Professor Elam

Those automotive Whiz Kids Click and Clack used to pontificate that they were going to offer a Capital Depreciation Fund, guaranteed for a loss if that is what one wanted, it would so simplify portfolio management.  Well wouldn’t you know it, farce become reality as Bear Stearns has done just that. BS (hmm, interesting abbreviation don’t you think?) waited until this blog had warned repeatedly about the impending real estate collapse. Then they started a fund that would invest in bonds backed by sub prime mortgages. Well if you are a regular reader of the blog, you know what has been happening, collapse, that’s what. Now with the fund down over 20% the managers have suspended redemptions to avoid taking further losses on having to sell bonds at losses to match the redemptions.  Yep you read that right, as an investor, you can’t get out, rather like Social Security come to think of it.

So, once again, the study of finance and accounting along with some basic economics, always our theme here, can really pay off.