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Author: imcharliehm Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35397  
Subject: JP Morgan Bonds Date: 10/27/2002 4:20 PM
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Attention, Yield Hogs and Hounds.

E*Trade is offering Morgan's zeros, priced to yield in excess of 6.7%, which is a warning sign, but also an invitation to look more deeply and to determine if their current troubles are the tip of the iceberg or an opportunity.

Specifically, the 0's of 4/14/27 yield ~7.8%; the 0's of 4.24/27 between 6.7-8.0%, depending on the lot; and the 0's of 5/15/27 ~7.4%.

Zero's have awkward tax treatment, so holding them in a tax-sheltered vehicle is a convenience.

Disclaimer: I own some, but, for heaven's sake, do your own due diligence. This is a junk bond, despite its carrying A2/A+ ratings. But it might make a good situation for going long the bonds and short the stock, or, even better, hedging the bonds by selling the SSF (single stock future) on JPM. To repeat, this is nothing for amateurs to jump into, merely an interesting investment situtation which invites research and offers an opportunity to practice evaluating risk/reward ratios.

Investing is just like tennis, golf, or the piano. It takes practice if you want play well. Charlie

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