Sent: Wednesday, June 30, 2010 6:49 PM
THIS IS NOT ADVICE.  IT IS A PERSONAL REFLECTION.  RELY ON NOTHING STATED HEREIN.Subject: RE: Risk/Reward vol.3

IBD's Big Story today warned as follows:  "Investors should holster their stock buying impulses...".  Unfortunately, I did not holster my impulses.

Today, I purchased DUK, ANH, FTR and LINE because at lunchtime I thought they were cheap.  They were---and they got cheaper.  The trades made sense.  DUK is an old school utility that Barb owns and that looked attractive again once its yield got to 6%.  ANH is a mortgage reit that complements my holdings in NLY and CIM and whose mid term prospects look bright according to the article below.  LINE is a best of breed gas mlp with long and strong reserves and a two year hedge on production.  It should easily produce a 9% dividend (not appropriate for retirement accounts because of UBIT).   And FTR is the legacy land line business of VZ (as of tomorrow).  This company like WIN ressembles a tobacco play---a slowly dying business dedicated to paying high dividends (10%) which should be good for a few more years.

They all took a hit today after I purchased them, but I am stop-limited so I will not lose any more than 8% on any one stock (none are close).   Indeed, the entire equity portfolio purchased this year is down only 3% without counting the return on dividends received.  That said, I am hitting the sidelines with equities until the market shows more conviction.

One subscriber has taken issue with my poo-pooing bonds.  He notes the historically high spread between corporate and government yields, and recommends I look at junk bonds with 5 years until maturity which are paying 7.5%.  I will, but I must reiterate that bonds are not easily traded by individuals.  One must use a broker; one cannot easily set stop limits, and the whole process lacks transparency since they are so thinly traded (outside the institutional arena).  They just are not as liquid as I would like.  My plays to date, however, have been successful.  I own 10/18/11 and 5/18/17 AIG bonds (A-/A3) with YTM's of 3.4  and 7.2% repectively.  The 11 bond is trading 350 basis points above par and both have gone up 1% in ask-value in just a few weeks.  These AIG bonds, which have yields far in excess of similar rated instruments of like maturity, are getting stronger every day.  Anyone else bought corporate bonds lately?  What and how have they done?