X-Message-Number: 1837
Date: Sat, 27 Feb 93 15:19:38 CST
From: Brian Wowk <>
Subject: CRYONICS Bonds vs. Equities

>Michael Riskin:
 
>      If you are a professional investment counselor, your first duty is
> to listen to the needs of your counselees. For example, it is well known
> that older clients, dependent on current income, and intolerant of short
> term losses often chose bonds over equities. Alcor is in a similiar
> position where our current needs are income, combined with an unwillingnes
> to place membership money in positions where nearer term losses of only
> 10% are possible, and unacceptable. 
 
        This may be true of the Jones Endowment, but certainly not the 
Patient Care Fund.  I think the Endowment should be managed for income, 
but the PCF should be managed for conservative growth with a strong 
internationally-diversified equities component.
 
> You indicated that US bonds were themself unsafe in that
> they could be defaulted. I am not a professional researcher or
> financial advisor....so could you advise me as to the last time the
> US government failed to pay its bond indebtedness, and which bonds you
> believe we should stay away from because of factual reasons to fear
> their safety?
 
        I can't imagine the government ever literally defaulting on 
bonds; they will always inflate the currency enough to "meet" all their 
obligations.  Of course, the real value of bonds may be so decimated by 
this process that they might as well default.  Because of this small 
(but very real) possibility, and because bonds are now at historic highs 
I think US bonds (corporate or government) are a very bad long-term 
investment.  They should certainly not be bought with a buy-and-hold 
intent.
 
                                                      --- Brian Wowk     

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