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Business Cycle Bond Stock Trades

12 may 2008 - Features - Editor

Every bond is not from a municipality. Profit-making corporations also use the bond route to meet fund needs. A bond is almost as liquid as stock. You can buy and sell a bond just like a stock pick. It comes with a kind of fixed dividend. Your risk is less than with a stock. That is why a bond yields less than stock from the same corporation.

We do not mean to insult you with a stock and bond primer. It is just that current market conditions are so uncertain. It seems to be appropriate to adjust portfolios. Trade some stocks for bonds. Corporations use long phrases for their bonds. A fixed income smells the same with any name. When is a bond of a profit-making corporation appropriate?

1. The company has heritage value. It is part of the American Dream.
2. Yesterday’s star has fallen on hard times. However, you want to remain a part of the company - for old time’s sake. Perhaps it will revive one day.
3. The company has vast resources in Washington. Stocks could be fire sold.
4. You need regular checks, even if they are for smaller amounts than you would like.
5. You do not think much of government managed budgets and funds.
6. You are not sure of any industry or sector.
7. Liquidity matters: you may have to turn some part of your portfolio in to cash.
8. You think the stimulus package will yield fragile and reversible results.

Bulls have raised nouveau stock investors on heady stuff. It is time to bond at Ground Zero on Main Street.


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