Book Review: Higher Returns from Safe Investments

This book gets a mixed review from me.  If I were reviewing it 14 months ago, when everything was in chaos, I would have given it a better review.  There are time to take credit risk, and times not to.  There are times to extend maturity, and times not to.  There are times to seek inflation protection, and times not to.  There are times to invest abroad, and times not to.

This book takes a view of income investing that is correct for average credit markets, for the most part.  But average credit markets rarely exist.  Few investors possess the fortitude to go through the nadir of the credit cycle, and ride it into the next cycle.

With high yield, he offers a simple stop-loss strategy.  Good.  But he should offer something similar on preferred stocks and dividend-paying common stocks, which are riskier than high yield bonds.

The chapter on writing covered calls is simplistic, but the truth is that most of us are simplistic with covered calls — we look for free yield, and often gain losses greater than the income received.

The book gives simple and reasonable descriptions of various bond types, and other income oriented assets.  In general, it understands the relative riskiness of all of them, with exceptions noted above.

The title is a great title, but I would have loved to have seen a different book that would have taught people to analyze yield spreads, and getting people to think when there is enough compensation for the risk involved, and when there is not.

If you want to buy the book, you can buy it here: Higher Returns from Safe Investments: Using Bonds, Stocks, and Options to Generate Lifetime Income

Who would benefit from this book

If you don’t understand income investments, this book could be useful to you, and the book is not long.  It is an easy read.  In general I don’t agree with the way the book is designed, but if you have a lot of self-discipline, the book will prove useful to you.

Full disclosure: I said I would review the book, and his publisher sent me a copy for free.

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