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Non-Tech : Kirk's Market Thoughts
COHR 181.67+2.4%Dec 5 9:30 AM EST
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To: Chip McVickar who wrote (3113)5/21/2015 10:23:29 AM
From: Kirk ©  Read Replies (1) of 26710
 
Thanks for posting that.

I gave this some thought yesterday while on my elliptical watching NBR discuss the risk in the bond markets. Some seem to be pooh-poohing the idea "safe bond funds" without leverage will have trouble, so that worries me. I got some great stocks dirt cheap during the 2009 crash that I think were sold from panic or margin calls. For example, I believe (from memory) I paid 34 cents on the dollar of cash on the book if I recall for my lowest prices Finisar shares..

What if a fund/bank has half its portfolio in these risky, leveraged bond assets and the other half in dividend stocks for yield? If there is a run on bonds, then they'll have to sell GE or MSFT of SPY to raise capital for margin calls or the equivalent on the leveraged bond funds. Even if they don't hold stocks by charter, they'll probably have GE and MSFT bonds for some portfolio stability..

It COULD give opportunity for those with nets out in advance well below the market for those stocks to perhaps get some shares on a flash type crash of the bond market if/when they all head for the door.

Or an opportunity to get some great corp bonds hitting a great yield on a bond liquidity crash...

I hope you are well and enjoying life!

Go Warriors!
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