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Bill Zastrow is chief executive of FileMark Corp., a Massachusetts software company. He is a single father of four children: an 18-year-old son who just finished his first year of college, a 17-year-old daughter who just graduated from high school and two preteens who live at home.

Mr. Zastrow has more than 30 years’ experience investing in bonds and purchased $240,000 of GM’s debt before they were declared “junk” bonds by Wall Street ratings agencies. He went in with his eyes open, he said. He thought he was limiting his risk by investing in bonds instead of stocks.

“I knew what I was doing, and I knew the risks,” Mr. Zastrow said. “I’d always been assured that in a bankruptcy, the bondholders come first.

“I thought about selling, but it was paying good interest and GM didn’t really get into trouble until just last year.”

The income went into a trust for his children’s education. Because of GM’s bankruptcy, the college money will have to come from his individual retirement account instead.

“They robbed me out of five years of work,” Mr. Zastrow said. “I will have to work another five years because of this development.”


William Nast
Family: Wife and five children
Date of purchase: 2006
Percent of portfolio that were GM bonds at purchase: Less than 10 percent
Percent of portfolio now: Less than 10 percent
Reason for purchase: Low-risk investment
Reason for holding after downgraded to junk status in 2005: “I took my broker’s advice.”
Original investment goal: Retirement

Three years ago, William Nast bought GM bonds to fund his retirement and to “generate wealth” — as investment advisers like to say — so that he could pass on money to his five children.

Now those lofty words look empty. “My kids will suffer because they would have benefited from the bonds,” Mr. Nast said. “When dividing money up over five children, a decent amount doesn’t look like much anymore.”

Mr. Nast, who considered his investment conservative, said the bondholders he knows were making investments for similarly altruistic reasons.

“Most people wanted some retirement money or money to leave their children,” he said. “But the media is painting us out to be greedy and rich.”

When Mr. Nast purchased the bonds in 2006, analysts were worrying about GM’s inefficiencies and underfunded pension plans. But Mr. Nast took his broker’s advice and bought the bonds anyway.

“He told me at the time that GM would never go broke,” Mr. Nast said.

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