[geeks] (Almost nothing to do with )Carley Fiorina

[Lionel Peterson]

--- "Greg A. Woods" <woods at weird.com> wrote:
> > You really seem to be talking about bonds, not stocks...
> 
> I suppose it depends on how you define each term.  If a bond buys
> stock in a company then what is it?  (yes I'm purposefully fuzzying
> up the terms here -- I don't want to discuss these issues within the
> confines of the current terms of reference used by the financial
> community :-)

A bond is a financial instrument that allows an individual to assume
some risk with an investment, and to be rewarded for that risk with a
"guaranteed" rate of return. For example, let's say I make cars, adn I
need to open anew plant to manufacture hubcaps for my cars. This
factory will cost, say, $100 Million dollars (it is a big plant!). Now,
I could withdraw the money from the bank (if I have it), I could get a
bank to assemble a consortium of banks to loan me the money at, say 9%
(made up number), or I could sell bonds, offering to pay 6.5% - in
effect become my own bank.

IMHO, bonds are a fine investment, and an important part of your
balanced portfolio. Some bonds are backed by the fullfaith of the US
government - the same folks that print the greenbacks - if they go
under, greenbacks are worthless, so they are a safe bet...


=====
Lionel

"Nothing would please me more than being able to hire ten
programmers and deluge the hobby market with good software"
Bill Gates, in "An OpenLetter to Hobbyists" dated February 3, 1976
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