Show wp ao sp at i AUM A ENric 1 l STAT STATEMENT E M E nt to THE mB CUSSES BONDS N PARK MASS while have leavo been film antl moderately in recent months ill tho trend in lond bond prices has been weaker it must list b i f how low ever that in bonds tho the maturity T ps as well as price must bo be given duo due consideration in ill determining yield government bonds bond government bonds are arc bought mostly by banks and in surane coat became tile the yield Is so small and they uie aie subject to taxation without benefit of any dividend credit private investors Invest ori as a rule do not make very heavy commitments in these issues when they do buy bovein mi mirits hunts rits they usually look for very short maturities selling around par Ilow however evor elderly people often buy certain maturities turi ties of government bonds which are selling at a discount and which the federal government will accept at par upon death for estate taxes your broker can give you a list of the special issues which have this privilege many investors buy government bond only in time of war or other national emergency as a patriotic duty but the large numbers who do wish governments primarily for safety or for liquidity usually buy the savings bonds series E and G most municipal and revenue bonds should be attractive for investors in high income brackets corporate bonds ordinarily business firms issuing corporate bonds look to the life insurance companies for support the life companies periodically figure when find and in what amounts they will need cash at a given future date to fulfill their underwriting obligations as indicated by actuarial tables their bond buying is pegged to these requirements life insurance companies are also heavy bond purchasers because the kind and number ol of stocks they can buy are restricted strict eted ed by law fire under 4 writers however are free to buy common stocks without restriction but in practice they hod sizable quantities 0 of high grade corporate bondi y au ali a rue rule corporate corp bonds should lip be avoided by tile the orill nory nary investor when inflation 13 14 on tile the because the money thus invested will buy less legs when the bonds come dye tile tho only corporate bonds I 1 recommend atillie moment for private I 1 iv estors are convertibles converti bles 11 with these you can have your cake ond and pat cut it too it 11 d deflation ii should hould come and acocks go down you can call forget the con convert wrt ible feature and insist on pay ment in cash it if inflation comes and stocks go up you boll can turn these bonds into stocks unfortunately how ever there are arc not many good convertible bond issues avail able most of these sell pt at quite a premium prices and outlook i during the past year the dow jones corporate bond average fluctuated from ft a low of in november 1057 1037 to a high of 91 in june IM at the present time this index Is 80 88 As to future price this depends almost wholly on the price of money and the trend of general business bufi lne it Is certainly not wise to buy bonds even ev the highest grade fr f r when hen your bank feels sure money rates will go higher Ilo however wever it Is a mistake to think that money rates alone will determine the trend of bond prices it is true that bond prices are not usually so quickly responsive to general business trends as are stocks but it is foolhardy to believe that bond prices alu not or cannot be affected by sharp changes in the over all ali business picture no what the tm prevailing interest rate 1 A final word of advice llo however wever attractive bonds bonda may seem to you dont build an investment reserve of lofte term maturity bonds longa long terms even those of the very highest quality are poor risks at any time A 1 rise in interest can wipe out it a number of years income on ran long term bond to stick to short term I 1 government good conVer convertibles converti tl bles es and tax continued on page 12 babson continued from page 9 exempts that you expect to hold to maturity before you invest your corporations money in bonds be sure you realize your corporation must pay 52 of any profit to the federal government there is no tax relief or credit as Is the case with dividends you receive on stocks before buying any bonds consult your banker who will give you hla his frank appraisal of interest rates and business trends before buying stocks consult an investment counselor any free advice about the stock or bond markets is usually worth just about what it costs you nothing not bing |