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Subject:  Re: Sara Lee Medium Term Bonds Date:  7/10/2011  9:56 AM
Author:  charliebonds Number:  33060 of 37023

Which numbers do you trust? I know Charlie's answer he is a ticker reader and this is the type of outlier that makes him fret. Years of buying has taught him to heed certain warnings. He doesn't care when he is wrong and misses out on a profitable buy because within his methods he is likely to lose more often than he wins when he bends these rules within his system.


You’re right. I look at ‘technicals” and then try to explain them with ‘fundmentals’. When I can’t confirm the former with the latter in two to five minutes, then I back away and look for easier money. The 1-year price chart for Sara Lee’s bond was enough to warn me away from looking any further. The action was anomalous. Buyers had to be reacting to events of a company-specific, non-interest-rate nature. So what I saw was a bet with limited upside (a sub 7% YTM) and lots of downside.

But in this case, because I had argued publicly against buying the bond, I felt duty-bound to try to refute myself. (If I couldn’t, then my guesswork was correct. But If I could discover where and how my quick analysis was wrong, then I would gain a cheap lesson.) So I dug further, hoping to suck you into looking at them as well, because you are a very superior analyst whose work I have a lot of respect for. I would never buy on the basis of your work (for preferring to trust my own numbers and methods). But I love it when we reach the same conclusion about something, and your suggestion that Sara Lee might be a better stock than a bond seems to be the best fit of the facts.

Why is ytm interested the bond? Because he finds the YTM created by an entry at 93.500 attractive. I don't. This isn't a top-tier credit that just happens to offer an anomalously high yield. The agencies have Sara Lee on negative credit watch for reasons that ought to worry a bond buyer. But if I have to accept worry, I want to be paid to do so. So I would look elsewhere.

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