| Bonds have a good reputation as a safe | | | | Convertibles shone in 2009. For the entire year |
| investment. Stock is not considered as safe as | | | | total return was about 30%, depending on several |
| bonds. The main reason bonds are safer than | | | | factors. |
| stock is that in case of serious trouble the | | | | But a good investor does not rush out to buy |
| company or entity that issued both stock and | | | | convertibles because they were good in 2009. |
| bonds will pay off the bonds before they will pay | | | | Investing in what was good last year is often a |
| off the stock. Stock holders can be wiped out | | | | way to lose money. Economic facts and forces |
| completely in case of bankruptcy, but bond | | | | are rarely the same over a long stretch of time. |
| holders might get paid in whole or part. | | | | But whatever economic forces that were in play |
| On the other hand, if the company prospers, the | | | | in 2009, convertibles still deserve to be on |
| stock will rise and the stock holders will benefit | | | | investors' radar screens in other years. Combining |
| more than the bond holders. People who like the | | | | both safety and upside potential, as they do, they |
| excitement and unpredictability of stock say | | | | do not deserve blind dismissal. |
| investing in bonds is like kissing your sister. | | | | Buyers of convertibles do not typically buy the |
| The holder of a convertible bond gets paid in | | | | bonds themselves. There are several mutual |
| shares of the issuing company, rather than cash. | | | | funds and ETFs satisfy the needs of most |
| Regular bonds pay in cash. Regular bonds are less | | | | convertible investors. Like any other investment, |
| volatile than convertibles. | | | | do lots of good research before plunking down |
| Even with their gray and boring reputation figures | | | | your money. It might turn out you make money |
| don't lie and a certain form of bond investing was | | | | after reading this note. |
| one of the investment winners for the year 2009. | | | | |