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tekla

Looks at my return rates of ~8-9% on S&P 500

Excuse me, what bonds are returning that?

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A single coca-cola corporate bond was issued with an initial yield of 7.35%

https://cbonds.com/bonds/100441/

Current META bonds yield ~5.8%

Barclays bond at ~10%

https://www.bondsupermart.com/bsm/bond-factsheet/US06738EBX2...

You are comparing the S&P 500 to a single company bond? Should I also compare the return of a SpaceX stock to the S&P 500?

you can build a portfolio of bonds that satisfy your risk preference and target yield. bonds can also be leveraged a lot which is how they are the largest financial market in the world trumping stocks by few orders of magnitude.

a return of 8-9% on broad market index like SPX in a year when the market made 20% profit tells me you're very risk averse.

(Stupid question) how does someone, who is not risk averse, go about executing the strategy you’re advocating for?

Are Barclays bonds available for purchase via a consumer brokerage account?

You can browse bonds in Schwab and interactive Brokers for example.

Fwiw I am not saying to go and buy Barclays bonds, but merely exposing the fact that a market far larger than the stock market exists.

Edit: one thing worth pointing out is that there are also municipal bonds which are tax free if you live in the jurisdiction of the issuer.

https://www.municipalbonds.com/bonds/issue/79771PU86/

Here’s an example of the SF muni bond at 8.4% coupon currently yielding ~6%

That 7.375% on the Coca-cola bond looks like the coupon (approximate yield) from its initial issue, which appears to be in 1993. ("Ticker: KO 7.375 07/29/93") The yield-to-maturity (yield calculated from current market price) is likely to be lower. Coca-Cola is A-rated[1], and Schwab is showing A-rated corporate bonds as yielding 5% (3-month) to 6.4% (30 years)

[1] https://www.fitchratings.com/entity/the-coca-cola-company-80...

Yea that is correct. There are tons of other bonds at varying yields and default risks. Check out Apple and Tesla bonds for comparison for example.

None of which are yielding in the Coca-Cola ballpark without significant default risk. The broader point about bonds clearly beating S&P earnings is dubious.

Apple bobs yield just ~0.9% or so kore than 10 year treasuries. You have to go for much riskier companies to get significantly above 5%.

Of course if there is a recession, the stock market tanks and most importantly the Fed starts cutting rates you might do quite well (assuming you’re willing to sell those bonds afterwards).

Is that an inflation-adjusted return? Just curious, same thing applies whether you're comparing nominal return or real return, I just know there are "inflation-protected" bonds.

And what are those inflation protected bonds returning?

1.4% in TIPS auction from today.

The Fed buys TIPS to suppress the yield (inflation expectations).

I know, that should be illegal, but when does that ever stop them.

Managing inflation expectations is the Feds main job.

And what are the inflation adjusted returns of Stocks over the last year or two?

3%. Still higher than inflation protected bonds.

How'd you figure?

Looking at the S&P 500[1] over the past two years relative to today's close:

  Aug 15, 2023 Close = $4,437.86
  Aug 15, 2022 Close = $4,297.14
  Aug 13, 2021 Close = $4,468.00
         1-yr Return = +3.3%
         2-yr Return = -0.7%

...and using the latest CPI-U data[2] over roughly the same period:

      Jul 2023 Index = 305.691
      Jul 2022 Index = 296.276
      Jul 2021 Index = 273.003
      1-yr Inflation = +3.2%
      2-yr Inflation = +12.0%

...I get real returns of +0.1% and -12.7% over 1- and 2-yr periods, respectively.

Same exercise looking at Vanguard VTI ETF[3]:

  Aug 15, 2023 Close = $220.37
  Aug 15, 2022 Close = $215.78
  Aug 13, 2021 Close = $230.05
         1-yr Return = +2.1%
         2-yr Return = -4.2%

...I get real returns of -1.1% and -16.2% over 1- and 2-yr periods, respectively.

[1] https://fred.stlouisfed.org/series/SP500

[2] https://fred.stlouisfed.org/series/CPIAUCNS

[3] https://advisors.vanguard.com/investments/products/vti/vangu...

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