Saturday, April 27, 2013

Preservation of Principle


7.50000% 11/15/2024



Coupon 7.500
Maturity Date 11/15/2024
Moody's Rating AAA
S&P Rating --
Call Protection YES
Bond Type Treasury
Interest Accrual Date 08/15/1994

Original Issuance



Issue Date 08/11/1994
Dated Date 08/15/1994
First Coupon Date 11/15/1994
Next Coupon --
Last Coupon 05/15/2024
Workout Date 11/15/2024
Issue Price --

Coupon Features

Coupon Type FIXED
Current Rate Effective Date 08/11/1994

Wow.  1994 wasn't all that long ago.  This 30 year bond would have cost you 100 then.  Now, with only 11 years left in the term you would have to pay 158.  So you'll get 11 payments of 7.5 and then 100 back in the year 2024.  No thanks.

Anyway, the lesson?  What goes up can come down.  USTs are not preservation of principal.  

 Yes, the correct usage is principal and the title of this post uses principle.  Think about the principles of any investment advisor recommending "safe as treasuries." 

1 comment:

W.C. Varones said...

Zimbabwe Ben is an angry man.

Stupid bond holders must be sacrificed.