Another Lottery Ticket is QRTEP

The 8’s of '31. Fat yield. Sucky financials. Do your due diligence, and don’t bet the farm.

So, here’s how I size bond positions: 3x, 2x, 1x between ‘defensive’, ‘enterprising’, ‘speculative’, which are terms borrowed from Graham and which be defined intuitively or quantitatively. I use ‘par’, not ‘price’ for the counting. Hence, not many dollars get put toward junk bonds --or spec-grade pfds-- both of which typically trade at a discount.

Currently, QRTEP is trading at 83.03x11. A market order at Firstrade --which is proving to be a good broker-- got me in at 83.07, which was the exact mid-point, though the spread is now 00x02, with a last of 01. Should I have been more aggressive? As often as not, when I try to do that, prices jump on me, and I end up having to chase.

Why did I buy QRTEP when the risk of default is high? Because I could never know what’s going to work, I prefer to carry hundreds of positions and benefit from the average of the tranche. Why not just buy a fund that does the same thing? Because I can control position-size and take advantage of maturities.