Two questions I've encountered reading the Intelligent Investor (revised ed. w/commentary by Buffett & Zweig). (I'm sure many more will come.)
-
On p. 24, Graham writes: "Towards the end of 1971 it was possible to obtain 8% taxable interest on good medium term corporate bonds, and 5.7% tax-free on good state or municipal securities." Can anyone tell me what the rate is now? Looking at this summary shows that mutual fund products (which I realize are aggregators of the securities that Graham is referring to) range wildly between $BRASX (offering a roughly 2.6% return) and $VWESX (offering a roughly 10% return). Is the 8% figure on corporate bonds, therefore, still relatively accurate?
-
On p. 63, Zweig comments that using an REIT can provide a "defense against inflation". Contrary to the popular belief of newly minted 2017 investors, the market does in fact fall. In addition, while probably unnoticed to many laypeople, the fed has already spurred the incipient crawl of increasing interest rates and recently announced they plan to do so again. While this inflation creep is certainly not approaching the historic highs described by Graham, just last week I could get a line of credit from Citi Bank with 21 months 0% APR. That offer, as of this writing, has disappeared. Certainly, I am not implying causality in my anecdotal, isolated case, but the relationship between interest rates, inflation and the health of the economy are well documented. My question is this: Does a long term investment in an REIT ETF or mutual fund have a place in the portfolio of a 20 year old investor who remains cautiously bullish in 2018 but is waiting for the other shoe to drop? Should I take steps to guard against inflation?
Submitted January 14, 2018 at 12:10AM by narkflint http://ift.tt/2EHct4e
