RE: Risk/Reward vol.5 THIS IS NOT ADVICE.  RELY ON NOTHING STATED HEREIN Sent: Wednesday, July 07, 2010 5:33 PM

Dear Readers, As you know my dislike for bonds stems not only from their depressed yields (at least at the upper credit ratings), but also from transactional difficulties at the individual investor level.  Acquisition and disposition must be handled through a live broker; the denominations can be large; the bid/ask spread is not transparent; and the volumes can be small to non existent.  In addition, yield is highly dependent on maturity, with short term duration coming no where near coupon rates, thus making intermediate laddering unprofitable.  These transactional issues led me to investigate exchange traded debt securities.  This is corporate debt specifically designed for individual investors.   Maybe all of you are fully versed on this, but I was unaware of them until a recent discussion with that savvy investor, Jim Levin.   The securties are unsecured notes, of very long duration, not intended to be held to maturity, paying quarterly interest.  They issue in $25 denominations (like preferred stock), rank junior to secured debt (bonds) but ahead of preferred and common stock.  They are callable at will, but they trade as freely as common stock, have market makers and  can be stop/limited.   They can be bought and sold through on line brokers, even Scottrade.  The best place to research exchange traded debt securities is www.quantumonline.com . Today, I purchased GE Capital 6.50% Notes due in 2048 (GER), rated Aa2/AA+ for above par ($25.40).  Thus  they now pay  a  nondeferrable 6.35%  yield, effective immediately.  The 25 week trading range has never left the $25 arena (except for the flash crash).  This is a steady, secure source of good income;  to my thinking just like a CD,  only not insured by the FDIC (but backed by GE). I also purchased Ford Motor Credit 7 3/8% Notes due 2031(FCZ), rated Caa1/CCC+ at a discount ($22.80) producing an immediate non deferrable yield of 8%.  Ford Credit is more secure than Ford but suffers from its parent's recent woes, most of which are being cured.  These notes, likewise have traded in the 22-23 range for several months.  I may stop/limit them just in case. Lastly, I purchased some AIG 7.70% subordinated and deferrable (for up to 40 quarters) notes rated Ba2/BBB for $19.50 yielding 9.8% immediately.  Because of the right to defer without defaulting, this is at the edge of my risk tolerance, and I would not have made the purchase but for my great success so far with AIG bonds which go up in value (and thus down in yield) every day.  In any event, I just have to watch these and exit  if uncomfortable, which I can do in the blink of an eye. As an aside, the equity portolio that I  purchased beginning in May (when the Dow was at 10,700), is in the black with the Dow barely at 10,000. For those of you who want exposure to oil and gas MLP's but do not want to hassle with UBTI, take a look at AMJ,  which tracks the Alerian Index.   This last bit of news compliments of one of our readers.   REACTIONS, ANYONE?   BUELLER?  BUELLER?