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No. of Recommendations: 7
Last summer, I bought 2 of Prospect Cap's converts, the 6-3/8's of '25, at 95.5 for a projected YTM of 7.5%. Today, after an interminable hold to talk to E*Trade's Corp Actions Dept, I accepted Prospect's tender at 111, bumping my achieved YTM to a whopping 32.2%

That's serious money, and most would say, "you shoulda bought more". But that's sheer recklessness and a road to ruin, because you never know which trades will work, and which won't. Therefore, you've gotta bet no bigger than you can afford to lose. In fact, you can't bet bigger than a likely string of losses, or else you get yourself thrown out of the game, or become so risk-shy that you stop buying what you should.

If it's upper-tier credits, I'll go 5's and 10's. But with spec-grade debt, I stick with 2's, which is the typical min to be marketable.

The sun is shining. The day is balmy. Time for a bike ride.
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