It’s no secret that interest-rates are moving up, that credit-worthiness is moving down, and that it’s getting tougher to find bonds worth buying. So now is as good a time as any to do a quick retrospective.

Over the past thirteen months, I initiated (or added to) 124 positions ($239k face) at a cost of $204k, with a present value of $201k, for an average CY of 8.6% and an average YTM of 12.1%. The credit-ratings range from double-AA to double-CC, but most are spec-grade, because that’s where the opportunities have been. Of them, none have defaulted so far. But I do expect that some losses will occur.

OTOH, my typical position is small, and the damage (individually and cumulatively) will be tolerable. In other words, my benchmark is an 8% return before taxes and inflation. If I achieve that, then I break-even, which is the only thing I care about, i.e., being able to move my purchasing-power forward against the time when I might need it. Though this portfolio generates a lot of income, it isn't income I need to meet current-expenses. It's just a passively-managed (aka, held to maturity), rainy-day savings-account that enables me to lower my overall, financial risks.

Charlie

------------------------------------ 

Traded	        Amt	Paid	Value	P/L	CY	YTM	MDY	SP
08/11/11	5000	$3,623	$3,306	-9%	12.1%	17.4%	Caa1	B-
08/11/11	2000	$1,754	$1,960	12%	8.7%	10.0%	Baa3	BBB-
08/11/11	5000	$5,048	$5,475	8%	7.5%	7.4%	A2	-
08/12/11	3000	$2,820	$2,927	4%	7.1%	8.4%	B1	B+
08/12/11	5000	$4,283	$2,850	-33%	9.5%	11.8%	B2	B
08/12/11	5000	$4,711	$4,948	5%	7.8%	8.7%	B1	B+
08/15/11	1000	$745	$775	4%	6.7%	16.1%	-	-
08/15/11	5000	$5,397	$5,856	9%	7.0%	6.1%	-	AA-
08/17/11	5000	$5,180	$5,400	4%	9.2%	8.5%	B3	-
08/17/11	1000	$1,055	$1,100	4%	7.8%	6.9%	B2	BB
08/17/11	1000	$990	$1,030	4%	8.6%	8.7%	B2	BB
08/22/11	1000	$781	$800	2%	10.7%	12.3%	Caa1	B-
08/23/11	5000	$4,523	$4,631	2%	4.4%	7.6%	-	-
08/24/11	1000	$853	$960	13%	13.2%	16.7%	Caa2	CCC+
08/24/11	2000	$1,792	$1,975	10%	8.6%	9.8%	Baa3	BBB-
08/25/11	1000	$1,008	$1,129	12%	8.6%	8.4%	B1	BBB-
08/25/11	1000	$961	$1,011	5%	9.2%	9.9%	Ba3	BB-
08/29/11	2000	$2,171	$2,260	4%	11.5%	10.1%	B2	B+
09/08/11	1000	$1,076	$1,147	7%	9.2%	8.1%	B3	B-
09/08/11	1000	$998	$1,024	3%	6.4%	6.5%	B1	BBB-
09/08/11	1000	$860	$917	7%	5.2%	14.6%	-	-
09/08/11	1000	$980	$1,011	3%	9.1%	9.4%	Ba3	BB-
09/09/11	1000	$681	$720	6%	7.9%	18.6%	B3	CCC+
09/19/11	1000	$870	$921	6%	6.0%	7.9%	Ba1	BBB-
09/22/11	5000	$2,443	$2,857	17%	0.0%	7.5%	-	-
10/04/11	1000	$929	$1,021	10%	5.1%	8.1%	A3	A-
10/05/11	1000	$898	$1,064	18%	7.0%	9.3%	Baa2	A-
10/13/11	1000	$918	$465	-49%	9.0%	10.3%	B3	B+
10/19/11	1000	$885	$984	11%	7.6%	9.6%	B1	B+
10/20/11	1000	$914	$1,011	11%	4.7%	8.1%	-	-
10/24/11	1000	$1,070	$1,005	-6%	9.8%	8.8%	B1	B+
10/25/11	1000	$730	$868	19%	12.7%	14.7%	B2	B+
10/25/11	1000	$983	$1,080	10%	7.1%	7.4%	Ba2	BB
11/02/11	5000	$4,719	$3,132	-34%	9.2%	9.7%	-	-
11/08/11	1000	$880	$995	13%	8.7%	10.4%	B2	B+
11/08/11	1000	$801	$872	9%	5.9%	9.3%	Ba2	BB+
11/08/11	1000	$976	$1,135	16%	8.7%	9.0%	Baa2	BBB
11/10/11	1000	$886	$1,035	17%	6.2%	9.0%	Baa2	BBB
11/16/11	1000	$926	$970	5%	13.4%	16.0%	B3	BB-
11/16/11	1000	$925	$1,135	23%	9.2%	10.2%	Baa2	BBB
11/29/11	1000	$970	$1,080	11%	7.2%	7.7%	Ba2	BB
11/29/11	1000	$858	$1,019	19%	6.4%	8.0%	A2	A
12/01/11	1000	$805	$780	-3%	9.6%	12.6%	B1	BB
12/02/11	1000	$880	$1,004	14%	5.7%	10.3%	Ba2	BBB
12/07/11	2000	$2,226	$2,272	2%	8.9%	7.4%	Baa3	BBB-
12/09/11	1000	$950	$1,040	9%	7.7%	8.5%	Ba1	BB+
12/14/11	1000	$661	$872	32%	7.1%	13.6%	Ba2	BB+
01/05/12	1000	$924	$974	5%	7.0%	8.9%	B1	B+
01/05/12	1000	$926	$1,020	10%	7.8%	9.2%	B1	B+
01/06/12	1000	$615	$819	33%	11.2%	20.0%	Caa1	CCC+
01/20/12	1000	$964	$1,072	11%	7.9%	8.5%	B1	BB-
01/23/12	5000	$3,348	$3,306	-1%	13.1%	20.2%	Caa1	B-
01/23/12	3000	$2,844	$2,325	-18%	7.8%	8.6%	B3	B
01/24/12	1000	$811	$916	13%	6.0%	12.9%	-	-
01/24/12	5000	$4,055	$5,050	25%	8.5%	11.7%	Ba3	BB-
01/24/12	5000	$3,686	$2,887	-22%	11.5%	13.7%	-	-
01/30/12	1000	$860	$882	3%	5.2%	10.2%	Ba2	BB+
01/31/12	1000	$795	$986	24%	10.8%	14.9%	B1	B+
02/01/12	1000	$730	$505	-31%	10.8%	15.3%	B3	B-
02/01/12	3000	$1,991	$885	-56%	4.5%	48.9%	-	-
02/03/12	1000	$308	$364	18%	38.6%	68.0%	Caa3	CCC
02/07/12	1000	$1,013	$987	-3%	9.9%	9.4%	-	-
02/07/12	1000	$1,000	$1,002	0%	8.5%	8.5%	Caa2	CCC
02/07/12	5000	$4,873	$4,950	2%	7.4%	7.8%	Ba3	BB
02/09/12	5000	$4,611	$4,206	-9%	9.8%	12.7%	B3	B-
02/10/12	5000	$3,811	$4,462	17%	9.0%	10.7%	B3	B+
02/14/12	5000	$3,517	$2,250	-36%	7.1%	17.7%	-	-
02/16/12	5000	$3,973	$4,200	6%	6.5%	7.7%	-	AA-
02/16/12	1000	$988	$1,064	8%	8.0%	8.1%	Baa1	A-
02/17/12	5000	$5,010	$4,946	-1%	7.5%	7.4%	B1	B+
02/23/12	1000	$555	$467	-16%	12.2%	15.7%	Caa1	CCC+
02/27/12	3000	$3,285	$3,090	-6%	11.9%	9.9%	-	-
02/28/12	1000	$1,050	$1,061	1%	8.8%	7.9%	B3	B
02/29/12	1000	$1,070	$1,039	-3%	10.7%	9.3%	B3	-
03/01/12	2000	$1,698	$1,270	-25%	8.0%	13.1%	B3	CCC+
03/01/12	1000	$1,111	$1,052	-5%	12.3%	10.6%	Baa3	BBB
03/05/12	5000	$2,923	$2,350	-20%	9.8%	19.9%	Ca	CCC+
03/07/12	2000	$1,968	$2,100	7%	7.8%	8.0%	B1	-
03/08/12	1000	$921	$895	-3%	8.0%	9.3%	B3	CCC+
03/09/12	1000	$810	$881	9%	6.8%	16.5%	B3	CCC
03/09/12	1000	$789	$770	-2%	7.0%	8.4%	Ba1	BBB-
03/12/12	2000	$2,030	$2,102	4%	8.1%	8.0%	B2	B
03/14/12	1000	$965	$982	2%	10.6%	11.2%	B3	B-
03/16/12	1000	$1,026	$930	-9%	10.2%	9.7%	B3	B+
03/28/12	1000	$1,015	$950	-6%	10.3%	10.1%	B3	B+
04/24/12	2000	$1,718	$1,611	-6%	6.3%	8.4%	Ba1	BB+
04/24/12	2000	$1,592	$1,586	0%	7.2%	8.5%	Ba1	BBB-
04/25/12	1000	$365	$364	0%	32.5%	58.6%	Caa3	CCC
04/26/12	1000	$891	$895	0%	8.3%	10.1%	B3	CCC+
04/27/12	1000	$710	$295	-58%	4.2%	51.7%	-	-
05/02/12	1000	$733	$695	-5%	8.7%	11.8%	B2	B-
05/07/12	1000	$833	$669	-20%	3.4%	8.5%	-	-
05/09/12	5000	$3,843	$3,200	-17%	10.6%	15.1%	B2	B
05/15/12	1000	$972	$1,060	9%	7.5%	7.9%	Ba3	BB-
05/15/12	1000	$1,003	$1,004	0%	7.6%	7.5%	B3	B-
05/15/12	2000	$2,031	$2,065	2%	7.5%	7.3%	Ba3	BB-
05/16/12	1000	$620	$287	-54%	19.2%	36.7%	Caa2	CCC
05/16/12	1000	$549	$495	-10%	12.5%	22.9%	Caa2	CCC
05/16/12	1000	$841	$727	-14%	15.2%	18.1%	Caa2	CCC
05/16/12	1000	$561	$450	-20%	8.9%	28.4%	Aa2	AA+
05/17/12	1000	$910	$802	-12%	7.8%	10.3%	B3	CCC+
05/21/12	1000	$335	$292	-13%	22.8%	45.2%	-	-
06/04/12	1000	$380	$857	126%	19.1%	83.6%	-	-
06/07/12	1000	$836	$855	2%	12.0%	15.3%	Caa2	CCC+
06/07/12	2000	$1,692	$1,820	8%	8.9%	11.6%	B3	CCC+
06/07/12	1000	$846	$895	6%	8.7%	11.4%	B3	CCC+
06/08/12	2000	$1,940	$1,915	-1%	7.7%	8.2%	B3	B
06/08/12	1000	$635	$795	25%	13.6%	23.9%	Caa3	CC
06/11/12	1000	$835	$855	2%	12.0%	15.4%	Caa2	CCC+
06/15/12	3000	$2,316	$2,416	4%	7.0%	10.8%	Ba1	BB+
06/20/12	1000	$919	$920	0%	7.9%	9.1%	Ba3	B+
06/20/12	1000	$549	$470	-14%	10.5%	22.5%	Ca	CCC+
06/22/12	1000	$678	$562	-17%	9.6%	12.1%	-	B
06/25/12	1000	$1,010	$927	-8%	7.8%	7.6%	-	-
06/26/12	2000	$1,406	$1,455	3%	9.1%	12.6%	B2	B-
06/27/12	2000	$1,613	$1,556	-4%	10.7%	14.6%	B2	B
07/17/12	1000	$836	$534	-36%	8.5%	9.7%	B2	-
07/17/12	1000	$966	$964	0%	8.5%	9.0%	B3	B-
07/24/12	1000	$831	$680	-18%	10.2%	12.4%	B3	B
08/06/12	5000	$5,462	$5,452	0%	8.3%	8.0%	Baa1	BBB
08/06/12	5000	$5,248	$5,200	-1%	7.4%	6.8%	Ba3	BB-
08/16/12	1000	$801	$750	-6%	5.3%	11.0%	-	B-
08/16/12	4000	$1,981	$1,800	-9%	11.6%	26.3%	Ca	CCC+
08/20/12	1000	$885	$870	-2%	10.0%	12.2%	B3	B
	

What can I learn from this? I'm asking that sincerely.
Thanks.

What can I learn from this? I'm asking that sincerely.

Fungi,

By “this”, you are referring to a listing of one bond-investor’s purchases over a recent, 13-month period. So, equally sincerely, I’ll answer that you can learn from it what you choose to.

But allow me, if you will, to point out the most obvious thing, namely, that despite the actions of the Fed, there have been ample opportunities to make money in bonds. It hasn’t been the easy, nearly risk-free money of former days. But decent-enough money has been available to them that chose to pursue the available gains using methods that Ben Graham would describe as “Enterprising Value Investing”.

Charlie