Comments on: Calling the Bottom on Junk Bonds http://www.goodevalue.com/2008/12/calling-the-bottom-on-junk-bonds/ It may be cheap, but is it a Goode value? Sun, 16 Oct 2011 22:06:46 -0400 http://wordpress.org/?v=2.8 hourly 1 By: Yngvai http://www.goodevalue.com/2008/12/calling-the-bottom-on-junk-bonds/comment-page-1/#comment-804 Yngvai Wed, 10 Dec 2008 19:19:13 +0000 http://www.goodevalue.com/?p=353#comment-804 Michael, Thanks for the response. I talked to the people at IB and you're right, it doesn't work. Michael,

Thanks for the response. I talked to the people at IB and you’re right, it doesn’t work.

]]> By: michael http://www.goodevalue.com/2008/12/calling-the-bottom-on-junk-bonds/comment-page-1/#comment-803 michael Wed, 10 Dec 2008 18:12:48 +0000 http://www.goodevalue.com/?p=353#comment-803 Yngvai - I don't think it works. I got my shares of CPY from my other broker (through Goldman) which allows reserving shares. I've tried reserving on IB by placing a high order and it never seems to work. Muddy seems to think it works. Yngvai – I don’t think it works. I got my shares of CPY from my other broker (through Goldman) which allows reserving shares. I’ve tried reserving on IB by placing a high order and it never seems to work. Muddy seems to think it works.

]]> By: Yngvai http://www.goodevalue.com/2008/12/calling-the-bottom-on-junk-bonds/comment-page-1/#comment-802 Yngvai Wed, 10 Dec 2008 18:07:16 +0000 http://www.goodevalue.com/?p=353#comment-802 OT question....does reserving shares on IB actually work? I know about putting in a high limit order and then changing it later in Thinkorswim, but I've tried that in IB before and I'm not sure it actually does anything. Do you know? If it does work in IB, then I would've reserved shares of CPY today when they were still available OT question….does reserving shares on IB actually work? I know about putting in a high limit order and then changing it later in Thinkorswim, but I’ve tried that in IB before and I’m not sure it actually does anything. Do you know? If it does work in IB, then I would’ve reserved shares of CPY today when they were still available

]]> By: michael http://www.goodevalue.com/2008/12/calling-the-bottom-on-junk-bonds/comment-page-1/#comment-801 michael Thu, 04 Dec 2008 22:32:16 +0000 http://www.goodevalue.com/?p=353#comment-801 Thanks for the kinds words and link! I like your blog's eclectic focus. If I'm going to get some linked traffic, I should make be a little more careful and point out that to calculate returns on a high-yield bond fund you really need to model defaults more than a years out as well as recoveries on defaulted bonds. Depending on when defaults happen and recovery rates on defaulted debt you could see really high (40% or more) defaults and still earn a decent return. On the other hand, if many bonds are PIK toggle bonds and companies start doing PIK payments, then it would take a lower default rate to ruin your returns. The great things about distressed bonds are that you are buying them so far under par that your recovery rate (as a percentage of the amount you pay for the bond) goes way up and if a company does not default then you get some spectacular capital gains. Thanks for the kinds words and link! I like your blog’s eclectic focus.

If I’m going to get some linked traffic, I should make be a little more careful and point out that to calculate returns on a high-yield bond fund you really need to model defaults more than a years out as well as recoveries on defaulted bonds. Depending on when defaults happen and recovery rates on defaulted debt you could see really high (40% or more) defaults and still earn a decent return. On the other hand, if many bonds are PIK toggle bonds and companies start doing PIK payments, then it would take a lower default rate to ruin your returns.

The great things about distressed bonds are that you are buying them so far under par that your recovery rate (as a percentage of the amount you pay for the bond) goes way up and if a company does not default then you get some spectacular capital gains.

]]> By: Miguel Barbosa http://www.goodevalue.com/2008/12/calling-the-bottom-on-junk-bonds/comment-page-1/#comment-800 Miguel Barbosa Thu, 04 Dec 2008 22:16:18 +0000 http://www.goodevalue.com/?p=353#comment-800 Hi, Great post. I don't normally believe in macro calls but I think your right. There are some great bargains to be found in junk bonds. Seth Klarman also is investing in junk bonds and thinks they are better than stocks. Thanks for the great post. We have linked to it in our nightly value investing links at SimoleonSense.com Best Regards Miguel Barbosa www.simoleonsense.com Hi,

Great post. I don’t normally believe in macro calls but I think your right. There are some great bargains to be found in junk bonds. Seth Klarman also is investing in junk bonds and thinks they are better than stocks.

Thanks for the great post. We have linked to it in our nightly value investing links at SimoleonSense.com

Best Regards
Miguel Barbosa
http://www.simoleonsense.com

]]> By: Nightly (Value) Investment Links #40 | Simoleon Sense http://www.goodevalue.com/2008/12/calling-the-bottom-on-junk-bonds/comment-page-1/#comment-799 Nightly (Value) Investment Links #40 | Simoleon Sense Thu, 04 Dec 2008 21:52:37 +0000 http://www.goodevalue.com/?p=353#comment-799 [...] Calling The Bottom On Junk Bonds - Via Goode Vaue [...] [...] Calling The Bottom On Junk Bonds – Via Goode Vaue [...]

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