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Subject:  Putting New Money to Work in Bonds Date:  1/22/2013  3:57 PM
Author:  globalist2013 Number:  34716 of 35623

The following post is simply a thought-experiment, and it is not intended as investing/trading advice. “How much new money could be put to work in individual bonds with prices at their current highs?” That’s an interesting question, right? or at least one I find interesting. As I trolled the bond offering-lists this morning, I kept being struck by the thought that, “if I didn’t already have an exposure to this or that issuer, would I initiate new positions?” and I keep having to answer in the affirmative. There are still bonds that could/should be bought. Not a lot, but enough to put a fair chunk of money to work. So, let’s begin there and work backwards.

According to a recent paper by Ed Wolff, as of 2010, the bottom 40% of households in this country had a negative, non-home wealth. So, clearly, it is unlikely they have any money to invest in 2013. The middle 20% had a median, non-home wealth of $12,200 in 2010 dollars. Let’s guess that’s grown a bit for them, and they would now have $15,000 they could put to work. The next 20% had a median, non-home wealth (in 2010) dollars of $100,700. Again, let’s assume they made a few bucks in recent markets, and they now have $120,000 to work with. The top 20%, predictably, are well-heeled, with a median non-home wealth of $1.7 million, to which I say, “Good for them”. But also, “their problems don’t interest me”. So, the thought-experiment reduces to this.

(1) If a person had only $15,000 to work with, which bonds would be best for her/him to buy now?
(2) If the account had $120k, what’s a reasonable way to put