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Re: GMAC Bonds.
Old 04-03-2006, 09:22 PM   #21
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Re: GMAC Bonds.

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Originally Posted by HaHa
Personally, I agree with the cons on this GMAC idea. I donít like investments that count heavily on some troubled situation holding together.
"Gosh, for these Orange County derivatives to fail the whole county would have to go bankrupt!"

... and other famous quotes.

I think buying Intel below $20 with new management is risky enough.
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Re: GMAC Bonds.
Old 04-04-2006, 06:24 AM   #22
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Re: GMAC Bonds.

House Mummy, better stick to clipping coupons for Disposable Diapers and the other Fraidy Cats, better stay with your 3% CD's.

I could lose 100% of GMAC, which I won't, and based upon my Asset Allocation(No Rabbit Mouth, that's not about you), it would not make any differance.

What people do not understand , they mock.
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Re: GMAC Bonds.
Old 04-04-2006, 06:38 AM   #23
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Re: GMAC Bonds.

WoW Max!!! I am so impressed!!! :
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Re: GMAC Bonds.
Old 04-04-2006, 07:48 AM   #24
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Re: GMAC Bonds.

I was wrong in my Mathematics, but then you all knew that.

My Math should have said $16 Capital Appreciation, add on 5 years of receiving Annual Payments of $6.10 gives you $16+ $31.1(Non Compounded) for a total return of $47 or 56%.

$84, 000 would be worth $168,000, then $336,000, then $672, 000, then $1,344,000.00 etc.

26 Years to turn $84,000 into $1,344,000.00

32 Years $2,688,000.00

From Bonds, Less Risk than Stocks, Interest Payments, start at 25 at 57 you will be as indifferant to people's comments as I am.

$5,000 a Year Deductible Interest.

You will never steal home if you keep your feet on third.

The same peope who criticise this policy think nothing of paying $40,000 for a car, which 5 years later is worth $10,000.

Would love to stay and chat, but today is our 4 hour hike, a bunch of ER's, we wander the back woods and just chat about stuff.
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Re: GMAC Bonds.
Old 04-04-2006, 08:32 AM   #25
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Re: GMAC Bonds.

Hmmm

Although most famous for value stock investing - I believe Ben Graham got his initial start in distressed bonds in the 1930's doing well enough to get noticed and write his first book with Dodd.

?? - memory?

Bonds are definitely a different ballgame.

$5000 a year ?deductible interest?
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Re: GMAC Bonds.
Old 04-04-2006, 08:45 AM   #26
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Re: GMAC Bonds.

Quote:
Originally Posted by unclemick

Bonds are definitely a different ballgame.
Not sure I agree. High grade bonds (single A rated or better) are basically portfolio de-riskifiers in that they are good for reducing overall volatility. Junk bonds, OTOH, should be looked at as high yielding equities with capped upside. Triple and buble B rated bonds are somewhere in between.
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Re: GMAC Bonds.
Old 04-04-2006, 08:56 AM   #27
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Re: GMAC Bonds.

Hmmm

So the junk bond investor is viewing the 'capped upside' as his guanteed return - if his bet against the market consensus is correct.

Am I following you correctly?
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The Sure Thing
Old 04-04-2006, 08:59 AM   #28
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The Sure Thing

The Sure Thing...

Well now that we have determined that GMAC bonds are a sure thing we should all put most of our nestegg in. Maybe we'll diversify into some DELPHI bonds for safety though.

If you don't go broke and don't have to go out and beg for money you can tell all your friends how smart you are !
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Re: GMAC Bonds.
Old 04-04-2006, 08:59 AM   #29
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Re: GMAC Bonds.

Quote:
Originally Posted by unclemick
Hmmm

So the junk bond investor is viewing the 'capped upside' as his guanteed return - if his bet against the market consensus is correct.

Am I following you correctly?
I'm not sure I would use the word "guarantee" at all when talking about junk. *I think a reasonable way to put it is that you always know the max you can get from a junk bond (or close to it): par. *If you buy something at a discunt and it goes to par or over, you sell, aside from certain special situations.
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Re: The Sure Thing
Old 04-04-2006, 09:05 AM   #30
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Re: The Sure Thing

Quote:
Originally Posted by MasterBlaster
If you don't go broke and don't have to go out and beg for money you can tell all your friends how smart you are !
Quote:
Originally Posted by Maximillion
Would love to stay and chat, but today is our 4 hour hike, a bunch of ER's, we wander the back woods and just chat about stuff.


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Re: GMAC Bonds.
Old 04-04-2006, 09:18 AM   #31
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Re: GMAC Bonds.

I think JG is still online but over at raddr-pages.com . I haven't checked lately, though.
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Re: GMAC Bonds.
Old 04-04-2006, 10:09 AM   #32
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Re: GMAC Bonds.

Yeah he is (or was, I havent been over there for a few weeks either).

He was trying the same routine over there. Nobody was responding to him. Seemed to be petering out.
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Re: GMAC Bonds.
Old 04-04-2006, 04:11 PM   #33
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Re: GMAC Bonds.

My Dad, downsized at 55, sold his Bungalow for $80,000, invested in Bonds, moved into small house , lived on his Pensions(never made more than $20,000 U.S.a year, 9 kids), now 87 and Guess What, He Was Right.

Hopefully he will live to be at least 100, which means his money should double and then double again.

My Daddy taught me.
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Re: GMAC Bonds.
Old 04-04-2006, 04:59 PM   #34
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Re: GMAC Bonds.

Quote:
Originally Posted by Maximillion


My Math should have said $16 Capital Appreciation, add on 5 years of receiving Annual Payments of $6.10 gives you $16+ $31.1(Non Compounded) for a total return of $47 or 56%.

$84, 000 would be worth $168,000, then $336,000, then $672, 000, then $1,344,000.00 etc.

26 Years to turn $84,000 into $1,344,000.00

32 Years $2,688,000.00

From Bonds, Less Risk than Stocks, Interest Payments, start at 25 at 57 you will be as indifferant to people's comments as I am.

$5,000 a Year Deductible Interest.
Max,
I was the one telling JG he was at risk a year ago when he bought into these GMAC bonds, but I understand they have been coming back so if you bought them recently I am sure you are sitting on some profit.

What I don't understand is your figures above -- I follow the 56% profit if these things go to par in 5 years, but that would make 84k go to 131k in 5 years (not 168k,) and then what about the assumed compounding at the same rates for all those additional years -- Is this assuming additional bonds bought on the same terms? Once these guys get to par in 5 years (assume), then you're only earning your coupon, not todays current Yield to Maturity. Maybe this was the math you were correcting?

Anyway, I can understand someone wanting to buy high yield bonds if they really know what they are doing, but most of us don't want to worry about any piece of our portfolio that much. Not 'cause we're wimps but because we spent enough years worrying about our portfolios and now just want to rebalance every year and do other stuff.

Hope you had a good hike today. Where did you go?

btw REWahoo -- cool pix of JG and DW 4-wheelin'

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Re: GMAC Bonds.
Old 04-04-2006, 05:54 PM   #35
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Re: GMAC Bonds.

ESR, the Bonds are redeemable at Face Value, then I guestimated using the n/72 =2x.

I was just trying to illustrate that even with a Reasonable Rate of return of 11% or so, the magic of compounding, and that also bonds present a viable and possibly less risky alternative to Stocks.

GM will NOT go bankrupt, politics not economics will ensure that, but in the case of such a potential, bond Holders will generall get a % on the $, stock holders end up with Zero.

I also tried to point out that any Investment should not be an over committal but a reasonable % so that if things did happen, it is an inconveniance not a Catastrophe.

I never owned Google, EBay, or Yahoo, I do like ETF's.
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