Warren Buffett: Buy stocks, beware bonds

[A HERETIC I AM]

24. First of all Reformist, I'm asking "Byeya", not you.

Secondly, I should probably tell you that I held a Series 7 Securities license and was a broker, and though I don't know all there is to know about bonds, it is clear by what you and byeya wrote, that I am much better versed on the subject than either of you.

What I want to know is where he got the information that told him junk bonds are selling for "$1.06" (which is the WRONG way of stating the price, BTW) and what he thinks he means by the statement "That means you pay your dollar and get 94 cents of value with a lot of risk."


FWIW, if he had simply said "Right now the average junk corporate bond is selling for 106." (leaving out the dollar sign and the decimal point) it would have given him a LOT more credibility. If he had said they were selling for 106% of par, that would have done the same thing. But to state specifically that average junk corporate bonds are selling for one dollar and six cents shows me he is either unfamiliar with proper nomenclature, ignorant of how bonds are priced or both.

And a moderate amount of searching shows ZERO BBB or worse rated, American Corporate bonds selling for 106. It doesn't happen. Crap bonds rarely if ever get bid into above par territory.

If he is quoting an index or a CEF or an ETF, then he is misleading his readers.