Nobody Knows How Bonds Work

Nobody Knows How Bonds Work

I began my investing journey at age 23. I got some pamphlet that said I should invest in some bonds to go with my stocks. I didn’t know what a bond was. The pamphlet said that bond prices were inversely correlated with interest rates, so if you owned bonds, you were happy if interest rates went down.

That is about the extent of most people’s knowledge of bonds.

And that was the extent of my knowledge of bonds, until I took a class on bonds in business school with a guy named Manuel Tarrazzo. It was a pretty quantitative class, especially for the University of San Francisco, where most students’ math backgrounds were pretty weak. But then I finally understood how bonds worked. I still have the textbook for that class, and I consult it frequently and give it to my interns to read. Also—a few years later, I took a 6-week class in fixed income during my training program at Lehman Brothers, which was the number-one bond trading firm at the time.

Central to understanding how bonds work is the concept of duration, which is the sensitivity of a bond’s price to interest rates. Most people know that the longer a bond’s maturity, the more duration it has. But there are other nuances. Bonds with lower coupons have more duration than bonds with higher coupons. That’s why 2022 was so painful for the bond market—the existing selection of Treasury bonds had very low coupons from years of zero interest rates, and it was a bloodbath as rates went higher. If you read The 10th Man since inception in 2014, you know I predicted this for years.

But there’s a lot more to life than just Treasury bonds. There are corporate bonds, municipal bonds, and mortgage-backed securities. If you go to, and you look at their fund selections, how are you supposed to construct a bond portfolio with zero experience in fixed income?

Like I said, 99% of people have no idea how this stuff works.

The Bond Masterclass

A few years ago, I decided to remedy this situation, and created something called the Bond Masterclass. It is the best-selling product at Jared Dillian Money and the one I am most proud of. Well over 3,000 people have taken this course, and the reviews have been uniformly positive. Rave reviews, actually. Because of the Bond Masterclass, there are 3,000 people out there who now understand how fixed income works. I am very proud of that fact.

But I think more people need to read it. Novice investors, sure, but there are a lot of financial advisors out there whose experience with bonds might be a little thin. After all, the Series 7 doesn’t cover bonds in a lot of detail. I should also mention that you can get continuing education credits for taking it. It’s been recognized by certification-granting authorities as a valuable educational tool.

In the Bond Masterclass, you’ll learn all about the math of interest rates without getting too deep in the weeds on calculations. It is explained intuitively. And if you want to get deep in the weeds on the math, the formulas are in the appendix. You’ll learn how all the major bond markets work: corporate, mortgage, municipal, and more. And at the end, you’ll learn how to build a bond portfolio that you can hold for years without looking at it.

The Price Is Going Up

I was talking to my partner Ed D’Agostino on Friday, and I mentioned to him that I thought the price of the Bond Masterclass was too low relative to its value. Plus, you know, inflation. So, on Sunday, June 30, at midnight, the price is going from $299 to $399.

Keep in mind that if you took a college course on bonds, you would pay much more, and it would be taught by some fuzzy-faced civilian professor with no experience in markets. This course was written by a practitioner. Now, most of you know that I traded equities at Lehman Brothers. But when I was in index arbitrage, I was trading a lot of short-term rates, and as head of the ETF desk, I was trading bond ETFs and hedging them accordingly. Plus, for a number of years, I was teaching MBA-level classes on this stuff, so I know what I’m talking about.

You may have seen a few plugs for the Bond Masterclass over the years and decided you were either too busy or didn’t want to fork over the cash. Now is the time to do it because the price is going up. And even when the price goes up, it’s still a steal because you’d pay $5,000 to take a college course.

You have three days to get your orders in. There’s no spin. This is pure educational material—no stock picks. The mission of Jared Dillian Money is to make you smarter. Click here to make it happen.

Jared Dillian
Jared Dillian, MFA

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