The Tycoon Report

FAT YIELD: Shusssssh ... Do you want to know a secret?

I would like to tell all of you wonderful people that I give an oath to you right here and right now.

I solemnly swear that I will do my very best to provide you with the very best bond recommendations possible. I WILL NOT be right 100% of the time, but I will do my best to come as close to that as possible. What I aim to accomplish is to give you fixed income ideas to add to your portfolio that have the highest yield possible with the least amount of risk.

But risk and reward go hand and hand, so you have to be willing to assume SOME risk to get the higher returns. What I'll do is take my education and experience and give you the ideas that I believe the marketplace has incorrectly assessed.

Let me start by showing you a way to be profitable and patriotic at the same time.

You know, of course, that American car companies have been in a great deal of trouble lately, namely Ford Motor Company and General Motors. And I agree with the beating that their stocks have taken recently, but I believe that General Motors has been unfairly cast as Ford’s evil twin. In other words, I believe that GM is a pretty darn good company that is going through some bumps in the road.

Let me explain:

• Did you know that the world’s population is about 6.5 billion people?
• Did you know that the population of the United States is only about 300 million people, and that the populations of China and India are approximately 1.3 and 1.1 BILLION respectively?
• Did you know that in 2004, GM and its manufacturing operations in mainland China sold a record 492,014 vehicles, an increase of 27.2% from the previous year?
• Market share was 9.3% in 2004, compared with 8.5% in 2003.
• Did you know that in China, auto sales have jumped over 70% recently?

What I am telling you, ladies and gentlemen, is that GM still has MANY more potential customers out there, and they're going after these new markets aggressively!

GM may be having problems here in the U.S. and parts of Europe, but these problems will be temporary, and over the long haul GM cannot be taken lightly. The so-called best analysts on the street disagree as to whether to upgrade or downgrade GM. I am telling you that you must OWN or LOAN GM one way or another. GM wants to borrow money from you, so you may want to be patriotic and make some money at the same time.

Consider the GM bond with the symbol GM.HB. It pays a coupon of 8.375% and matures in 2033. Its price, by the time you read this, should be around 70 and it is NOT callable; that means that its yield is around 12%.

More specifically, the information is:

SYMBOL: GM.HB ISSUE: GM 8.375 (07/15/33) CUSIP: 370442BT1

This bond is rated B1 and B by Moody’s and S&P respectively.

Don’t be afraid of this.

If you're not as familiar with bonds as you may be with stocks, looking up a bond is just as simple. You can get a quote and see more information for this bond as well as others by simply going to Yahoo! Finance or any other stock look-up site.

In the case of Yahoo!, after you are in the finance section, just scroll down and click on the bonds link. There, you'll see a search area that says “Find Bonds by Name.” To find this General Motors bond, just type in “General Mtrs Corp” (obviously shorthand for the full company’s name. There will be several GM bonds listed, so look for the one that matures on 15-Jul-2033 and has a coupon that says 8.375.

After you have that information you would call up your broker just as you do with a stock and tell him/her that you want to buy this bond and he/she will quote you the current price and other information on the bond.

Keep a lookout for more bond ideas and resources in the future ... STAY TUNED. 

As for the GM bond, I believe that the return that you get for this debt is more than the risk that it carries. This play will either be a trade or a hold.