I see your point. I might not have been clear, but I am seeing potential in a very small subset of the market. It's so illiquid that large price discrepancy exists. For example, death, divorce, education, drug addiction. etc., all can prompt people to want to unload paper that was originated through owner finance, and sometimes at huge discount. 30% discount is not unusual... Then, occasionally, you come across one that only has a few years left.
15% annual gain is not what I am used to in stock investment, then, I don't think I can cosistantly beat that. I was pretty flat in 2005, though 2006 more than made up for it. I thoght about this for more than twenty years and never made the move. It requires large amount of cash. There is no leverage, nor liquidity. This won't make me rich, as huge profit can only be possible with someone willing to buy these paper at slightly less discount, with me serving as a broker or reseller. That would be a different game and I am not up to it. Still, this simple buy-and-hold may offer some balance to my stock exposure.
I can only postulate so much. We'll see if it works as well as I think. Again, thank you for your experienced consel.
bd: are you in either of the two? i can't tell if this is short covering or rumour-mongering pumping about a settlement of shareholder litigation. I will believe it when I see it [settlement]. I kept my common position to a livable exposure, but its so cheap its like holding options that never expire.
I, too, am thankful for your work on Pref & common on DRL, only that I used that same idea going over RGFC. There, the prefferred is 17 vs 25 par. So I am not nearly as excited.
DRL--Seemed like all the bad news and some potential problems are already factored in the price. The difficulty in finding financial backing is company specific, and conduit to unload the loans can be a general problem for all involved. The once perfect fomula--make loans, resell them, make new loans, sell them...--is not working well.
I am checking into buying mortgage papers. By looking through courthouse records, find out-of-town owner of promisory notes and offers to buy them at a discount to generate 15% rate of return or more. Nobody really wants to hold those papers. The collection process can be tedius. What do yo think? Or, anyone else?