| |
|
|
Why Shop4Bonds?
That was then, this is now...
25 years ago there wasn't a timely and accurate way for individuals to find out about bonds.
For most people the bond market back then was pretty much an invisible flow of new bonds from top-quality American corporations, bonds were mostly sold to other American companies.
New bond issues (the primary distribution) were generally sold to "institutional" accounts like insurance companies, investment firms and pension funds -- but not to retail individuals. Imagine, bonds bought and held by the very companies where most people kept their savings? Small wonder that individual savings returns often failed to keep pace with corporate bond rates.
J. W. Korth & Company was founded in 1981 to change that investment model. (Company History) Led by Korth, the primary distribution business ultimately came to acknowledge the concerns and needs of retail bond investors, yet only in recent years has adopted the Korth program approach for new-issue offerings
Today, Korth's latest market innovation empowers the individual retail investor by creating a unique discovery platform for rapid electronic access and visibility into the plentiful secondary markets for bonds.
So why should I care about secondary bond markets?
One word: Value. Hidden value, that is, and here's how hidden bond values are created.
After a "new" bond sale - weeks, months, and for whatever reason, years later -- some large or small
portion of that bond issue may be offered for resale by earlier holders. The older bond
must be revalued (we say "discounted") to prevailing market prices in order to find fresh buyers, and
most often this means the older bond must be set at prices below new issues (we say "posted at higher yields").
That's why we care about the secondary bond market -- higher yields for bond buyers -- and, time and again it is the only place to
find consistently bettter values than most new-issue bonds may offer.
How can I find out about value bonds?
I fashioned this website to help you do precisely that -- that's why it's called Shop4BondsSM, where you can search, shop and compare current bond offerings from over 300 bond dealers.
Follow me through this brief tutorial, and along the way we'll talk about some key concepts.
First, a conversation...
Over the years many people, some very wealthy and sophisticated, have asked me in just this way:
"I'm sorry if this sounds naive, but could you tell me just what a bond is?"
I always answer the same way: "Bonds are basically very simple, and always involve two things -- YOUR principal and THEIR interest payments. It's a contractual promise to pay your money
back on a certain date, and to pay you regular interest -- like a rent -- while you are waiting."
Next I will ask if the person knows how bank CDs (Certificates of Deposit) work and they will often answer "Yes." I usually continue by saying, "Bonds are essentially structure the same as bank CDs except that
they are issued by a governmental entity or a big corporation instead of the bank. Unlike CDs, they are not guaranteed by the Federal Deposit Insurance Corporation, but instead are guaranteed by the issuer.
Here's where that first light will often go on.
And leads directly to the next question: "Not issued by a bank? So how does the interest on these bonds work? Does it get paid the same way, or do bonds pay higher interest?"
Another light clicks on -- funny how higher interest can stimulate interest!
Now the conversation invariably turns to this question: "How can I find out who might issue bonds?"
Here's where I can smile and answer, "Just about every company, city and state you can imagine!"
Drive a car? Pay utility bills? Watch cable TV? Own a computer, and have an on-line service? Shop at supermarkets or superstores? Do business with a bank, or use a credit card? Many of these businesses are public companies -- they have a publicly traded common stock -- and they may also have more than one bond to consider.
You can often find secondary bonds sporting higher "yields to maturity" and greater total return than available with comparable new-issue bonds.
Why always buy the newest high-priced item? A reliable tool for shopping is all we need to avoid the latest high bond prices (and their LOWER yields!)
Shop4BondsSM is the 21st Century tool for investors who prefer to shop before buying, who want make an investment choice instead of
being "sold" one. Investors who would rather shop for better values in a giant warehouse rather than the local hardware store. Investors who wish to put their own light on all their options.
Before heading into the Shop4BondsSM search tools, invest a few minutes and let's see if we can make some light bulbs start to switch on -- we'll want to spread as much light as we can into the heart of the matter: finding bonds, comparing maturity, interest rates and prices in the hunt for superior investment values.
For that we'll need some specialized terms and tools. So let's get going!
|
|
| |
