GE has been cleaning up its balance sheet. I just got hit with another call. But on this one, I made decent money. Bought 03/04/09 at 66.195, for a projected CY of 9.2%, and a projected YTM of 9.9%. Called 02/15/13 at 100.000, for an achieved CY of 9.2%, and an achieved YTM of 18.5%. 'More' money is better than 'less'. 'Sooner' is better than 'later'. But the bond-game is what it is, and it is very, very different than from how the introductory books describe it. That's what most who attempt to play the bond-game fail to understand. There's nothing very 'fixed' about 'fixed-income' investing. Everything is in constant flux and change. The analogy that occurs to me is that you're skiing on a very unstable slope, with the threat of the avalanche poised to wipe out you. If you don't take on enough risk, your gains will be wiped out by taxes and inflation. If you take on too much risk, your account will be wiped out by defaults and adverse workouts. So you've gotta carve your path on the slope carefully. Buying GE's debt at the discounts offered by the 2008-2009 correction was a risk that happened to pay off, this time.. But there's no fundamental reason why stock and bond prices shouldn't have gone even lower, and it was only the Treasury's Plunge Protection Team's stepping in that turned the stampeding herd, this time. Whether they will be able to do so the next time is doubtful. That's a grim thought, right? But that's why I'm scrambling to get myself diversified away from classic, value bond-investing and into other, more 'traderly' tactics.
Bought 03/04/09 at 66.195, for a projected CY of 9.2%, and a projected YTM of 9.9%. Called 02/15/13 at 100.000, for an achieved CY of 9.2%, and an achieved YTM of 18.5%.
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