On the Money From the December 5, 2008 print edition Ralph Waldo Emerson once said, “Can anybody remember when the times were not hard and money not scarce?” That time certainly isn’t today. Money is scarcer than ever, and it seems every new financial decision is harder than the last. In the face of difficult decisions, it’s natural to search for additional and more meaningful information. Good decisions flow from good, truthful and complete information. For investors, the search for good information begins with the Securities and Exchange Commission. Most individual investors access company information using third-party services, such as Yahoo Finance, Bloomberg, etc., rather than the SEC’s Edgar system. The Edgar system presents massive amounts of data, but isn’t an effective distiller of information. Therefore,...
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On the Money From the October 3, 2008 print edition When raising cash for a new company, there are basically two things that a firm can do: Borrow money from a lender in exchange for a promise to pay later. Or, accept money in exchange for stock. Debt holders receive a promise to repay in cash. Equity holders become part-owners of the firm. When these two methods are combined, the arrangement becomes a “convertible debt.” A convertible debt (or convertible debenture) is a type of loan that can be converted into shares of stock rather than be repaid in cash, usually at some predetermined discount rate. The investor in the new company then has the best of both worlds – a promise of specific cash...
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On the Money From the August 1, 2008 print edition With the Democratic national convention just a few weeks away, we move into that period of time occurring every four years where political slogans and sound bites rain down-creating the proverbial great flood of ancient times. Insistent campaign promises, ranging from thoughtful to ridiculous will saturate our eyes and ears over the next several months. While much of the political process is the zealous gathering of support through emotional appeal, there is in fact some quantitative basis underneath these rallying battle cries. Here’s a summary look at the theoretical relationships between government and money. The government has two major tools for achieving economic health: fiscal policy, through which it determines the appropriate level of taxes and...
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On the Money From the June 6, 2008 print edition Economic conditions remain challenging. Fuel prices are climbing to unprecedented heights, the number of home foreclosures is setting records, and the financial markets have more volatility than ever. As consumers and business owners work to survive the assault on predictability, it’s appealing to take on additional debt, with the idea that current conditions are temporary. Unfortunately, purveyors of illegal money schemes know this as well. A colloquial phrase says, “I’ll whip them into a frenzy.” Obviously, in a frenzy, people are less likely to make considered decisions. That opens the door to fraud schemes, especially those that involve “borrowing” money on a promise of relief or gain. It’s not long before the victims have more...
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