Friday, June 4, 2010

Short Takes: Corporate Bonds, Fiduciary Duty, and more

1. Larry Swedroe explains why you might not want to own corporate junk bonds. They tend to drop in value at the same time that stocks drop. Usually you want your bonds to provide some stability for your portfolio.

2. Jonathan Chevreau posted a reader comment making the case for why financial advisors shouldn’t have a fiduciary duty. I found this very illuminating. The attitude of the reader seems to be that only a baby should expect to have an advisor place the client’s interests above the advisor’s own interests. The relationship is a business transaction and people should expect to have advisors take advantage of them. This attitude contrasts sharply with the expectations of many clients who seek out someone they can trust.

3. Big Cajun Man had some fun announcing that Bank of Canada rates had gone up 100%!

4. Canadian Capitalist reviewed Gail Vaz-Oxlade’s book Debt-Free Forever.

5. As Preet collects more feedback on his Know Your Advisor (KYA) questionnaire, he plans to turn it into an e-book.

6. Canadian Investor looks at whether investing in Real Return Bonds is best done directly, with an ETF, or with a mutual fund.

7. Mike at Money Smarts discusses some research that suggests that if some financial advisors were made to disclose their fees, they may treat their clients worse than they do now. Even if this is true, I suspect that the benefits coming from clients knowing the fees would more than offset this potential problem.

8. Guest blogger Rachelle at Million Dollar Journey gives some tips to landlords on how to negotiate with difficult tenants.

9. Financial Highway lists the 8 warning signs that you have too much debt.

7 comments:

  1. Thanks for the mention, hopefully the rates won't keep doubling!

    ReplyDelete
  2. Mike
    I do own stocks and corporate junk bonds (latter through an ETF). At the time I bought the bonds, yields were around 9%. But I consider the corporates as part of the equity allocation, not bond.

    ReplyDelete
  3. @Larry: According to Larry Swedroe, you're thinking of your corporate bonds in the right way. I guess corporate bonds have an unfortunate name if some investors are fooled into thinking that they are safer then they really are. The simple rule that higher expected returns come with higher risk applies here in the same way that it applies to stocks.

    ReplyDelete
  4. Thanks for the link! Have a great weekend!

    ReplyDelete
  5. A bunch of good reads for this weekend Michael. Keep up the good work!

    ReplyDelete