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Subject:  How Many Bonds? Date:  11/12/2012  12:18 PM
Author:  trader2012 Number:  34489 of 35909

The bond market is closed today (for Armistice Day), but other markets are open. So it’s a working day for me, as is every Monday, and I was poking around at E*Trade when I noticed a link to a paper published by Bond Desk on “estimating the number of individual bonds required to minimize the impact of default risk”. Here’s a snippet:

“Another implication is that credit quality is more important than individual security selection. A diversified portfolio of 10 or more investment grade bonds (rating grades between AAA-BBB) should be protected against extreme default losses. “