THE FINANCE GHOST: Unpack the capital stack
In this part of the macroeconomic cycle, you need to do more research than ever before on your single stock positions
28 March 2024 - 05:00
What distinguishes equities from fixed income opportunities? The clue is in the word “fixed” and what that means for the return profile of the investment. A fixed income investment (like a government bond, or even a bank lending to a corporate) has a known return if held to maturity and if there is no credit default event. If sold along the way, the capital value will vary based on prevailing market returns compared with the fixed income component of the instrument.
That sounds terribly complicated, doesn’t it? Thankfully, there’s an easier way to understand the difference...
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