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Author: charliebonds Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35345  
Subject: Re: Junk thoughts Date: 7/7/2011 5:37 PM
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Charlie may be able to find places to put money to work in the bond market, but I don't see the reward for the risk. Well, I do believe there is value that can be found in almost every portion of a market cycle. The real answer is I don't see the reward for the work relative to the risk. I don't spend enough time turning over bond rocks to be able to do the quick assessment and wing shoot; it is simply not cost effective shopping for me right now.

Jack,

You attribute to me more work than I actually do, as well as more implied risk. I put in some time daily looking for things to buy, but nothing excessive. The payoff is that I can pull better risk-adjusted money out of the bond market than the average investor, because I'm buying at the discounts that come to those who shop frequently.

In 2009, with a great deal of trepidation, I spent $66k to buy $99k face of agencies and corporates, or 66 positions in all, with an average YTM of 11.5% and an average credit-rating of invest-grade. In 2010, I spent $100k to buy $132k face of agencies, corporates, and munis, or 74 positions in all, with an average YTM of 8.9%% and an average credit-rating of invest-grade. In 2011, I’ve spent $123k to buy $198k face of corporates and munis, or 47 positions in all, for an average YTM of 9.9% and an average credit-rating of invest-grade. What the rest of the year might offer buyers remains to be seen. But things don’t look good now that interest-rates are on the rise.

Meanwhile, the fishing sucks majorly, with high water from New York to California and everywhere in-between. Torrential flooding has restructured stream beds and made wading unsafe and fishing a wasted effort. So I’m biding my time until I head out to Yellowstone at the end of the month. Bonds or fish, the same metrics apply. If you don't have a line in the water, you're not going to catch fish. But there are times, like now, when it's better to be on the sidelines, prepping gear for when conditions favor success.

Charlie
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