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No. of Recommendations: 2

Here's a bit of bond gains silliness. On 06/15/20, I bought someone's 4's of '34 at 95.200 on which I'm being marked to marked at par. That's a holding-period of 0.066 years and an absolute gain of 4.8%, but an IRR of 103.4%. WhooHoo! and a reason that trafficking in bonds can be fun.

On a more serious side, 10/10 of last year I bought someone's 1.5% converts at 95.200 on which I'm being marked to market at 109.128. That's a holding-period of 0.746 years, an absolute gain of 22.6%, and an IRR of 34.4%. But here's the kicker. Had I bought the common on the same day at its market close of 28.77, I'd currently be up 219% on an absolute basis, which makes my bond gain look pretty paltry.

However, I hate stocks with a passion that knows no end and don't want anything to do with the game. For sure, I've done some stock trading and generally pull more money out of markets than I bring to them. But it's a high-stress, follow-up-intensive gig that I don't want --don't need-- to engage in. With bonds, I can have a leisurely breakfast and waltz into the market on my own schedule, run some scans to see what might be available, do my vetting routines, execute (or not) as I'm inclined, and then warehouse the position for as much as the next 30-40 years along with the other 250-300 positions I typically carry.

Were those positions stocks, there's no way in hell I could manage that many of them responsibly, nor would I want to be making bigger bets than I do with bonds --typically, 2's, 5's or 10's, depending on my assessment of the issuer's risks. In short, over the years, I've found in the bond market a gig for me that's a good compromise between my aversion to risk and my need to put money to work. My choice and trade-offs aren't recommendations that others do the same. They're what works for me and my life-style. Were I a debt-strapped, young householder who hadn't yet lived through a couple of bear markets, I, too, would be playing in the equity casinos. But that's not the case, and I'm content to clip coupons and to pick up some occasional cap-gains.

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