How Does The Chrysler Bankruptcy Impact Your Mutual Fund?
What impact does the Chrysler bankruptcy have on regular investors who hold bond funds? Most likely little to none, it turns out. Consumer Reports points out that most mutual funds have been avoiding Chrylser, GM, and Ford debt for years now—and if your fund does include Chrysler, it's probably a tiny portion of your overall investment.
"Chrysler's bankrupt. What's the impact on your bond fund?" [ConsumerReports]
(Photo: dok1)
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Screw you, a lot of the hedge funds bought up Chrysler debt at 30 cents on the dollar. And they are gonna get screwed. Good for them. And good for you if you invest in these weasels that helped cause the financial crisis. I never knew Consumer MisReports was a financial barometer, besides a toaster tester.
Ricardo Montalbon would never let this happen. The Cordova has Corinthian leather, you know.
Since junk bonds fund can yield more than a safer or low risk tolerance fund some will be hurt ( formely known as B- - - or what ever which actually replaced the junk bond because of the 1980s Micheal Milken ) .
Some of the high yield or junk bond funds actually have had some good yields . I've seen some pay almost 2% per month when they do/did pay .
The news of whole of auto industry and the big giants being in trouble was in public domain for a while and hence its expectd that most of fund managers would have stayed out of these companies.
It's certainly doing nice things to my ford stock.
I can appreciate the passion and your feelings towards this issue. I don't know exactly how I feel;
On the one hand these corporations that operate with no liquidity or minimum reserves and/or are debt based need to be taught a better way just like the folks who bought houses on 120% loan to value loans with zero down, balloons, etc.
The car companies and sadly many other companies are no different. Spending money like drunken congressmen, debt is treated as "a tool" (what a joke), and little to no cash reserves are to be found. A 3-5% down-turn in sales results in a panicked 20% reduction in work force and the spiral begins.
On the other hand I have to take issue with Government firing CEOs (Shareholders' job) or publicly chastising someone who enters a legit business transaction at the behest of the other party. If I loan you $500 dollars on reasonable terms and you sign a contract it is your legal (perhaps moral?) obligation to pay me back. I don't need someone from the Blue Team or the Read Team making me the scapegoat for just wanting my loan paid back and/or having my name mud for not wanting to take a loss on the deal.
These Hedges have an obligation to their Clients/Investors/Regular_Folks_Who_Own_Them to get the job done. Imagine making Lowe's a dirty word if they didn't want to sell widgets at 50% off just because the Obamassiah said so? That proposed action and subsequent backlash would not benefit the Lowe's shareholders/investors who at the end of the day are folks just like us.
It is all a big mess regardless of your tendencies towards capitalism or what team you support (Red/Blue or neither in my case). Some behavior modifications for both business and consumer are in order. One of the biggest ones for me is stop expecting the government to be your savior. Their track record on that subject leaves quite a bit to be desired.
Oh, those terrible speculators, hedge funds, vulture funds invested in these bonds. Tell, the messiah, Obama, that speculators are the lubrication to our financial system. Without those willing to make sizable investments in risky credit securities our whole system will not function correctly. These people use investors money, not taxpayer funded welfare, to make a risk adjusted return. They are a much needed part of a capitalist system that has created enormous wealth and innovation in the last 200 years. No other economic system does this. None.
This is how it will start. The UAW and the government now own a car company. A year from now, it will still be in the sh*tter since nobody will want to buy a Chrysler P.O.S. so they'll go crying to Obama who will find a way to declare all non-Chrysler, non-union made vehicles illegal on some trumped up bullsh*t like they violate arbitrary CAFE standards or they emit too much CO2 or some damn thing and the lowly consumer will get screwed. In other words: BOHICA! (bend over. here it comes again.)
jamar0303 : you are right but no other countries have an economic system that can crash so spetacularly .
I'd rather have an economic system that crashes or corrects itself on occassion rather than have a commie regulated system where the only choice of employment will be which branch government and you only have one brand to choose from at the supermarket .
@u1itn0w2day: Other countries probably beg to differ. The US economy crashing has brought down most of Europe and some of Asia too. I'm sure they wish they were still up and running.
Your problem is that you jump to the most far-fetched conclusions. Regulation =! communism but logic is apparently in short supply here.
That's great, last thing we need is Chrysler doing damage from the grave.