By investing in bonds, the important thing is not to be right on the future of society. The important thing is to predict the movement of the crowd, future modes.
The market can remain irrational longer than you can remain solvent. In other words, if you find an undervalued share deep value as they say, you have no guarantee that the price will converge to its true value. The market may continue to depress the price after your purchase, again and again, even if your reasoning is correct and that the company is not expensive … The time aspect is also: get 50% discount within one year does not have the same performance as 50% in 20 years!
By investing in bonds must know in advance coupons and date of return of capital. You buy a cash flow statement. The yield is known, the risk too. While movements of the crowd can get there and push the current up or down, but return on investment does not depend on these movements: It depends only on the creditworthiness of the company, so the quality of analytical work that was originally effectuate. Having redemption date unknown force convergence course with the passage of time: at worst, expected due date of the obligation.
In other words, We are prefer to bet on the creditworthiness of a company and see my picture flow happen if we are right, rather than hoping that we sell more to another buyer. Suitable for everyday life, it means doing what suits us rather than do what it is hoped that others see fit. And it is this independence of mind we like the Investment in bonds!
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