Over the last 9 years ( started 2010 ) , I hv built up a bond portfolio that comprise investment-grade bonds (20%) and high yield junk bond (80%) with leveraging.It generates annual income of ave $180k after deducting borrowing cost of 0.9% to 1.5% (from 2011 to 2017) . My bond portfolio was as high > $4 million (with leveraging) during good times (borrowing cost 0.9% to 1.5%) .But in 2018, my annual income around $110k as I take less risk (less junk bond) & less leverage. Zero leverage for 2019 as I want more peaceful night . So far I have traded in/out more than 100 corporate bond (2010 to 2019). Buy during IPO (@100) & sell at profit above par within 0.5 to 1.5 yrs. I only hold a few bond till maturity.
Despite being hit by bond default, I still manage to do reasonable well. Now I am more cautious as another default will make my bond investment underperforming. If I will to go out to buy millions of stock with high leveraging like in 2006/07. I will be very very emotional unstable & chances of losing money is high. So I switch to bond trading.
1) Low borrowing cost (0.9% to 1.5% from 2010 to 2016)
2) Less volatile so emotionally it will affect me less.
3) Capital gain is fast due to US QE (2010 to 2016). Buy at IPO 100 & sell at 103 to 1.10 plus accrue interest in 1-2 yrs.
4) Corporate Bond has a higher LTV than stock.
I do have sleepless night buying junk bond like China Evergrande /Olam which was attacked by buddy water. Luckily, I ride through the crisis. During the oil crisis (2015) which I bought India Vedanta US$400k. It dropped as low as 70. I regretted buying huge amt US$400k just into one counter. I was very stressful. I asked my brother in law's friend (former fund mgr) about this India oil company.He said unlikely this company will default. I ride through it & get called . As for bond default, many many sleepless night. But month later, I learnt to accept it & move on.
I have survived the 1997 Asia financial crisis & Lehman 2008/09 Crisis. I was lucky as I was saved by Mahathir (97) & Dr Tony Tan (Mar08). I may not be 3rd time lucky like in 1997 & 2008 given advance warning from Dr Tony Tan. Many great Guru said that the crisis bigger than Lehman is coming. From 2012 till the recent 2019. It look like it is going to come . A big drop in dow jones in early 2019. But it recover fast & furious. It seem that the biggest fat Wolf never comes at all. Right now, Many investors maybe are complacent now. Record bond issuing since 2018/19 especially from China. 10% ,12% 15% etc. Damn worrying. Even our LTA , HDB , PUB , KEPcorp , SIA etc issue more bond.
Warren Buffett is noticing a unique phenomenon right now in the global economy: negative interest rates and low inflation. So something different is happening, but something different happens all the time,” he said.
Right now, I am reducing my risk for my family sake as I really do not know when the biggest fat wolf is coming. My income for bond is only 70k to 80k for 2019 from high of 280k in 2012/2013. I may want to look for alternative in 2020 as may want to keep more cash on hand. I am lucky that I started contribute to max the CPF annual limit early(now 37.7k per year). Tgt to hit high $1.5m at age 65 *(hello Pension Goodbye Tension) . Still a long way.
By other investment
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Property - Make very good $
Private equity fund(from 2006 to 2019) - Make good $. Profit est $300k.Nearly lose $ as I want to sell in 2009.It does not allow me sell at NAV. Sell at zero to them. Force to keep.
Unit trust - Make some $ as did not invest in big amount and also did not hold for long term (10 to 15 yrs ) like a private equity fund.
FX - Waste of time .Make some $ despite do hundred of times trade. Opportunities comes,then do. Recent trade sell SGD buy Aud @0.948. Premium only $550 ( 1mth).
Stock - Trade in/out a few hundred time (maybe a thousand time). A totally waste of time & money. Lose money but not a lot. Just buy bank stock & hold should be the right strategy. Timing is important.