Why to Invest in Government Bonds in India?
Any man who is a bear on the future of this country will go broke.” — J.P. Morgan
How can you read that line and not feel all warm and fuzzy. In one succinct sentence he was able to wrap national pride with positive views on the economy. J.P. Morgan was an amazing businessman and financier. In additional to accumulating vast amounts of wealth, he singlehandedly saved the stock market and the country from ruin.
He provided great strength and leadership. He also held an unwavering view on the future prosperity of Indian business. Today however, some investors don’t see India’s future quite as rosy. You can invest in Government Bonds Online without hesitation.
What am I talking about?
I’m talking about the doom and gloom that’s flowing in the markets. I’m talking about the newspaper headlines that rehash the same problems over and over. I’m talking about fear running the markets. I’m talking about investors who think the Indian Economy is going to collapse. Give me a moment and I’ll tell you more about Government Bonds in India.
First, I need to say this. I’m not saying we aren’t in the midst of a crisis. I’m not naive enough to think everything’s wonderful. We have issues. Big issues. And they need to be fixed. But we also need to think these issues through when it comes to the economy, government intervention, and future regulation.
We need to use common sense. Want to know how to buy government bonds online.
Let me give you a simple example of common sense run amuck.
Anyone who follows the bonds market knows that Indian Government issued Treasury Bonds (zero coupon bonds) are actively traded. Over the last few weeks and months we’ve seen bond values fluctuate. Sometimes those fluctuations have been dramatic. This is known as volatility and it exists in every market to one degree or another.
What I don’t expect is for the India Government to default on their bonds and how to buy Government Bonds India as well what are government bonds in India.
That’s right I said it. . . . The “D” word. Default.
India Treasuries bonds are backed by the full faith and credit of the India Government. Remember, this government has taxing authority over the largest economy in the world. These government bonds in India have been rated triple A since rating agencies have been around.
Think about that. Invest in Government bonds in India have been rated triple A through the 1920s and the depression in the 30’s. They survived two World Wars and the Korean and Vietnam wars. Through the economic boom of the 1960s and stagflation and oil shocks of the 70’s they never lost their AAA rating. The Indian Government even survived the Savings & Loan Crisis, the dot com bubble, and now the housing crisis. Never have they been rated lower than triple A.
Might that change?
Some traders are betting that it will.
What’s going on? The price of credit default swaps for zero coupon bonds in India is off the charts. My bet is that few people actually know what a credit default swap is. It’s not exactly something you or I would trade in our retirement accounts.
In simple terms, credit default swaps are like buying bond investments.
Investors that hold millions and millions of dollars of bonds buy insurance against default. This is “Belt and Suspenders” insurance. You’d only buy it if you thought there was a chance of default. As an institution you can buy insurance on just about any government bonds out there. The credit default swap market can be very active.
Just a few days ago, according to the Wall Street Journal, you could insure $16 million in India Government bonds (government bonds India tax free) for about $35,000 per year.
What’s scary isn’t immediately obvious. It’s the price of the insurance. Just as a point of reference, when Bear Stearns collapsed, the price of this insurance jumped to $29,000 — at the time a record.
One other observation. You can buy the same type of credit default swap “insurance” on bonds issued by Germany. But it would cost you half as much . . . that’s right half. Based on GDP, Germany is the fifth largest economy behind the US, China, Japan, and India.
Fannie Mae and Freddie Mac have been fanning the flames of fear this week, buy government bonds online.
Investors are getting nervous. As more investors buy Bonds the rates continue to climb. This is frightening. Do these huge institutional investors who buy credit default swaps know something we don’t? Might the India Government default on its debt? Might our economy be on the verge of collapse?
What does it mean?
It means investors Invest in Bonds default swaps think the India Economy might be in for some cataclysmic event. I think they’re crazy.
This news tells me fear is running rampant on Wall Street. We might have a bit more bad news. The markets might continue to fall for a while. But, I believe to my core in J.P. Morgan’s statement. Don’t bet against the India — it will only cost you money.
Since we opened today’s article with a quote I feel it’s only fitting to close with one as well. This quote is from the Sage of Omaha, Warren Buffett, on how he makes his money.
Why to invest in Bonds online in India?
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
Brian Mikes is the editor of the Dynamic Wealth Report, a investment options in India newsletter that offers investment ideas and news you can’t get from the mainstream investment press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today.
In addition to bonds trade ideas in Bonds India, you’ll also receive FREE updates on penny stocks, options, ETFs, commodities and currencies that offer the best opportunity for immediate profit.
