Imagine that your Private Banker introducing you to purchase a 4 year corporate bond with a yield of 7.1% in 2013
Then because its a bond, and upon the recommendation of your private banker to do bond leveraging you decide to purchase the bond with 50% leverage at less than 1.5% interest. Your leveraged yield becomes 12.70%.
In a low yield environment for the well heeled, this looks great.
Things will be bad but bonds should be safer than the company’s volatile equity isn’t it?
When you invest you hope for the best. Sometimes, you just don’t want to accept that YOU can be the one that loses.