There are so many investment products in the market, why should we choose convertible bonds? What are its advantages Today we will talk about why convertible bonds are suitable for us ordinary people to invest in.
1 Certainty
One of the biggest enemies of investing is uncertainty.
What would you do if you knew where the highest and lowest points were? Is it crooked to earn money? But the truth is, ** has huge fluctuations, you think it is low, but there are eighteen layers below; You think it's the top, but it's actually just halfway up the mountain. But convertible bonds are the kind of investment products with certainty.
Why?
First of all, the investment time of the convertible bond is "basically" determined, and the duration of the convertible bond is about 5 to 6 years;
Secondly, the bottom of the convertible bond is more certain, with a face value of 100 yuan or the resale protection price (before the resale of the current year);
Finally, the top of the convertible bond is "close" to be determined, that is, more than 130 yuan, and there is no cap.
For ordinary investors, buying for 100 yuan and selling for more than 130 yuan within five or six years is the greatest certainty of convertible bonds.
2 Capital Preservation
Warren Buffett is one of the long-term holders of a variety of convertible bonds. Although the conditions of convertible bonds in the United States are far less favorable than those in China, Buffett still likes to buy convertible bonds in large quantities during the downturn, and he buys more and more as he falls.
Why does Warren Buffett favor convertible bonds so much?
The most important principles of investment are: first, keep the principal; Second, keep the principal. Third, keep the first two items in mind.
Convertible bonds are such a long-term holding product that will not lose money, but short-term fluctuations are unavoidable.
Of course, there is a premise for the capital preservation here, and only the holders with a face value of 100 yuan and below, or a resale price and below**, can be 100% guaranteed. The resale price is equivalent to the protection price of a convertible bond, which is generally slightly higher than the face value of 100 yuan5 3 yuan. ）
Why is 100% of convertible bonds guaranteed?
Because it's contractually stated. In essence, a convertible bond is an alternative type of bond with a debt backing, and all bonds have an agreed repayment date, an agreed interest rate, and a principal repayment date.
If the listed company becomes old, what should it do?
Don't worry, the SFC will come out and solve the problem. Don't pay it back?Isn't there a company asset?Isn't there a **?Take them all out to pay off your debts. Therefore, listed companies do not dare to move this crooked mind.
Moreover, so far, there has been no non-repayment in the convertible bond market (in most cases, the conversion of shares has been successful).
In addition to this, convertible bonds also have a buy-back clause.
When the stock price is falling and falling, we have the right to sell the convertible bonds back to the company at the resale price. Among the convertible bonds, there is a Huifeng convertible bond, the company behind it has been exposed in recent years environmental protection violations, inflated revenue, and inaccurate credit and other problems, and two consecutive years of losses were "capped", its corresponding stock has now become ST Huifeng, once speculated that it may become the first default of convertible bonds, but its final outcome was finally sold back with 103 **.
Therefore, as long as you don't operate blindly, convertible bonds can basically be principal protected.
3 High yields
As we said earlier, the biggest certainty of convertible bonds is to buy at about 100 and sell at more than 130 within five or six years. But this is only theoretical, in fact, it can be completed within two or three years, as far as the current convertible bonds are concerned, a large wave of more than 150, Yingke has even broken a thousand.
Why did convertible bonds rise so much?
Before answering this question, let's talk about why listed companies issue convertible bondsIs it a low-interest borrowing?It's not!Their ultimate goal is to convert shares. If you borrow at a low interest rate, you still have to repay the money when it expires, but if you convert the convertible bond into **, and the creditor becomes a shareholder, then you don't have to pay back a penny.
The loan scale of convertible bonds is basically hundreds of millions or even tens of billions (50 billion yuan for the Shanghai Pudong Development Bank), and if the company's efficiency is not good, it will be more difficult for the company to repay the moneyIf the company's efficiency is good, the stock price will definitely rise, because the convertible bond can be converted into the convertible bond according to the agreement, so if the company rises, the convertible bond will definitely rise sharply.
Moreover, even companies with good experience are reluctant to pay back, they need more capital to expand production, expand scale, increase market competitiveness, or retain capital to deal with risks.
Therefore, from the perspective of the interests of listed companies, they have only one purpose, that is, to convert shares and turn creditors into shareholders.
So how can listed companies promote the conversion of shares?
In a bull market, stock prices are rising.
If there is a bull market or a major positive, then the listed company does not have to do anything, just sit back and wait.
In a bear market, stock prices are falling and falling.
At this time, the downward revision of the stock price comes. After the downward revision condition is met, the stock price can be revised downward to make the stock price 130% of the new conversion price.
Not bearish, not bullish, the stock price is sideways.
At this time, listed companies will try their best to mobilize all resources to release various benefits and stimulate stock prices. If there are no conditions, the conditions created will also rise. You are not alone in the struggle, the listed company will accompany you.
Convertible bonds may be the only place where the interests of investors and listed companies are highly consistent, and everyone's goal is to rise and rise.
4 Avoid black swans
Black swans generally refer to phenomena that occur infrequently or rarely, but once they occur, they have a great impact and extremely serious consequences. Like a plane crash or something. This is often the case in the Chinese market. In 2018, there were many black swan events. For example, in the film and television black swan incident, Mr. Cui Yongyuan reported celebrities for tax evasion because of mobile phone 2, resulting in the film and television index exceeding 40% throughout the year. And because of the fake vaccine incident, pharmaceutical stocks are also the best ......Because we said before that convertible bonds have the property of guaranteeing the bottom, convertible bonds have also become a weapon to avoid black swans.
5 Worry-free operation
What is the hardest part of investing? Of course, it's a pick, so many companies, it's so difficult to choose! The selection of convertible bonds is much simpler than **. First of all, the threshold for the issuance of convertible bonds is very high, and the specific rules are as follows, and the China Securities Regulatory Commission has helped us to do a good job of the first hurdle.
1) The average return on net assets in the last three years is more than 10%, and the listed companies belonging to energy, raw materials and infrastructure shall not be less than 7%;
2) After the issuance of convertible corporate bonds, the asset-liability ratio shall not be higher than 70%;
3) The cumulative bond balance shall not exceed 40% of the company's net assets, and after the issuance of the convertible bonds, the cumulative bond balance shall not exceed 80% of the company's assets;
4) The investment of the raised funds is in line with the national industrial policy;
5) The interest rate of convertible corporate bonds does not exceed the interest rate of bank deposits for the same period;
6) The issuance amount of convertible corporate bonds shall not be less than 100 million yuan;
7) ** Other conditions as specified.
*What is the biggest risk?
It's a big fluctuation! I have a friend who said that he invested in **, earned 10w last month, and lost 15w next month....The mood is like a roller coaster, ups and downs, stimulation is stimulation, that is, the wallet is empty. The money you make by luck ends up losing by luck.
* What is the greatest sorrow?
That is, the bull market is cut before liberation, and the bear market is slapped on the beach. Because investors can't share prices consistently and accurately. That's why when the bear market fell and fell, I made up and replenished, but I didn't expect that there was a basement under the floor, and there were eighteen layers of hell under the basement Hey, it's too difficult for me
However, convertible bond investment can perfectly avoid these problems.
Convertible bond investment basically does not require ** stock price and market! Because our convertible bonds are certain. So, I just need to execute according to the ** sell strategy.
Having said all this, I want to tell you that convertible bonds are indeed a very suitable financial variety for us ordinary people!
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