Conference nyoss1::market_investing

    You might want to look at preferreds associated with very solid
    companies.  
    
    One example is : Barclay Bank (of England) which has ADRs on the NYSE
                     yielding about over 10% (but read on). 
    
     I've been following this one for two years. Their are several
    preferreds, and the one that pays 2.78 per year, has been very "steady"
    in last 18 months. It used to be between 25 and 26.5 but recently moved
    over 27. 
    
    Here's the deal on foreign investments of this type:
    
       You don't get the full 2.78 per share (which was close to 11% yield at
    about 25.25 a share when I got in.)  The country reduces your dividend
    check by 15% as a Foreign Tax. You however, still get 9.5% and you get
    to take a deduction on your income taxes for the Foreign Tax paid. So
    your net yield is better than 9.5%. 
    
    I cannot vouch for the stability of Barclay bank, but it is the
    larget English bank, and the 19th largest in the world (Standard &
    Poors).  There is obviously some risk; not the least of which is that
    the London Times is not convenient to get at daily. (I got involved
    as it was recommended for a "Widow's" account by a major Brokerage house.)
    
    Perhaps someone knowledgable about this particular bank would care to 
    comment on its stock price/stability.
    
    I suspect other noters will be aware of other issues of this nature,
    (preferably US companies).
    
    Jerry

> Does anyone have ideas for how to obtain a better than L-T CD rate without
> any fluctuation of principal?  (without assuming tremendous risk)    
    
    Partake in the stock plan but sell at the end of each six month period.
    
    Prepay any loan you have who's interest rate is greater than the L-T CD
    rate.  (Home mortgage, credit card, car loan).
    
    There's a bond out there with whatever interest rate you want.  As the
    rate goes up, so does the risk.  
    
                            

    
    
    	Consider a short term Bond Fund. I've been in the Scudder Short
    Term Bond fund for a little over a year. There is very minimal price 
    fluctuation with this fund. The price has never flucutated more than a 
    few cents in the negative direction. It has also appreciated about 
    25� a share over the last 16 months. The average yield has been over
    10% in that time, but recently has been down closer to 8-9% area.
    You also get check writing. 
    John 

    I've been considering the Scudder Short Term Bond Fund for some CDs I
    have coming due. I have one apprehension. .3 says that there is minimal
    price fluctuation, with the price never going down more than a few
    cents and then says it has also appreciated about $.25 a share over
    the last 16 months. Is that $.25 appreciation due to falling interest
    rates? If I buy now, what happens to the share price when rates go up?
    
    Dick

    Bonds are odd beasts since they move in the opposite direction of
    interest rates.  I'm pretty sure this is how they work.

    When interest rates fall, the price of a bond increases, but since
    the interest payment is fixed when issued, they have a lower yield.

    When the interest rates rise, the price of a bond falls, but since
    the interest payment is fixed when issued, the have a higher yield.

    Martin

    
    
    	The Fund invests in Short term maturities, so chances are as
    rates fluctuate the secuties are, or have already matured. Kiplingers 
    had a good article a few months back on 'investing in 92', they gave 
    a more thourogh explanation of this fund and others like it's,
    strategy.
    
    John 

    Thanks for the ideas guys, but everything mentioned does involve
    a little principal fluctuation - although very slight in the
    examples mentioned.

    I guess other than money market funds and CDs, there aren't
    many investment options that maintain a constant principal value.

>    I guess other than money market funds and CDs, there aren't
>    many investment options that maintain a constant principal value.
    
    MMFs maintain a constant principal value by varying the rate of return.
    CDs maintain a constant principal value by being illiquid.
    
    If you want liquidity you *MUST* accept a market valuation mechanism,
    which means either lowering principal value or lowering the yield.
    
    Stated another way, if higher yields become available elsewhere, why
    should you expect to be able to sell something for the same price you
    paid at purchase?  It's clearly less competitive now than when purchased.
    
      John

    
>    MMFs maintain a constant principal value by varying the rate of return.
>    CDs maintain a constant principal value by being illiquid.
    
    Yes, I agree.
    One last question though....how is it that insurance GICs yield
    roughly 8% while providing a stable principal value?
  
    (By the way, believe it or not, I'm an active stock trader and
     would never buy a CD - but I'm asking because it seemed curious
     that in a world of multiple investment options that there are only
     2 categories (MMFs and CDs) which promise constant principal value)

    
    RE:     One last question though....how is it that insurance GICs yield
    roughly 8% while providing a stable principal value?
    
    
    GICs :Because they are mostly repackaging of 
    junk bonds at 12% - 14% and higher. The
    insurance companies keeps 6% for the risk of offering you stability. 
    Everything works fine until (if) the bonds default. Then you find out
    the "guaranteed" doesn't mean anything. The actual contract doesn't 
    guarantee preservation of principal. But by bundling lots of bonds the 
    company spreads the risk. Some of the 6% would go to cover a loss, if
    it happened. 
    
    Equitable Life got into a lot of trouble by selling ten year GICS 
    at 14 - 16% in the early 80s. Bonds and mortgages 
    in the GICS did default and it cost Equitable a lot to continue 
    to make the payments. 

.10>    GICs :Because they are mostly repackaging of 
>       junk bonds at 12% - 14% and higher.

The equation of GICs and junk bonds was offered in INVESTING, and as I 
remember the discussion, was refuted in general.  Some GICs are based on
junk, the majority are not.

.9>    One last question though....how is it that insurance GICs yield
>      roughly 8% while providing a stable principal value?

You might check the current GIC rates.  I suspect they have come down a bit.
The non-junk 1 year GICs are basically packages of 1 year instruments (see 
below) and the last time I checked they had similar rates.

.9>     that in a world of multiple investment options that there are only
>       2 categories (MMFs and CDs) which promise constant principal value)

I suspect this is just an artifact of the market.  There are actually many
instruments which promise constant principal value, with various combinations
of risk, rate, denomination, liquidity and convenience.  In addition to 
those mentioned so far, you could include Treasury bills and notes, savings
accounts, US Savings Bonds, Eurodollar certificates of deposit, bank money 
market deposit accounts, commercial paper, short term notes and expiring bonds.

MMFs, MMDAs and CDs dominate the small investor market because they offer a
combination of risk, rate, denomination, liquidity and convenience that the
average small investor appreciates.

Any investor who wished to could take the trouble to create a custom 
package of instruments from the market above.

See....I knew something was missing.

Fixed annuities.  Although I know stocks & bonds, I'm not 
very familiar with fixed annuities.
My current understanding is that they are a lot like CDs except
that 
1) they pay higher interest rates  (a 1yr annuity pays 6.25% vs. 4.x% for CD)
2) the principal is not guaranteed by FDIC or anyone
3) fixed annuities are only sold by insurance companies ?

I'm trying to line up a good fixed annuity for someone.
I'd like to get one through NY Life or Northwestern Mutual (in my opinion
the 2 most solid insurance companies in the US).

It's a longshot, but...does anyone know how to contact either of those
companies to obtain a fixed (taxable) annuity?   Or have anything to
add about these investment instruments?                 Thanks.

  I hate to suggest the obvious but...  They are listed in my telephone
book.  They are probably listed in yours or the one for your nearest city.