No. of Recommendations: 5
Today’s selling was as follows.

On 04/23/10, I bought a single of Columbia Heathcare’s 7.5’s of ’95, at 83.250, for a projected, nominal YTM of 9.0%. But the inflation-adjusted YTM would have been a negative (3.4%). So I sold. The inside market was 80 x 82, or a fairly wide spread, and I received a single bid of 79.5, which I accepted for a realized, nominal YTM of 4.5% over my holding–period. One can call that a win, a loss, or a scratch as one chooses. But I’m now flat, which is what mattered to me.

On 05/26/09, I bought a single of Anheuser’s 6.45’s of ’37, at 83.000, for a projected, nominal YTM of 8.0%. But the inflation-adjusted YTM would have been a negative (0.2%). So I sold. The inside market was 116.024 x 116.546, or a fairly narrow spread, and I received a single bid of 115.787 which I accepted for a realized, nominal YTM of 22.5% over my holding-period. Definitely a win, and I’m now flat.

On 12/03/09, I bought a single of Ford’s 7.7’s of ‘97, at 74.298, for a projected, nominal YTM of 10.4%. But the inflation-adjusted YTM would have been a negative (3.2%). So I sold. The inside market was 96.393 x 98.350, or a fairly wide spread, and I received a single, low-ball bid of just 90 which I did accept for a realized, nominal YTM of 21.1% over my holding-period. I took a serious beating getting out, but now I’m flat, which is what mattered to me.

I also solicited bids for other bonds that I’m trying to sell, but either received no offers or rejected them. In all, over the last three weeks, I’ve been able to clean up 16 positions on reasonably favorable terms, in some cases doubling my YTM on a comparative basis, in some cases getting out only with only half of the nominal YTM that I would have received if I had held to maturity. On just one position did I take an actual loss. So I’m content.

Some of the sales were at E*Trade, some at Interactive Brokers, and some at Zions Direct. So, gradually, I’m accumulating selling-experience, instead of just buying-experience. Of the three brokers, IB is the easiest and best place to sell. If the bond is being quoted, you can hit the bid and get out at the inside market without having to solicit bids through what amounts to an email exchange as is done as E*Trade and Zions and suffer the indignity of being low-balled. Of the latter two brokers, I prefer to sell through E*Trade. Their quote-gathering time is 10 minutes, rather than Zion’s 20, and how they present the info is more intuitive. Also, Zions imposes a 48-hour subsequent “timeout” on any bond put out for bid. In other words, if you tried to sell on Monday, but got no bids or rejected them, you have to wait until Wednesday before for putting the bond out for bid again. Also, though I don’t yet have enough data to say this definitively, I think the bids I get at E*Trade are better than those offered by the (admittedly overlapping) network of dealers that Zions deals with. Also, though I haven’t tested this systematically, I suspect that time of day matters and that trying to sell during the “dead zone” of the Eastern lunch hour should be avoided.

Monday, I leave for a three-week, Western states, fishing trip. So further selling will have to wait until I’m home again. Enjoy the summer.
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