bond has value or why it does not. Here, Emons helps investors understand different selection methods by analyzing and presenting practical cases of individual selection. Along the way, readers will learn about equity and fixed income trends, get practical tips, and gain a solid education on stocks, bonds, and convertible bonds. Looking at stocks through the lens of a bond buyer, and vice versa, has the power to improve your portfolio's overall returns and reduce risk.Monthly data, 2005a€“2015. Carry return = (Dividend yield a€“ yield of ATaamp;T bond maturing in July 2015)/equity duration + (coupon of T 2029a€“ yield of ATaamp;T ... It can also be caused by the stability of the dividend, which helps improve perceptions of the company and thereby the market rewards ATaamp;T with lower borrowing cost.

Title:Mastering Stocks and Bonds
Author:Ben Emons
Publisher:Palgrave Macmillan - 2015-10-06


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