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G.I.C. refugee.


Here is a conversation I had on the way to the lunch room today:

Q:  Hey, Doug. Are Bank of America bonds safe?

Doug: Huh? (My spidey senses are tingling).

Q: My broker wants me to buy their bonds.

Doug: Why?

Q: They pay 5%

Doug: Ah.

Pause. Breathe.

Doug: What do you mean by ‘safe’?

Q: Well, you know, are the U.S. Banks going to go down?

Doug: Geez.

Pause. Breathe.

Doug: Well, they won’t be like buying a Government of Canada bond, no. Are you worried about the U.S. Banks?

Q: Yes.

Doug: Why would you consider buying an investment that worries you?

Q: Because it pays 5%.

Doug: Ah.

Pause. Breathe.

Doug: Is it an I.P.O.? (Initial Public Offering).

Q: Huh?

Doug: How does your broker get paid? By commission?

Q: Hmm.

Doug: Did your broker do a K.Y.C? (Know Your Client).

Q: Yes.

Doug: What does your K.Y.C. say your risk tolerance is?

Q: Hmm.

Pause. Breathe.

Q: I have to decide by 3pm today.

Doug: Ah. Classic ‘sense of urgency’ sales technique.

Pause. Breathe.

Doug: Have you ever bought a bond before?

Q: No, just GIC’s.

Doug: Hmm.

Pause. No breath.

Q: Ok, Thanks.

Doug: Anytime!


Next time?


Doug Cronk CFA is Manager, Investments for a Canadian Pension Plan

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