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A single coca-cola corporate bond was issued with an initial yield of 7.35% https://cbonds.com/bonds/100441/ https://cbonds.com/bonds/100441/ Current META bon

A single coca-cola corporate bond was issued with an initial yield of 7.35% https://cbonds.com/bonds/100441/ https://cbonds.com/bonds/100441/ Current META bonds yield ~5.8% Barclays bond at ~10% https://www.bondsupermart.com/bsm/bond-factsheet/US06738EBX22 https://www.bondsupermart.com/bsm/bond-factsheet/US06738EBX2...

tekla 3y ago
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?
- mrcode007 3y ago
  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.
  - cj 3y ago
    (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?
    - mrcode007 3y ago
      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/ https://www.municipalbonds.com/bonds/issue/79771PU86/ Here’s an example of the SF muni bond at 8.4% coupon currently yielding ~6%
SilasX 3y ago
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-80542325 https://www.fitchratings.com/entity/the-coca-cola-company-80...
- mrcode007 3y ago
  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.
  - SilasX 3y ago
    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.
  - ffhhttt 3y ago
    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).

tekla 3y ago

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?

mrcode007 3y ago
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.
- cj 3y ago
  (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?
  - mrcode007 3y ago
    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/ https://www.municipalbonds.com/bonds/issue/79771PU86/ Here’s an example of the SF muni bond at 8.4% coupon currently yielding ~6%

SilasX 3y ago

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-80542325 https://www.fitchratings.com/entity/the-coca-cola-company-80...

mrcode007 3y ago
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.
- SilasX 3y ago
  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.
- ffhhttt 3y ago
  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).