The Asian markets tanked last night. Japan's Nikkii fell 25% this week, its worst week in history. Many of he European markets were down between 8% to 10% this morning. I just checked those markets and the German Dax was down 9.5% and France's index down 8.3%. Great Britain's FTSE 100 was down 7.5%.
Prior to this year, I believed that W would be remembered primarily for the Iraq War. While he will certainly be remembered for that, he will also be joined forever with Herbert Hoover, as in "Hoover and Bush".
Fortunately, I have cash and will be looking for opportunities to buy senior bonds in TC form that individuals are being forced to liquidate due to margin calls. The downward surge of 25% near the close yesterday in PJL to 16.05 had nothing to do with the desirability of a senior bond from Verizon. There were worse declines than that one of TCs containing senior bonds. The closing price in PJL represents a 36% discount to its $25 par value, and the decline yesterday juices the yield to 11.83%. The underlying bond had been trading on 10/8 at around a 5% discount to par and it did fall to a 17% discount to par yesterday. It is hard to view that as rational. If Verizon can not pay interest on its obligations, then where is your money going to be safe? In any event, the fall in the TC price was about twice as great. There are even better opportunities than this one that have been created in the turmoil which I will focus on today. But I will buy another 50 of PJL at or below the closing price yesterday to average down my recent purchase of 50 at 19.5. I did feel a little heartburn this morning, so I took a Prilosec with a glass of milk and I am ready to approach this in a rational manner after my prediction has now come true and I have come to terms with it already.
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