Mutual Funds for the Utterly Confused

First, corporate bonds, a mechanism that allows companies to raise needed money for capital expenditures such as new plants and buildings, research and development and even to fund mergers and acquisitions. Corporate bondholders receive the “first-in-line” stature that allows them to receive something, perhaps not much if you consider some of the enormous failures of financial institutions recently, but some recompense for their investment.

Preferred shareholders are next, followed by the common shareholder who benefits when things are good and can lose everything when they are not. And after discussing par and discount, premium, short, intermediate and long, taxes, yields and economic influences on these fixed income investments, chapter seven focused on these type of bonds and the funds that hold them.

But Mr. Johnson, or Junior as he was professionally known provides us with a unique way of looking at the investment.

He took advantage of what should have been obvious to every other driver and exploited it to his benefit. This former bootlegger, who developed that action-movie turn we are all so familiar with, the complete reversal, a one-eighty, at almost full-speed, took his understanding of not only how cars work but how they interact with one another as they race for the finish line, invented something much more prosperous: the draft.

He knew that of he followed closely enough to the car in front of hi, the aerodynamics of the maneuver would make his car almost free of wind resistance, something that the car in front must conquer with horsepower. Corporate bond funds offer great things for those who can take advantage of what they have to offer. But a very clear understanding of that potential is needed.

In a side note: Johnson, who was convicted of bootlegging was eventually convicted and then, quite interestingly, pardoned by Ronald Reagan. This allowed him to once again obtain a passport and to vote. Johnson sells food now after retiring from racing in 1966.