Wednesday, March 07, 2007

Interesting Fact of the Day


At 3/07/2007 12:02 PM, Anonymous Walt G. said...

If globalization is creating so much profit for American companies today, why are investments in them so much more riskier than in the past?

Doesn't increased profits translate into less risk and not more?

What am I missing here?

At 3/07/2007 1:05 PM, Blogger Mark J. Perry said...

The bond market used to be only available to investment grade firms, and was closed to speculative grade firms. In the 1980s, bond traders like Michael Milkin and firms like Drexel opened up the bond market to small and medium size firms in new industries, like IT, providing new sources of financing to firms like Dell, Intel, Microsoft, Oracle, etc.

At 3/07/2007 2:15 PM, Anonymous Walt G. said...

Thanks for the information.

It seems like the chart begs for another column and is ambiguous in its present form.

Maybe the amount of dollars invested in bonds adjusted for inflation for the two years should be shown for clarification? If the "pie" got tremendously bigger, then it would be obvious the new investment was probably riskier given the ratio changes between the two years.


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