three kinds of ladies; a tutorial on bonds as an investment for everyone/ draft 1

three kinds of ladies; a tutorial on bonds as an investment for everyone/ draft 1

fiction
Edward w Pritchard

Merry Christmas to my nephew Steve


reader:
JNK is the market symbol for junk, a bond fund ETF, go to yahoo finance, type in JNK where it says stock symbol and review the chart for 2013.

start:

part 1; junk bonds as an investment
by Professor Ickes
Gifford on line university
finance 101


Wake up students bond investing is sexy:  Junk bonds as an investment, by using the ETF "JNK".
We will tackle treasuries and corporate bonds next class period.


JNK will fool a man every time. In time an investor always catches her sneaking home at 9AM hung over and disheveled of hair, with a torn blouse and her skirt on backwards; then he realizes poor old junk is just a trashy girl.

 JNK is common and tries to hide her fallen nature by disguising her real self by offering higher yields and more special features than other self respecting ladies like corporate bonds or government treasuries, who are proper but a might predictable and boring. JNK is a fallen angel who never should be discussed with Mothers, widows or orphans either.

JNK is really a colloquialism, just plain trash, she's junk the debt instruments of company's bonds, issued by American businesses that have gotten in trouble and lost their reputations. No self respecting church pension fund or school system should invest in JNK or any bond ETF for that matter. We will discuss ETF's later.

Still there is something enticing about junk bonds. Whole Countries who have lost their good standing can issue high yield junk bonds. Greek debt in 2010, winking looking back across their shoulder an investment for those so inclined and even the shy Portuguese in 2011 shrugging their collective shoulders and demurely lowering their dark eyes some times must sell junk bonds on the world markets.

Michael Milken made a fortune and changed the way American investors valued junk bonds and changed the modern world. Now Milken is barred from working on wall street for life. Milken was called a gangster and racketeer and instead now does humanitarian work. He's a member of the admired rich and famous now, a revered philanthropist.  Black and Scholes won a Nobel prize for telling traders how to definitely price bonds. Later Scholes got bitten in the butt by their financial model and plunged the world into financial meltdown a couple of times.

This author met Myron Scholes; he was smart and polite but not especially contrite for all the mischief he helped bring about.

Don't understand bond ETF's, bond derivatives and futures and the Black Sholes pricing model? Rest assured someday someone who does understand all that, working at a Big bank, will call you and will patiently explain why the fixed rate on your mortgage just jumped up 300 basis points because of a pending default in Portugal. He might offer to make it easier for you to understand interest rate fluctuations by using the Black Scholes equation. It's simple really;




disclaimer by author;
if JNK is a real lady, alas I haven't met her and don't know her.