First analyze the situation of American bonds in the world’s largest economy? The next part is suitable for bond varieties that are suitable for our personal investment.
What we want to say today is investment bonds. Why is the bond market so important?
First: The yield curve can more reliable to predict the important inflection point of the economic cycle than other indicators.
The changes in the bond market affect many aspects of our daily life: housing mortgage, investment, employment, economy and politics.
Second: The essence of interest rates is the price of funds, which is the basis of all asset pricing.
Third: The main crisis in the world is related to bonds, not stocks, because only debt is repaid, and bonds are preferred to equity.
What is bond?
The simplest, bonds (Bond) is a interesting document contract sold by government institutions or companies for financing purposes. The largest three types of bond issuers are companies, local governments, federal governments and their institutions.
In the US bond market, including a variety of different types of fixed -income securities, the most typical of them is from large to small in order from large to small:
· Mortgage support securities;
· U.S. Treasury;
· Corporate debt;
· Currency market securities;
· Federal government agency debt;
· Municipal Bond/Local Government Treasury;
· Asset support securities.
Like all other investment, bond investors should have some basic knowledge in bonds before investing bonds. However, in order to make successful bond investment, the intellectual sets are complicated, and investors are often scared to withdraw from the bond market. We don’t talk about complex technology today, but only talk about simple operations.
· There is no different knowledge structure related to bond investment and knowledge in other markets.
· While working hard to learn bond knowledge, bond investors should pay special attention to factors that affect investment performance. These factors include the Fed’s trend, macroeconomic, and inflation, and their impact on bond portfolio may far exceed other factors.
The sentence “Don’t move with the Federal Reserve” comes from millions of investors accumulated in decades. History proves that those investors trusting the Federal Reserve may get higher investment returns than investors who ignore the Federal Reserve. Therefore, you should also incorporate the analysis of monetary policy into your own investment decision system. Being a keen Federal Reserve Observer can improve the accurate capabilities of the Fed’s interest rate action. Reading the Fed’s speech and paying attention to these simple practices can help you lead most investors in most investors
· Five factors for accurate prediction of interest rates are monetary policy, inflation expectations, economic growth rate, long -term and periodic effects, and the technical conditions of the market.
From tulip to national debt, for centuries, human behavior has had a significant impact on market performance. Even in a fairly mature society, the performance of investors still shows that the mature mechanism cannot help them get rid of their emotions. They are still vulnerable to the fear and greed from time to time.
· Credit rating is a good tool for measuring the company’s debt repayment and willingness.
· In the decades of rating systems, it was a very reliable and measuring tool for measuring credit risks. Credit risk is one of the core risks faced by bond investors.
· However, with the decline in the accuracy of rating in 2008 and the emergence of some huge credit breach of contract, we found that even if a credit rating agency could not keep up with the pace of financial innovation, it also made it difficult for investors to completely trust them.
There are many methods used by large rating agencies, and the investigation work is stricter than most individual investors.
· Although credit rating is a good investment tool, investors only apply their investment decisions, and in the process of decision -making, various factors must be comprehensively considered.
The bond market contains rich investment options, which can be suitable for various situations -whether it is personal investment demand or the investment environment at that time, it may be richer than other types of assets.
· Investors need to clarify their investment goals first, and then fixed income investment strategies.
· The bond market can achieve various investment targets of investors, including capital and liquidity preservation, income improvement, devoted to international markets, asset -liability management, tax management, and risk dispersal (reiteration: decentralization of assets is not equal to risk decentralization! To.
· Throughout history, in many cases, the role of interest rates affects US political situations.
· In the distant past, when the interest rate is not suitable for use as a policy tool or the energy owned by interest rates is not fully understood, people can see that interest rates may have greatly generated the US economy and American political situation at that time. Impact.
· In the past, the role of interest rates in the political movement is becoming more and more obvious, and the interest rate itself will constitute a problem.
The impact of interest rates on politics is a very regular thinking. However, evidence has clearly stated that the bond market has played an important role in affecting the US political situation and will continue in the future. The impact of interest rates on the current political situation may gradually disappear, because interest rates are a tool for solving periodic problems, and many problems facing the United States are structural.
· Economic data is undoubtedly the root cause of most fluctuations in the bond market. Realizing this is the first step for you to get the opportunity.
· The next step is to use the repetitiveness of monthly data release, and to thoroughly understand the data from beginning to end. If you read these data carefully month by month, your feeling of how the economy runs will be significantly improved, helping you more accurately predict the trend and market trend of future economic operations more accurately.
· Effectively use the interpretation of economic data to predict the next series of economic events, considering the potential impact of the market on each event. But remember that it is important to maintain an open horizon and the virtual valley -the focus of investors will change frequently. Today, investors think that pivotal things may become secondary tomorrow; vice versa.
· When you can well understand the current operating status of the economy and make predictions easily, you can learn more about how the economic report is prepared, which can further improve your level. In this way, you have more advantages than other market participants. · When engaged in all the above work, don’t forget that everything in economic operation is interconnected. Every incident in the economy will respond. As investors, we predict that the ability of this series of reactions will make us stand out from the mediocre public.