Re: Finance Query

[Doug Henwood]

Rob Schaap wrote:

>Briefingscom has beens saying, in a sad tone, that Warren Buffett has been
>buying zero coupons.  What are those, then?

Bonds that pay interest only at maturity. Instead of getting $25 
twice a year on a $1,000 bond, you buy it at, say, $230, and get your 
$1,000 at maturity. Since you have to pay tax on the imputed interest 
every year, even though you're not getting any cash, it only makes 
sense in a tax-sheltered retirement account (or if you're a 
tax-exempt pension fund). The charm of zeroes is that the price moves 
a lot more than a coupon bond, so Buffett must be expecting a good 
drop in interest rates.

>And I see the great Wall St charge has come to a halt after all of 
>five days ...

Bad numbers on initial claims for unemployment insurance. Instead of 
reading weakness as good news, the markets are now reading it as bad 
news; worries that profits will suck are now outweighing enthusiasm 
over future Fed easing. Today at least.

Doug