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Author: globalist2013 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35392  
Subject: Re: bond of company in CH. 11 Date: 4/29/2013 4:26 PM
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I hold a bond of a company that filed Ch. 11 last December. It is Edison Mission Energy. There is an active market for this bond, at about 50 % of what I paid for it. How does one determine the likelihood that this bond will eventually be redeemed for the price paid? I am wondering whether I should sell it instead of holding it.

Ho, ho. Ha, ha. Hee, hee. Welcome to the world of junk-bond investing.

You knew when you bought it --as did I, as did anyone who bought that bond-- that you were making a speculative bet that might not pay off. Well, --surprise, surprise-- that reality has come to pass.

Now the game switches over to managing that risk, and there's a whole bunch of things you can do, the chief are to sit tight and wait for the workout, or dump it for what you can get. If it's not a marketable position, you're probably not going to be able to get out, and even then, you'll be low-balled. Your other choice is to accept the fact you're going to take a loss, no matter what you do, but hope the workout offers a more favorable result than trying to sell now.

Flip a coin, and move on. Being able to sustain tolerable losses is simply a part of investing. They happen, and they have to happen, or else there would be no upside, either.
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