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I was doing a Google search just now, and I was linked to a post I myself had written a couple years back under a different handle. Like so much of what I write, it was articulate and informative. (Am I good, or am I good?) So I'm re-posting it.

Just now, I was filling out the questions for my Motley Fool interview, and one of them was this:

”What's the best product you use that most people don't know about?”

At first, I was nonplussed. In commercialized America, when the average child has seen 16,000 advertisements by the time they reach age 18 (or whatever the actual number is), how could anyone not know about some product that everyone also knows about? So I had to think for a bit, and given that this is an investment site, I tried to think of an investment-related product that isn’t well-known.

My candidate would be the website, Investing in Bonds (linked below) and the access it gives to the TRACE system (info about which is also linked below).

Nowadays, if a would-be corporate bond investor wants to see how the price of a bond has varied, he can pull the data for free from TRACE. The data isn’t as complete as stock investors have access to, because TRACE doesn’t report market side. (I.e., whether the trade was a buy or a sell.) But data is nonetheless useful for estimating how liquid a bond is and how the market is presently evaluating a company’s prospects.

If you’re never explored the website, you should give it a test drive, as you should also request bond data for a company you might be interested in learning more about.

Incidentally, I know from personal experience that data posted by TRACE is both accurate and very close to real time, because within a minute or so of my buying bonds through one of my brokers, I can see my trade being posted nationally for everyone to see.

In fact, do this.
-Enter the CUSIP, 36962G4B7, into the dialog box for <bond history> and click <Continue>.
-That will take you to the next page which provides a brief description of the bond, GENERAL ELEC CORP MEDIUM TERM NTS BOOK ENTRY 36963G4b7, and lists the coupon and maturity <6.875, 01/10/2039>. At the far right of the page, in red, is a hot link that lists the number of trades <3440>.
-That will take you to yet another page that lists T&S (Time & Sales).
-Click on page 3 of those lists and scroll down to 02/09/2009 for the time period 12:51:14 to 12:54:38.

What you’ll see (among the 10k, 25k 250k trades done around the same time) a series of four, single-bond trades. The two done at 12:54: 38 are mine. The price of 85.59 was the offer to me. The price of 87.685 was the offer plus Zion Direct’s $10.95 commission, or the price I actually paid.

As near as I can reconstruct, this is what happened. I had been scanning the offering list for GE’s debt, not paying attention to any particular issue, just more to get a sense of what was going on when suddenly I noticed that there now was an offer for a single of GE’s 6 7/8’s of ’39 that hadn’t been there before. In terms of how the rest of their debt was being offered that day, the price was low. My guess was that a client somewhere wanted to sell a single bond, which brokers hate handling. Therefore, the broker was screwing the client by feeding him the usual sorry excuse that lots less than ten bonds were hard to market and that he’d probably have to take a haircut on the trade. (Or, maybe, the client was in a hurry and didn’t care about price. He just wanted out, and he wanted out now.) So the bond was offered out cheap, which is when I can along and bid for it.

So, retrospectively, what happened was this. Some bond desk, somewhere, (likely Fidelity due to the $8 commish that gets tagged to the bond) sold a client’s bond for 84, which netted the client 83.200. This happened at 12:51:14. About three minutes later, or at precisely 12:51:38, the bond hero himself (that’s me, Charlie) had his trade executed by Zions. In other words, the opportunity was fleeting, but, fortunately, I happened to be there to seize it.

Now page back to the first page of reported trades, i.e., the data for today (which is Feb 18). You will see that trades of all kinds of sizes are happening at all kinds of prices, with the bigger trades happening at more favorable prices (to the buy-side and the sell-side) than smaller trades. But the average price (both on the day I did the trade and today) is a couple points higher than my entry, which is why I said of that trade that the market had immediately confirmed it was correct and continues to do so (at least in the short term. In the longer term might be another story.)

Part of my love of the bond market is the intrigue and the detective work, and part of my love is the fun of winning. Access to TRACE is free. It’s a useful product whether you are a stock investor or a bond investor. Check it out.
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