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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 35345  
Subject: Re: sell jc penny bonds now to buy back later? Date: 11/15/2012 8:25 PM
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...I'm not quite sure what your trying to say ....I agree that the price of a bond is not important by itself. What is important is the CY and YTM of the bond at that price ... As far as risk, my three JCP bonds are 6% of my direct corporate bond holdings.

Blacktree,

Every investor will have his/her own ideas of how to manage risk (or should), because that policy is the cornerstone of their investing plan (or should be). So, in that sense, the answer as to what you should do about your holdings of JCP's debt will be found on Page One of your investing plan under the paragraph heading, "How do I get myself out of trouble when I seemed to have failed avoiding getting myself into trouble?"

In other words, when an investor finds him or herself long (or a short) a position (which could be stocks, bonds, whatever) and prices have moved against them more than they are comfortable with, they don't need anyone to tell them what to do, because the answer is obvious. They screwed up, and they need to fix the problem before it gets worse, Going flat is often the best way to do that. Close out what should be closed out. That's not the only way to fix the problem. But 'fixes' that aren't simple, fast, and cheap aren't 'fixes'. They are just more problems have to be dealt with. Getting flat puts an immediate end to the problem, frees up capital, and clears the head.

A couple threads back, I did a post on "How many bonds?" As usual, it attracted no comment, because few investors worry about risk-management to the extent I do. But the answer to your current dilemma is to be found there, namely, if long-term survival in this game is your chief concern, then you're over-weight that issuer.

Charlie
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