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Author: persistentone Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35252  
Subject: Re: Selling Munis Date: 11/26/2009 8:13 PM
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The bond market is an illiquid negotiated market. You need to review pricing on investinginbonds.com and then actively counter offer any bids you receive when you want to sell. Ask your broker to develop a bid on a bond, and after you get back and answer lower your offer to something between the spread.

Your broker will actively negotiate against you, telling you that your offer is not in the market and that you aren't going to execute. Just ignore them. I think the brokers have no idea what they are talking about, frankly. Bond executions are 50% luck, 30% being stubborn, and 20% about the market prices on a given day.

Plan on doing this as many as 10 to 20 times for each sale. If you aren't prepared to spend significant time negotiating, buying and selling individual bonds isn't a place you should be. In your case, unfortunately, you don't have a lot of choice.

As one example, I had a parent in a highly illiquid JP Morgan perpetual bond. I was consistently getting bid $88 to $92. Out of nowhere one day I got bid $98, for no particular reason. Probably JP Morgan got tired of answering the phone calls from my broker. :) Whatever the reason, I sold them all on that one bid, but that was one bid out of about 12, and the other 11 were lousy.

Plan on selling about 1/4 of each position at a time, unless you get an outstanding bid. That let's you audit the result. Challenge your broker on why they bought the bonds from you at $X and then immediately went out and sold them at Y% higher.

If you don't get satisfaction from your broker, open up additional broker accounts, and try to develop multiple bids at the same time. When your broker sees you trading bond positions out of his company to a competitor, he will get the point that you are serious about business and he needs to sharpen the pencil on his bids.

This is going to take a lot of your time. But you said it is a lot of money, so presumably there will be a return on that investment.
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