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Posted by W on July 23, 2009, 7:04 pm
FINRA shows intra-day trade data for different CUSIPs, marking each trade as
reported by the seller, the buyer, or dealer-to-dealer. I included a
sample out of a bond that traded today between $89.4 and $91.1 below my
signature. When I call my brokers and I get quotes of $94 to $95.8.
So it's clearly frustrating that even when the market has a lot of liquidity
on a given day the brokers give really lousy quotes. At end of day with
the bond trading at $89.50, someone quoting me $95.8 is stealing 6.5% of my
equity as their commission. It's just not acceptable. There has to be a
better way.
If you want better price executions on bonds, who are the brokers who are
most likely to give that to you?
Is there a better way to trade these? As a retail investor, what
strategies can you employ?
If your account gets to a certain size (and what is that size?) do you get
additional options for better pricing?
--
W
07/23/2009
16:27:19 89.500 14.481 5K @ run calculations
07/23/2009
16:27:19 89.600 14.426 5K @ (c) run calculations
07/23/2009
16:21:18 89.500 14.481 10K @ run calculations
07/23/2009
16:21:18 89.400 14.536 10K @ run calculations
07/23/2009
16:21:00 89.500 14.481 10K @ run calculations
07/23/2009
15:16:02 90.000 14.207 10K @ run calculations
07/23/2009
15:11:00 89.500 14.481 10K @ run calculations
07/23/2009
15:10:00 90.000 14.207 10K @ run calculations
07/23/2009
11:47:13 91.100 13.613 5K @ (c) run calculations
07/23/2009
11:47:13 91.100 13.613 5K @ (c) run calculations
07/23/2009
11:47:13 91.100 13.613 5K @ (c) run calculations
07/23/2009
11:47:13 91.100 13.613 5K @ (c) run calculations
07/23/2009
11:47:13 91.100 13.613 5K @ (c) run calculations
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Posted by dapperdobbs on July 25, 2009, 11:23 am
[snip for brevity]
> So it's clearly frustrating that even when the market has a lot of liquidity
> on a given day the brokers give really lousy quotes. At end of day with
> the bond trading at $89.50, someone quoting me $95.8 is stealing 6.5% of my
> equity as their commission.
[snip]
First, have you told your broker you have quotes at $89.50 and asked
him why he is quoting you $95.80?
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Posted by dapperdobbs on July 25, 2009, 10:54 pm
[snip]
>
> Does anyone have any insights on how to get around this?
> --
> W
[snip]
>
> Does anyone have any insights on how to get around this?
> --
> W
Thanks - that's informative. In the 1990's I had some munis
neighboring CA's temporarily infamous Orange County. The bid was 75
and I tried to buy. My broker told me the asked was 97 and "we have no
inventory." By contrast, in the 1980's munis were retail-friendly
(always a prospectus, reliable bid/ask, etc,). Two years ago I had to
special request prospectii on variable rate bonds, with limited
success.
Concentrations of money are the clowns who crash markets and make the
environment dangerous (e.g. the recent 'financial crisis'). My take on
it is: individuals have become literally "convinced" investing is too
complicated, and hand over money to "funds" (managers, "private
equity," banks, etc.). My concern is that, as goes with history,
apathy is leading to destruction of free markets.
The SEC handles stocks - I do not know if they handle bonds. IMO the
issues here are very serious and should be addressed. Even in "private
placements" advisors and underwriters (read, "investment banks") walk
away with millions in their pockets. (Btw, the situation with IPO's is
much worse, costing issuers half their capital through what I call
"gifting" to the tiny minority of concentrated funds.)
It's a big topic and requires work. I will check with my broker, find
the regulatory agency, and inquire, but I fear a good job will require
tracing back the regulations to those which allowed the changes, and
my guess - it is when Glass-Stegall was rescinded (over several years
in the 1990's). IMO, we've been attacked by investment bankers, and we
have lost.
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