Financial Analyst and Activist Darnell L Williams
Here we go
again with people calling me a "bragging, boasting, scruffy looking old
man." I shouted back, "Who you
calling a scruffy looking old man?"
The reason
why I talk about my investment successes and sometimes my disasters is because
most people learn about finance from family members. That means they learn
nothing at all since many families do not teach their children anything about
finance. Public Schools tell you how to open a checking or savings account if you are lucky. Public schools are controlled by local banks. They tell you nothing about financial markets. They say, if you want to save, we will put you in high cost Mutual Funds.
So as the nation moves on, most people stay behind the financially educated. That is especially
true with Black families. Most name calling directed at me comes from people in Black
families because they were taught not to talk about finance. Then when they find out that they are behind in over all income vs. White families, they cry discrimination.
Instead of
learning from my blog, they call me names like what you see at the
top of this blog. Now for people who want to learn high finance to help with
family future purchases, read on.
Most brokers
will tell you that junk bonds (sometimes call noninvestment grade bonds or High
Yield bonds) are high risk investments. That is because they want you in open
ended mutual funds, options, and annuities. Why? Because they can make more money
off of you than individual stocks. They make very little from you if you
purchase bonds. So they tell the media
that investors cannot make money off of bonds because they do not pay in a low
interest rate environment. Junk bonds are very high risk and you have a good
chance of losing money. The media, not knowing any better or because the
brokerage firms are clients, tell you this propaganda.
Well, here is what I am doing in this bad
stock market environment. You know, this market that falls without warning ,
100, 200, and sometimes 300 points per day.
362337AL1 | GTE NORTH INC DEB-G MBIA
6.73000% 02/15/2028. Purchase Price $775.95, giving me $136.89 (or +17.64%) in
interest and appreciation since I owned them per bond, Standard and Poor's
Rating is AA-. I bought them when they were in Junk Bond status. Now it is in investment
grade. The company pays half of its interest on February 15 and half August 15.
I wrote this blog, click on this link to read it;
"Making Double Digit Gains for at least 6 years"
on the same day I created
this portfolio in the above blog. I bought these bonds in this portfolio on December
31, 2014. Today, January 15, 2015, my portfolio increased 1.595%. That is an
increase of 1.595% in 15 days. If you annualized that increase it is 38.26944%.
In my IRA Account, I received a note
today telling me that one of my bonds will be paid off early. That means that I will get the remainder of what the company
owes me on this bond on February 1, 2015. This is a Standard and Bond B-.
It is a Junk bonds, giving around 12% Yield to Maturity.
CUSIP:
|
38121EAJ2
|
Security Description:
|
GOLDEN ST PETE TRANS
|
Interest Rate:
|
8.040%
|
Maturity Date:
|
2/1/2019
|
It was suppose to mature on February
1, 2019. I bought it in 2011. So I am crying all the way to the bank because I am
missing out on 4 years of interest.
What is the risk that I am taking?
The biggest risk that I am taking is
the risk of bankruptcy of the companies that these bonds represents. There is a
good chance that bankruptcy can happen. It
happened to me with Jamesway and A&P Supermarkets. When TWA went bankrupt
in the 1980s, I got my money back plus interest. I am talking about "business risk" here.
What is the risk that you are taking
with savings accounts?
The 2015 Hyundai Sonata ranks 1 out of 19 Affordable Midsize Cars.
Savings and investment is a matter
of risk. What people do not understand is that it is purchasing power that you
want, not cash per say! For example, I remember paying $12,000 for a fully equipped
Hyundai Sonata in 1990. I just priced
one today fully equipped and it cost $33,644. That is an increase of about $21,644
in 25 years. That is $865.76 or 7.215% per year increase. So instead of buying
my car in 1990 and I had the patience to buy it in 2015, my money would have to
increase by 7.215% to buy the same car. If I could not make that kind of money
in 25 years then I would lose to car inflation. That is the risk that I could
have taken.
Purchasing Power Risk may stop you from buying your home.
This also means that if I wanted to
be safe with my money like most people think they are doing at an average of
2.5% over 25 years, they would have lost purchasing power. This is why Bank savings
accounts are not a good idea over time. The people's money is guaranteed by the
Federal Government but purchasing power is not. This is
one reason why the average working person becomes poorer every year.
This is called "inflation risk" and since
you made part of the money that you need you are also losing to "interest rate
risk."
My Book; Building Wealth with Corporate Bonds
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I told you many times about my last book published in 2003 called, "Building Wealth with Corporate Bonds." The price is $35.00. I am selling off my final copies of this book. After that, I do not plan to produce anymore. Some of the topics enclosed are:
- Creating a Risk Policy
- Bull and Bear Markets
- What are Stocks and Bonds
- Corporate Bond Strategy
- Buying Corporate Bonds on Margin
- How to Place orders
You can buy a copy of my book by sending a donation of $35.00 money order to: Darnell L Williams
Building Wealth with Corporate Bonds
I/O Darnell L Williams
200 A Seneca Way
Havre de Grace, MD. 21078
I only have a limited amount of copies so order yours today. When they are gone, they are gone.
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