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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 35380  
Subject: Re: CDs vs. the CPI Date: 3/23/2013 2:12 PM
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Thanks, guys (and gals) for your interest in this topic. I was hoping to provoke some discussion from those of you who actively engage the bond market, and more for the sake of bemusement, than creating action plans, which always tend to be specific to each investor’s means, needs, skills, and goals. The basic problem seems to be this. The stuff you’d like to buy a piece of keeps getting even more ridiculously expensive. The stuff you really don’t want any more of (or any at all) still seems to be available. Mistakes and all, below is my YTD buying.
 

Issue CPN Due CY CG YTM Paid P/L MDY SP Adj Yld
DCP 10.375 07/01/17 10.5% 0.4% 10.9% $985 -1% B2 B- 5.1%
MCP 3.250 06/15/16 5.1% 17.5% 22.6% $635 -5% - - 14.1%
GGS 10.500 01/21/17 13.3% 6.7% 20.0% $792 11% B3 B+ 13.1%
Toys 10.375 08/15/17 10.5% 0.3% 10.8% $987 -1% B3 CCC+ 4.9%
GGS 10.500 01/21/17 11.3% 1.9% 13.1% $932 -18% B3 B+ 7.2%
Apria 12.375 11/01/14 12.3% -0.5% 11.7% $1,009 -1% Caa1 B- 6.5%
EOP 7.500 10/01/27 11.9% 4.0% 15.9% $2,525 1% - - 6.6%
JCP 7.125 11/15/23 8.3% 1.6% 9.9% $855 13% B2 B 3.0%
Safeway 7.250 02/01/31 6.7% -0.4% 6.3% $1,082 6% Baa3 BBB -0.9%
Verso 11.375 08/01/16 26.6% 38.1% 64.6% $428 5% Caa2 CCC 45.7%
CYH 10.750 05/01/19 10.9% 0.2% 11.0% $990 -5% B3 B- 4.7%
Dell 5.400 09/10/40 6.6% 0.8% 7.4% $821 7% A2 A- -0.7%
WLB 10.750 02/01/18 10.5% -0.6% 9.9% $1,029 1% Caa1 B- 3.9%
Dell 7.100 04/15/28 6.9% -0.2% 6.8% $1,025 -1% - - -0.1%
Amerenergy7.000 04/01/18 10.4% 9.5% 19.9% $670 -14% B2 B 12.1%
ABS 7.750 06/15/26 11.6% 3.7% 15.2% $670 19% B2 - 6.5%
CWEI 7.750 04/01/19 7.7% -0.2% 7.5% $1,013 -1% B3 BB- 1.6%
GGS 10.500 01/19/17 11.6% 2.6% 14.2% $906 -16% B3 B+ 8.1%
Momentum11.500 01/15/21 15.1% 3.9% 19.1% $760 0% Caa1 CCC 11.0%

Totals/Averages 10.6% 3.3% 13.9% $18,113 $18,085

Notes: CY = Cpn/Entry; CG = (Entry/Par)/Holding-period; YTM = CY + CG; P/L = MTM (~ 2wk out of date)/Entry; AdjYTM = the discounted value per year assuming a 5% rate of inflation. (When I'm scanning, I also assess my tax-rates against prospective purchases and don't buy if I can't do better than break even.)

My strategy this year has been to buy at least some of the least worst offered. In practice, that has meant ignoring anything offering less than 6% nominal and trying to keep Adjusted YTMs positive. I’m flat on my P/L, but decently positioned given current market conditions. Cash is piling up, but bonds are what I'd rather stick with, because it's the game I know best, and the bond market has been very, very good to me.

Charlie
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