The Bridgeport times and evening farmer. (Bridgeport, Conn.) 1918-1924, 1918-01-14
LIBERTY BOND
LESSONS
BY HOWARD SPEER
OF Hincks Bros. & Co.
LESSON NO. -
DAY DREAMS
DAY DREAMS


certain as predicting prices on STOCKS
and bonds. We used to think pre-
dieting the weather was a pretty rlsAS
lob but it is an exact science compar-
ed to trying to tell what values the
market is going to set upon various
| investments a week or year from
now. :.
It is not only an uncertain JOB; II
is thankless, too. If you guess right
! the other fellow pats himself on the
back for his shrewdness in buying OF
selling. as the case may have been' |
| Tfuvou guess wrong he never forglVeS
Won and takes every chance to REMIND
Won that you made him lose money
| In spite, however, of the thankless-
ness of the job and the uncertainty
attending it, the writer is willing 10
make the prediction that anyone VINO
holds his Liberty bonds Of either the
! first or second or any future issue
until after the war, will make money
| on them.
You have been seeing your Liberty
bonds selling for less than you paid
for them for over a month. We tried
| TO CnS6r YOU up 1dSSl NCClN "ANA- $500
prospect of them selling again at par
within a very short time. Now we
| want to carry the process step
further and give you something TO
dream about.
Day dreams, after all, aren't the
worst things in the world. Trey nave
inspired many a splendid career ana
they are rain and sunshine to young
and growing ambitions TOGO much
rain or too much sun will hurt any
growth and too much day dreaming
<mav result in a heavy sleep. But a
little of it can do no harm and as
these are such trying times anyhow
we may, perhaps, all be excused for
trying to find some rosy tints in the
future.
Liberty bonds are going to sell some
day for more than you paid for them.
Here is why:
A little less than a year ago a man
came into the office with which the
writer is connected and gave an or
der for some bonds, He wanted Uni
ted States government bonds-the
per cent. issue that was sold in 1895
and that comes due in February, 1925.
The order was filed and the bonds
: cost him HE per cent, that is, ST.
115 for each $1,000 bond.
Now Just follow this bit of artthme-
tic That man will get $40 annual in
come from each $1,000 bond that he
bought Take your pencil and you
: will find that $40 is 3.5S per cent. of
$1,115, the price he paid. That in it
self is a pretty low return. But look
at this other feature of the case.
The bonds come due in 1925, just
eight years from the time he bought
them. At the end of eight years then
he is going to receive from the gov
eminent only $1,000 for something
that he paid $1,115 for. He is going
to take a loss of Sis on each bond.
Now a loss of Sis in eight years is
an average loss of $14.37 a year, and
, $1437 is equal to about Is per cent.
on the s1,115 invested. When you
) subtract this loss of is per cent.
therefore from the yield of $50 per
cent, which the man is to receive, you
find that his actual net yield is going
) to be about 2.3 per cent.
Now, what was the matter? Was
the man fool to take such a low
| return on his money? Or was he
cheated? No, neither one. Far from
being a fool he is very wealthy man,
and a shrewd investor. He wasn't
cheated because he tried several
days before he could get any bonds at
that price.
Well, what was the matter, any
how? Why the matter was simply
l that at that time United States gov
> eminent bonds were selling at such
high prices that a man who wanted
them simply had to be content with
a very low return on his money. And
that was at a time too when, though
D we had not actually declared war on
I Germany, we were expected to do so
almost at any moment and did actual
: ly do so a couple of months later
= You may day dream bit more then
q and perhaps imagine how low a re-
turn a man might get on U. S. govern
ment bonds if he should buy them in
times of peace and quiet the world
. over. At such times it is not unusual
S for United States bonds to yield as
low a rate as LIS per cent, or even
= 1.50 per cent
Y Don't forget the meat of one of las,
weeks lessons namely, that as the
interest rate goes down ire price goes
l. up. Remembering that, just day
r, dream bit about your Liberty 8 y
per cent and per cent bonds. This
isthe picture you may carry around
, with you tsday to cheer you up If
= five years from now United States
:. government bonds are selling to yield
: only $50 per cent. Liberty 31%s will
= be worth about 1OS and the As about
e 10Y. If the yield is as low as 2 pei
V cent the SIS will be worth about
= l112 and the As about 100. If the
e yield should get down to 1.5O per cent
you could sell your 8 Y S for rs anG
your As for 1111S
1t may seem strange to you thai
IT the rs will be worth more than the
lie As, but that is subject for another
S. lesson. In the meantime, if you have
IL been thinking of selling your Liberty
p bonds don't you think you had better
change your mind until you have ha6
IS a chance at least to get a little NOR,
ed fun out of this latest day dream?
TY