This is a person who doesn’t understand how the fixed income market works.

He’s assuming he’s buying $3m notional of a bond yielding 8% and paying for the face value $3m (i.e., he’s buying it at par). This is not how it works, even if you’re somehow subscribing at issuance as a retail investor.

You’re going to be buying the bond at bid, which is going to be higher than par when prevailing future yield expectations are lower than the coupon rate of the bond.

TL,DR: You can’t buy $3m of a high-yielding sovereign bond for $3m today. You’ll get less of the bond for the money if it’s yielding more than the market is expecting base rates to be in the future.

Eine wahre Explosion aus der Vergangenheit!

Ist das etwa Boxxy? In deinem Thumbnail?

I try to predict the future in order to find a way for us to invest the money universities have given us that ensures we can pay scholars a modest wage once they’re too old to work. The goal is to not run out of money before the last scholar dies.

I’m a stochastic Asset Liability Modelling specialist in the financial and investment risk function of the asset management company of a pension plan for the university sector.

Stock markets and securities had already existed in various forms for centuries, but pensions and insurance are really more of 19th century phenomenon, as are probabilistic views of the world (closely related). Stochastic analysis is a 20th century beast, and multidimensional non-linear optimisation in financial mathematics is a relatively recent 21st century development!