Fixed Income

• Stocks and Fixed Income typically compete for investment dollars
• Bonds become more popular as real interest rates increase
• Bond markets are the biggest markets on the planet
• 2x The size of stock markets
• Home to lots of institutional money (given its size and depth)
• Bond markets can often be "the canary in the coal mine" for stock markets
• Sell off in junk bonds can warn that bull markets are over
• Junk companies are the firs to show distress
• What to Examine when considering a bond (The order is important):

1. Creditworthiness of the borrower
2. The rate of interest
3. The quality of the money (currency / inflation risk)

Common Fixed Income Traps

• Examine the creditworthiness of the borrower before looking at the interest rate.  A high interest rate may lure you in, but may result in losing your money if the borrower is not creditworthy
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Bond Markets Are Big

• The US bond market is the biggest market on the planet (~$41 Trillion in 2019)