The FSA deal was closed today! As an owner of FSA retail bonds I expect that their prices will firm up in the days to come. FSA's business will be in the global municipal wrap business where its business as a guarantor is highly respected.
A few years ago I started to look into exchage traded debt issues or minibonds. It's become my favorite asset class if you want to call it that. I may become less aggressive later this year and start buying some utilities. I'm at the point right now that I've recovered my losses from a total standpoint. I made some big mistakes, but they have been more than offset with this year's performance. Big losers last year were MBIA and SLM(Sallie Mae). I may just stay away from stocks all together in the future. I do better without them. I liked getting paid on regular basis with fixed income securities and by buying them when they're at a discount from par I get potential capital gains.
Good luck to you.
Tony..Good for you! There are alot of sad stories over the years with the markets. People who really don't have the years left to recoup. I have been investing since the sixties only to see money made and money lost. Short story is that I probably would have been better off in CD land. I have tried HARD to be on the right side of the sector universe and on the right side of the trade. I tried aggressive managers and laid back. I tried trading equities myself and now I mostly buy preferreds and look for bargains. Buy and hold equity is dead.
I went through a lot of stress last November when I saw the market crashing down. I decided to raise cash in my IRA by selling mutual funds for the purpose of concentrating, not deversifying in securities. I saw it as a once in a lifetime opportunity. I couldn't believe the fear that was driving down security prices. I thought this is absolutely crazy. Last year I ended down 19%, but it would have been more like 40% if I hadn't decided to take action rather than do nothing. I was tired of not getting any sleep and going to the computer to see what could be the worse case if certain securities got wiped out entirely. That was why I started to look into deep discounted retail bonds. Most of my lost self esteem has been restored.
True, the yield on purchase price will stay the same, but not on its market price. I expect the yields on all the FSA retail bonds to continue to come down especially after July 1 when the FSA sale closes. The yields will then fall more in line with AGO's own bonds. By selling at a lower yield the capital gains will offset income, which can be replaced with approximately the same amount from other retail bonds. My targets for now are to sell some of FSB when it gets to 20, FSE at 19 and FSF around 17.
>>Once the yields on the FSA securities start coming down I have to start diversifying into other securities<<
You do realize your yield on your purchase price will always be there unless they cut the rate or stop paying altogether.
"Assured Guaranty had the option to reduce, by up to half, the number of shares in exchange for cash at a price of $8.10 per share, the companies said."
AGO is developing into a 'no nonsense' monoline. They don't pay someone to pump press releases out everytime someone develops gas. When AGO puts out a P-release, it has "meat" in it. I must be patient.
I'm looking forward to the closing of the deal. I'd don't own AGO, but do own a zillion of FSA's retail bonds. Seriously, I own more of them than some close end funds that specialize in this kind of security.