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Author: trader2012 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35351  
Subject: Howard: Your Maturities? Date: 9/30/2012 2:14 PM
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Howard,

Have you taken a look lately at the maturities of your bond holdings?

Spec-grade bonds tend to be mid to short-term in maturity, meaning, very soon we’re going to have to replace a lot of what we hold, and we’re going to have to do so in an interest-rate and investing environment that isn’t very friendly to fixed-income investing. It isn’t just ‘savers’ that are being screwed by Bernanke’s Zero-Interest Rate Policies. It’s us investors as well. Gees, that man is evil, especially since his polices won’t help anyone but his bankster friends (and, maybe, a few home-owners who want to re-fi).

Friday was the end of Q3. So I marked myself to market, and now I’m grinding through my holdings, trying to get an overview as a way of planning tactics for Q4. Initially, given that bond prices have gotten so expensive, I was hoping to be able to back off from buying and just coast for a while and not get too worried about the cash that would pile up. But the table below suggests that plan is a non-starter. We bond-investors are screwed, absolutely screwed, in terms of being able to put incoming cash back to work at decent rates.

The first column is the years in maturity from today. The second column is the percentage of my portfolio coming due by that date. E.g., in a mere 4.3 years, I’ll be faced with the task of replacing 20% of my portfolio, and this assumes that I won’t suffer any calls.

We’re screwed, absolutely screwed, which is why I fell asleep last night reading one of the classic texts that lays out the rational for shorting stocks. If I can’t put money to work in bonds, and since I know I don’t want to put it to work buying stocks (or mess with currencies or commodities), then the logical conclusion is that I have to find a new gig, and I’m thinking that selling stocks short might a viable way to deploy some cash, especially since a genuine economic recovery is at least a decade away.

Charlie
-------------------------------------

Years % Of Portfolio Coming Due

1.4 5.6%
2.7 9.9%
3.7 15.1%
4.3 20.0%
4.4 25.3%
5.5 29.7%
5.8 35.1%
6.2 40.0%
6.7 45.1%
8.8 49.9%
10.7 54.9%
12.7 60.1%
13.8 65.2%
14.8 70.0%
16.1 76.1%
17.0 80.1%
19.0 84.8%
20.0 89.7%
34.4 94.3%
39.7 100.0%

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