Originally Posted by
GTM 3442
Indeed. Companies do diversify their source of funds, with equity, bank funding, and bonds.
"Just query why your local banks only lend mortgages on residential properties instead of lending to small businesses?"
Banks do lend to small businesses, but they want security for the loan, and for many if not most small businesses, the only security that is available is either a personal guarantee or a mortgage over (residential) property - usually the small business-owner's house. I suspect that this is simply a result of the retail banks making most of their money from residential property loans, and having little understanding of anything else.
"A reason why Buffet isn't a big fan of owning junk bonds?"
I'm not a fan of junk bonds either. After all, what would it take for an Apple to turn into a Blackberry for example? I run a portfolio of directly held New Zealand bonds, bought at time of issue, to be held to maturity, average credit rating of A. The income goes to fund other investments - bond income provided the funding to buy into the 2013/2014 New Zealand electricity company floats.
". . . a local Christchurch firm Jarden. . .
They're actually a diversified national financial services company, ex First NZ Capital ex Credit Suisse/First Boston. Last time I talked to them (2015?), the 1% annual account management fee came down to well under 0.5%. I suspect that it depends on what you want from them.
Out of idle curiosity, when I own shares and bonds in New Zealand, these are held at the registry in my name, without any third party custodial arrangements. Is this the case in the US/Canada, or are shareholdings/bonds held by the broker - with or without DIMS?
"Bonds have their place... but in Warren Buffet's books (and he's getting near 90 years old), don't waste your time unless you're the person that can name the terms of the bond rate with warrants and options
Can you explain what this actually means? The "warrants/options" makes no sense to me in the context of holding individual bonds.
Thanks for the posts, I'm learning a lot.