Urgent sell signal

by | May 16, 2002 | Archives

A few months back, I invested in and wrote about SAS bonds. About fiveminutes ago I received the following sell recommendation from my bank and am passing this onto you.

“Dear Gary,

You hold some SAS Airlines – Euro bonds and Jyske Bank now recommends tosell, as the Company came with a negative result yesterday and the Bank's opinion is that the sector currently is under pressure and the price of the bonds could fall in the next few month.

Currently you can get EURO 90,75 for the bond and we expect it could fallas low as 85.

I sold immdiately as these bonds were purchased at 89.5 last October. Thesale brought in Euro 57,617 for my investment of Euro 53,700 so the the profit in just under seven months was Euro 3,917 or about 7.2%, plus the 8% per annum interest earned. But if you check out the original recommendation at the link below you will see that they were purchased with a 1.625% Japanese yen loan, soo those who levereage four times earn up to 28% in seven months. This shows how bonds purchased during distortiosns can bring excellent returns.

I have also liquidated the Japanese loan at this time. I believe that theyen is worth borrowing under 125, (I liquidated at about 128) but I am uncomfortable relying on further yen weakness in the world's tense economic atmosphere. My attitude is one of greatest conservatism right now and I will go into full details at the two upcoming investment courses in London and Copenhagen where I will speak this year. My recommendation is to stick with what you know! More about this in tomorrow's message!

Until then, good global investing!