Hey Elle (re: ETDS's

Last week I mentioned exchange traded debt securities as a way to goose the interest yield on ones cash reserves? You warned that that was a bad idea. Since then, a senior unsecuried bond I've been watching (ticker GJM) has dropped about 5% in in value. In just a week. That's not a big deal if your time horizon is large, but would be awful if it was a significant part of someone's emergency funds and they took a 5 or

10% hit and then had to take out the money before ever collecting any interest payments (and the broker fees for a final insult).

I just thought I should mention it since the example makes your point.

I also might buy some GJM next week as a long-term holding.

Thanks, regards, Bob

Reply to
zxcvbob
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Hi Bob,

My hybrids (two ETDS's, two traditional preferreds, one TPS) took a hit this week (Friday especially?), too. Not a serious one, but considering they were up consistently for a month or so, I took note. They're a tiny part of my portfolio, to goose my income a wee bit, like your plan. I too look at them as long-term holdings, in the worst case. Assuming no bankruptcies etc., then I'm "stuck" with something that yields 6% (for my holdings) for the next thirty years. Hopefully I'll be transferring these over, slowly but surely, to stocks that actually show growth both in principal and in dividends over time.

GJM's Moody etc. rating is still a little too low for my taste. I hope you've hit quantumonline.com and tried their income tables to see if perhaps there's something more appealing to you. Not to step on your toes or anything. Then again I see from finance.yahoo 's charts that it took a similar dive and then recovered in January. Maybe it'll come back up. Or maybe GM will stop paying dividends altogether! Dunno the whole story right now. Just saying.

Thanks for the update. It adds to my experience.

"zxcvbob" wrote

Reply to
Elle

Yes. Thanks for that link! I have about $20000 worth of my employer's common stock in my taxable portfolio. That's a large percentage of my semi-liquid assets. I'm thinking about selling it all and buying a variety of bonds and true preferreds with the money to balance things out a little. If the company does an Enron, I don't want to lose my job and my investments at the same time.

I think even if GM stops paying dividends, it will have to keep paying GJM interest payments or else it will be in default. From the prosepectus (which I've read a couple of times and still don't totally understand):

Since the debt is unsecured though, I'm not sure what happens if GM does default. Hopefully I won't find out. They can pay up to 29 days late, but they cannot suspend payments.

Best regards, Bob

Reply to
zxcvbob

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